Janus Corp BSE SME IPO review (Avoid)

Review By Dilip Davda on Jan 21, 2020

•    JCL is engaged in constructions related business and trading activities.
•    Last three fiscals' financial data has shown inconsistency in the top and bottom lines.
•    The issue is aggressively priced based on the latest performance data.
•    Lead Manager has poor track records.
•    There is no harm in giving this issue a miss.


ABOUT COMPANY:
Janus Corporation Ltd. (JCL) is a diversified business company with Construction, Media, Consulting and Trading as primary segments having based in Mumbai. It is engaged in the business of Civil Construction, land and site development, landfilling, fencing walls, erection of hoardings etc. JCL is also engaged in the business of trading of various constructions related materials such as cement, iron & steel, sand, soil, aluminium etc.


The company also provides construction and projects related consulting to various clients. It's Construction Management Consultancy include Site Management, Construction Supervision & Management, Safety Management, Safety audits, safety systems & processes, Safety documentation amongst others. From the initial concept to project closeout, JCL assists its clients in facilitating and coordinating the construction process to mitigate complex problems.


ISSUE DETAILS/CAPITAL HISTORY:
To part finance its needs for working capital (Rs. 5.85 cr.) and general corpus fund (Rs. 1.40 cr.) JCL is coming out with a maiden IPO of 1599000 equity shares of Rs. 10 each at a fixed price of Rs. 50 per share to mobilize Rs. 8.00 cr. The issue opens for subscription on 27.01.20 and will close on 30.01.20. The minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 27.86% of the post issue paid-up capital of the company. JCL is spending Rs. 0.75 cr. for the entire proceeds of this IPO.


The issue is solely lead managed by First Overseas Capital Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. NNM Securities Pvt. Ltd. is the market maker for this issue. Having issued entire equity at par, JCL issued bonus shares in the ratio of 6 shares for every 1 share held in August 2015.


The average cost of acquisition of shares by the promoters is Rs. 9.84 and Rs.10.22 per share. Post issue, JCL's paid-up capital will stand enhanced from Rs. 4.14 cr. to Rs. 5.74 cr. Thus the company mulls market capitalization of Rs. 28.70 cr.


FINANCIAL PERFORMANCE:
For the last three fiscals, JCL has posted turnover/net profits of Rs. 12.82 cr. / Rs. 0.43 cr. (FY17), Rs. 25.16 cr. / Rs. 0.22 cr. (FY18) and Rs. 17.14 cr. / Rs. 0.48 cr. (FY19). For the seven months period ended on 31.10.19 of FY20, it has clocked in the net profit of Rs. 0.29 cr. on a turnover of Rs. 10.73 cr. JCL's top and bottom line have shown inconsistency for these periods.


For the last three fiscals, JCL has posted an average EPS of Rs. 0.94 and an average RoNW of 7.29%. The issue is priced at a P/BV of 3.56 based on its NAV of Rs. 14.06 as on 31.10.19 and at a P/BV of 2.08 based on post-IPO NAV of Rs. 24.07. JCL has not paid any dividend so far.


If we annualize FY20 first seven months earnings and attribute it to post issue paid-up equity capital then asking price is at a P/E of 57 against the industry average of 81. Thus issue appears aggressively priced. Its debtors holding days are 90 days that raises concern.


COMPARISION WITH LISTED PEERS:
As per offer documents, JCL has shown Bharat Road, Shristi Infra and Shervani Indl as its listed peers. They are currently trading at a P/E of 30.82, 213.64 and 2.99 (as on 21.01.20). However, they are not strictly comparable.

MERCHANT BANKER'S TRACK RECORD:
On merchant banker's front, this is the 14th mandate from its stable in the last four fiscals (including the ongoing). Out of the last 10 listings, five issues opened at a discount, one at par and the rest with a premium ranging from 0.39% to 25% on the day of listings. Thus it has poor track records.


Conclusion / Investment Strategy

JCL is in a highly competitive and fragmented segment. Financial data has no match for the asking price. Considering aggressive pricing and bleak scope for the future of this segment, simply stay away from this issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jan 21, 2020

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

Janus IPO FAQs

  1. 1. Why Janus IPO?

    The initial public offer (IPO) of Janus Corporation Ltd offers an early investment opportunity in Janus Corporation Ltd. A stock market investor can buy Janus IPO shares by applying in IPO before Janus Corporation Ltd shares get listed at the stock exchanges. An investor could invest in Janus IPO for short term listing gain or a long term.

  2. 2. How is Janus IPO?

    Read the Janus IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Janus IPO what should investors do?

    Janus IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Janus IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Janus IPO good?

    Our recommendation for Janus IPO is to avoid.

  5. 5. Is Janus IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Janus IPO.

  6. 6. When will Janus IPO allotment status?

    The Janus IPO allotment status will be available on or around Feb 4, 2020. The allotted shares will be credited in demat account by Feb 6, 2020. Visit Janus IPO allotment status to check.

  7. 7. When will Janus IPO list?

    The Janus IPO will list on Thursday, February 6, 2020, at BSE SME.

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