Navoday Enterprices BSE SME IPO review (Avoid)

Review By Dilip Davda on Jun 9, 2021

•    NEL is engaged in diverse activities like marketing/advertising/consultancy etc.
•    It has shown inconsistency in its financial performance.
•    The company is operating in highly competitive segments.
•    Nearly 60% equity dilution is taking place.
•    Issue appears highly-priced based on financial parameters/listed peers.

ABOUT COMPANY:
Navoday Enterprises Ltd. (NEL) is engaged in diverse activities like marketing support and advertising services, management and financial consultancy services and component supply and support services to manufacturers of packaging and allied machines. It is also engaged in event management services.

NEL is in a highly competitive market and competition is based primarily on the quality, design, pricing of such products and services. To remain competitive in the market it strives to improve design capability, reduce procurement and production cost and improve operating efficiencies. With growing competition between the products and services, effective and efficient advertising seems to be the need of the hour and this need has resulted in new and innovative changes in OOH (Out of Home) advertising media. Gradually, electronic LED Billboards, mobile displays, roll-ups, vehicle wraps, skywalks, building wraps, flyover panels and interactive screens are changing the trends in Indian OOH advertising in a massive way. Even in financial services too it is facing cutthroat competition from well-established players.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its need for working capital (Rs. 3.60 cr.) and general corpus fund (Rs. 0.61 cr.), NEL is coming out with a maiden IPO of 2304000 equity shares of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 4.61 cr. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. The issue opens for subscription on June 14, 2021, and will close on June 17, 2021. Post allotment, shares will be listed on BSE SME.  The issue constitutes 59.78% of the post issue paid-up capital of the company. NEL is spending around Rs. 0.40 cr. for this IPO process.

The issue is solely lead managed by Inventure Merchant Banker Services Pvt. Ltd. and Satellite Corporate Services Pvt. Ltd. is the registrar to the issue. NNM Securities Pvt. Ltd. is the market maker for this company.

Having issued initial equity at par, the company has issued bonus shares in the ratio of 30 for 1 in July 2019 and 4 for 1 in February 2020. The average cost of acquisition of shares by the promoters is Rs. 0.06 and Rs. 2.00 per share. After the issue, promoters' holding will come down from 99.9% to just around 40.2%, which raises concern. Post issue, company's current paid-up equity capital of Rs. 1.55 cr. will stand enhanced to Rs. 3.85 cr. At the IPO price, the company is looking for a market cap of Rs. 7.71 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, NEL has posted turnover/net profit of Rs. 23.12 cr. / Rs. 0.56 cr. (FY18), Rs. 16.52 cr. / Rs. 0.35 cr. (FY19) and Rs. 48.27 cr. / Rs. 1.13 cr. (FY20). For the first nine months of FY21 ended on December 31, 2020, it has posted a net profit of Rs. 0.39 cr. on a turnover of Rs. 14.84 cr. Thus there is no consistency in its top as well as the bottom line.


For the last three fiscals, the company has posted an average EPS of Rs. 4.99 and an average RoNW of 32.99%. The issue is priced at a P/BV of 0.95 based on its NAV of Rs.21.07 as of December 31, 2020, and at a P/BV of 0.98 based on its post-issue NAV of Rs. 20.43.

If we annualize FY21 (pandemic period) earnings and attribute it to fully diluted post issue equity, then the asking price is at a P/E of 14.81. Thus the offer appears highly-priced.

COMPARISON WITH LISTED PEERS:
As per the offer documents filed, NEL has shown Pressman Advertising, Hi-Klass Trading and VLS Finance as its listed peers. They are currently trading at a P/E of 10.77, 00 and 2.71 (as of June 08, 2021). However, they are not truly comparable on an apple to apple basis.

MERCHANT BANKER'S PERFORMANCE:
This is the third mandate from Inventure Merchant Banker in the last four fiscals (including the ongoing one). Out of the last two listings, both opened with premiums ranging from 1.89% to 2.70%. Thus it has an average track record.


