Lex Nimble BSE SME IPO review (Avoid)

Review By Dilip Davda on Mar 3, 2018

Lex Nimble Solutions Ltd. (LNSL) is a subsidiary of Lex Nimble Solutions Inc., USA that holds 97.81% stake in the company. The Company is engaged in business of Appraisal Advisory, Certification, training and related services on quality models, IT product and development and services, the major revenue streams being IT application, development, maintenance and support, corporate training and consulting. The Company now plans to explore new opportunities in the field of ISO certification and CMMI consulting.

To part finance its plans to foraying into CMMI consulting, customization of product simple law for the Indian Markets, establishment of an ISO certifying body and general corpus fund needs, LNSL is coming out with a maiden IPO of 1112000 equity shares of Rs. 10 each at a fixed price of Rs. 57 per share to mobilize Rs. 6.34 crore. Issue opens for subscription on 12.03.18 and will close on 16.03.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment shares will be listed on BSE SME. Issue is solely lead managed by Quintessence Enterprises Pvt Ltd and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.54% of the post issue paid up capital of the company. Average cost of acquisition by the promoters is Rs. 14.26 per share. Having issued initial equity at par, it raised further equity in the price range of Rs. 48.42 to Rs. 100.31 per share between June 2012 and October 2017. It has also issued bonus shares in the ratio of 5 for 1 in July 2017. Post Issue Company’s current paid up equity capital of Rs. 3.08 crore will stand enhanced to Rs. 4.19 crore.

On performance front, LNSL has reported turnover/net profits of Rs. 2.19 cr. / Rs. 0.11 cr. (FY14), Rs. 1.42 cr. / Rs. 0.12 cr. (FY15), Rs. 1.43 cr. / Rs. 0.12 cr. (FY16) and Rs. 1.74 cr. / Rs. 0.05 cr. (FY17). Thus while top line has seen inconsistency, bottom line has almost remained static from FY14 to FY16. In FY 17 it has posted lower net profits. For last three fiscals it has reported an average EPS of Rs. 1.86 and an average RoNW of 2% on an equity base of Rs. 0.51 crore. Issue is priced at a P/BV of 3.51 on the basis of its NAV of Rs. 16.24 as on 31.10.17 and at a P/BV of 2.47 on the basis of its post issue NAV of Rs. 23.06. For the period ended on 31.10.17 of the current fiscal, it has earned net profit of Rs. 0.12 cr. on a turnover of Rs.1.01 cr. If we annualize this earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 114 thus issue is priced exorbitantly. As per offer documents,  its listed peers are trading at a P/E of around 28 (Excel Realty), 1071 (Intrasoft Techno) and 280 (HOV) as on 01.03.18. All these are not fully comparable as the business line is not the same. Industry composite P/E is around 22.

On merchant banker’s front, this is the 2nd mandate from its stable so far and the only listing so far of Blueblood Ventures opened at a premium of 2% on the day of listing.


Conclusion / Investment Strategy

Issue is highly priced compared to its inconsistent performance so far. Paid up equity is rising from Rs. 0.51 crore to Rs. 4.19 crore. There is no harm in giving this issue a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Mar 3, 2018

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 before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

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

Lex Nimble Solutions IPO FAQs

  1. 1. Why Lex Nimble Solutions IPO?

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

  2. 2. How is Lex Nimble Solutions IPO?

    Read the Lex Nimble Solutions IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Lex Nimble Solutions IPO what should investors do?

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

  4. 4. Is Lex Nimble Solutions IPO good?

    Our recommendation for Lex Nimble Solutions IPO is to avoid.

  5. 5. Is Lex Nimble Solutions IPO worth Investing?

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

  6. 6. When will Lex Nimble Solutions IPO allotment status?

    The Lex Nimble Solutions IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Lex Nimble Solutions IPO allotment status to check.

  7. 7. When will Lex Nimble Solutions IPO list?

    The Lex Nimble Solutions IPO will list on Wednesday, April 4, 2018, at BSE SME.








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