Milestone Furniture BSE SME IPO review (Avoid)

Review By Dilip Davda on May 2, 2018

Milestone Furniture Ltd. (MFL) is running manufacturing and marketing of Interior and Modular Furniture business. It has developed the skill and expertise in space and work station management with designing and innovation in furniture used in education, healthcare and corporate organizations.

To part finance setting up of manufacturing facility for modular innovative furniture, working capital and general corporate funds needs, MFL is coming out with a maiden IPO of 3297000 equity shares of Rs. 10 each at a fixed price of Rs. 45 per share to mobilize Rs. 14.84 crore. Issue opens for subscription on 07.05.18 and will close on 11.05.18. Minimum application it to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Monarch Networth Capital Ltd. and Karvy Computershare Pvt. Ltd. is the registrar to the issue. Issue constitutes 35.46% of the post issue paid up capital of the company. Having raised initial equity at par, it issued further equity in the price range of Rs. 12 and Rs. 45 per share. Average cost of acquisition of shares by the promoters is Rs. 22.65 per share. Post issue, its current paid up capital of Rs. 6.00 cr. will stand enhanced to Rs. 9.30 cr.

On performance front, MFL has posted turnover/net profits of Rs. 0.38 cr. / Rs. 0.03 cr. (FY14), Rs. 3.32 cr. / Rs. 0.05 cr. (FY15), Rs. 5.52 cr. / Rs. 0.20 cr. (FY16) and Rs. 8.95 cr. / Rs. 0.33 cr. (FY17). For the period ended on 30.11.17 of fiscal 17-18 it has earned net profit of Rs. 0.80 cr. on a turnover of Rs. 23.72 cr. Thus sudden jump in top and bottom line for FY18 is surprising and raised eyebrows. Issue is priced at a P/BV of 2.96 on the basis of its NAV of Rs. 15.20 as on 30.11.17. NAV shown as Rs. 98.60 for FY 15 and Rs. 297.50 for FY16 in offer documents is surprising and one is unable to understand working. As per capital history of the company it raised initial equity of Rs. 1.01 crore at par till 28 March 2017. On 28th March 17 and 17 Oct. 17 it issued further equity (2990000 shares) at Rs. 12 per share and in December 2017 it issued total 2000000 shares at Rs. 45 per share. As on 31.03.17 it had a paid up equity of Rs. 3 crore that stood at Rs. 4 crore as on 17.10.17 and Rs. 6.00 cr. as on 15.12.17. For last three fiscals it has posted an average EPS of Rs. 122.30 and an average RoNW of 44.67% which appears was on an equity base of Rs. 0.01 cr. for FY14 to FY16 and Rs. 3.00 cr. for FY17 and is not considered on fully diluted basis.  
However, if we annualize latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 34 against industry composite P/E of 20. As per offer documents it is showing Nilkamal, PIL Italica and Omfurn as its listed peers that are trading at a P/E of around  21, 37 and 8 respectively.  (As on 02.05.18).  Thus issue is aggressively priced.

On merchant banker’s front, this is the 6th mandate from its stable and out of last 5 listings, 1 opened at par, three with 1.4% to 5% and one with 45% premium on the day of listing. 45% premium on opening day was marked by VCU Data which is currently trading at a discount of around 38%.

Conclusion / Investment Strategy

Company’s financial data is really confusing and latest working is a bit surprising. Better options are available in the secondary market at lower P/Es. There is no harm in giving this issue a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on May 2, 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

Milestone Furniture IPO FAQs

  1. 1. Why Milestone Furniture IPO?

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

  2. 2. How is Milestone Furniture IPO?

    Read the Milestone Furniture IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Milestone Furniture IPO what should investors do?

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

  4. 4. Is Milestone Furniture IPO good?

    Our recommendation for Milestone Furniture IPO is to avoid.

  5. 5. Is Milestone Furniture IPO worth Investing?

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

  6. 6. When will Milestone Furniture IPO allotment status?

    The Milestone Furniture IPO allotment status will be available on or around May 16, 2018. The allotted shares will be credited in demat account by May 18, 2018. Visit Milestone Furniture IPO allotment status to check.

  7. 7. When will Milestone Furniture IPO list?

    The Milestone Furniture IPO will list on Monday, May 21, 2018, at BSE SME.