Conclusion / Investment Strategy

Considering its inconsistent financial track record and the highly competitive business, this highly-priced IPO may be ignored as it will take a longer duration for migration to mainboard based on its current small paid-up equity. Promoters will have around 40% holding post issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jun 9, 2021

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

Navoday Enterprises IPO FAQs

  1. 1. Why Navoday Enterprises IPO?

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

  2. 2. How is Navoday Enterprises IPO?

    Read the Navoday Enterprises IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Navoday Enterprises IPO what should investors do?

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

  4. 4. Is Navoday Enterprises IPO good?

    Our recommendation for Navoday Enterprises IPO is to avoid.

  5. 5. Is Navoday Enterprises IPO worth Investing?

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

  6. 6. When will Navoday Enterprises IPO allotment status?

    The Navoday Enterprises IPO allotment status will be available on or around Jun 21, 2021. The allotted shares will be credited in demat account by Jun 23, 2021. Visit Navoday Enterprises IPO allotment status to check.

  7. 7. When will Navoday Enterprises IPO list?

    The Navoday Enterprises IPO list date is not yet available. The Navoday Enterprises IPO is planned to list on Jun 24, 2021, at BSE SME.

3 Comments

ipo applicant
3. ipo applicant  Jun 14, 2021 10:55 I Like It. | Report Abuse Reply
premium 7-8 rs buyer ohhhh super now i m sure this ipo will give very good return



insider news very bullish
ipo applicant
2. ipo applicant  Jun 14, 2021 10:54 I Like It. | Report Abuse Reply
super good response received from public in first hours i want to buy application @ 40000 rs if any one have plz send me reply
ashlesh shah
1. ashlesh shah  Jun 12, 2021 11:42 I Like It. 1 | Report Abuse Reply
Navoday Enterprises Ltd. to Launch IPO on 14 June

Mumbai, 14 June, 2021: Navoday Enterprises Ltd. to launch Rs. 460.80 Lakhs SME IPO on 14 June, 2021. The IPO will be launched on BSE’s SME platform. The company will make fresh issue of Equity Shares. Initial Public Offer is of 23,04,000 Equity Shares of face value of Rs. 10 each of the Company for cash at a price of Rs. 20 per Equity Share (including a share premium of Rs. 10 per Equity Share) aggregating up to Rs. 460.80 lakhs. The proceeds from the issue will be used for working capital requirements and general corporate purpose. Inventure Merchant Banker and Satellite Corporate Service are the lead managers and registrar to the issue respectively.

The company treats marketing and advertising fundamental to business strategy and revenue management. They provide Outdoor, Print, Ground events/activations and digital marketing. Their primary offering is in outdoor or out-of-home media company also known as OOH advertising. Their offering of outdoor media includes advertising on hoardings, billboards on road, highways, streets, lamp post boards, mobile sign trucks, kiosks, traffic booth etc.
Their outdoor media operations are spread across Mumbai & Thane. They help their clients run a focused campaign in consumer populated areas. The company is focused on cost effective and impactful solutions tailor-made as per our client needs, so that their clients get necessary reach and frequency to further propel their business.

The company is also engaged in Events Management which includes planning, organizing and managing events. Navoday Enterprises manage commercial events, corporate events, cultural events and also small brand promotion events for our clients. They are also engaged in branding and designing through print and online & digital media. They also design various publicity materials for their clients such as Pham plates, brochures, flyers, etc. for their own consumption. The company has in-house design capabilities for the same.

The Company has always believed in the best quality in their services. The Company is dedicated towards quality of their services and adheres to quality standards as prescribed by their clients. The company strives for complete transparency and satisfaction of their clients with an unwavering thrust and focus on professional excellence and integrity.

The company is focused on increasing the number of client relationships and having more number of relationship managers to service these relationships. Their strategy is to increase the number of client relationships and then leverage those client relationships into offering in a whole suite of financial products. Navoday Enterprises believe in offering competitive prices to their customers. This helps the company to sustain the competition and claim a position of strength in the marketplace.








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