Net Pix Shorts BSE Startup SME IPO review (Avoid)

Review By Dilip Davda on Nov 12, 2020

•    NPSD is a technology-based entertainment startup.
•    It has shown just 12 months of financial data for two fiscals.
•    Based on all parameters, the issue is exorbitantly priced.
•    It has posted losses for Q1 of FY21.
•    Issue expenses indicate fully structured model of this issue with arranged funding.

ABOUT COMPANY:
Net Pix Shorts Digital Media Ltd. (NPSD) got incorporated only in June 2019. Before that, it was run as a proprietorship concern as First Step Entertainment Capital.

NPSD is a technology-based entertainment company operating in the niche segment of online short film contents and publishing the same on various digital online portals and OTT platforms. The online digital media industry is a continuously evolving technological industry and the company endeavours to exploit these technological advances to reach audiences in India and globally with entertaining, socially relevant and heartfelt content.

Company's objective is to offer a platform for enabling digital online entertainment by creating and/or procuring short content in order to make its platform a preferred choice for short content audiences. It started online content distribution through the internationally renowned 'YouTube' portal and its channel - "Net Pix Shorts" went live on January 08, 2018. Currently, it has released 10 titles consisting of 12 videos on YouTube channel aggregating to 154.94 minutes of content, which has received approximately 314.68 lakhs aggregate views as on November 06, 2020.

As on the date of this Prospectus, NPSD also has 8 short films which are under production aggregating to approximately 155.84 minutes of content. Besides, some of its videos are also uploaded on various other digital online portals like Hungama Play, Sony Liv, Mx Player, Shorts TV and Hotstar, either directly or through media partners.

It has recently launched its own music channel on YouTube - 'Net Pix Raw Music' which went live August 14, 2020.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans of acquiring workshop and godown on a long term lease (Rs. 1.00 cr.), augment digital media content library (Rs. 0.80 cr.) and general corpus fund (Rs. 0.37 cr.) needs,  NPSD is coming out with a maiden public issue of 900000 shares at a fixed price of Rs. 30 per share to mobilize Rs. 2.70 cr. This issue opens for subscription on November 18, 2020, and will close on November 23, 2020. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE Startup SME platform. The issue constitutes 28.12% of the post issue paid-up capital of the company. The company is spending Rs. 0.53 cr. for this issue process (refer page 58 of the offer documents), which indicates that this is a fully structured IPO with funding arrangements tied up in advance.

This issue is solely lead managed by Aryaman Financial Services Ltd. and Cameo Corporate Services Ltd. is the registrar to the issue. Aryaman Capital Markets Ltd. is acting as a Market Maker for this issue

Having issued initial equity at par, the company raised further equity by way of rights issue of 700000 shares at Rs. 30 per share in August 2020. The average cost of acquisition of shares by the promoters is Rs. 16.09 per share.

Post issue, NPSD's current paid-up equity capital of Rs. 2.30 cr. will stand enhanced to Rs. 3.20 cr. NPSD is looking for a market cap of Rs.9.60 cr. post this issue.

FINANCIAL PERFORMANCE:
On the financial performance front, NPSD has posted a total revenue of Rs. 0.18 cr. with a net profit of Rs. 0.02 cr. for FY20. For Q1 of current FY21, it has reported a net loss of Rs. -(0.02) cr. on total revenue of Rs. 0.01 cr. thus it has a very short period of financial data of around 12 months in total and that too with a loss for the first quarter of current fiscal.

For FY20 and Q1-FY21 the company has reported EPS of Rs. 0.14 and Rs. - (0.11) cr., and RoNW of 1.40% and - (1.09) %. Thus based on the latest financial data, the issue is priced at a negative P/E. The issue is priced at a P/BV of 2.96 based on its NAV of Rs. 10.14 as on March 31, 2020, and at a P/BV of 1.50 on the basis of post-issue NAV of Rs. 20.02. It has not paid any dividend so far.

If we consider FY20 earnings, the issue is priced at a P/E of around 214 based on its current paid-up equity capital and at a P/E of around 298 based on fully diluted equity post issue.

COMPARISION WITH LISTED PEERS:
As per offer documents, NPSD has no listed peers to compare with.

MERCHANT BANKER'S TRACK RECORD:
On the merchant banker's front, this is the 24th mandate from its stable in the last three fiscals (including the ongoing one). Out of last 10 listings, 3 opened at a discount of 2.5% to 10% and the rest with a premium ranging from 0.06% to 2.16%. LM has average track records,


Conclusion / Investment Strategy

The company has presented financial data for around 12 months in total for two fiscals. Based on Q!-FY21 negative earnings, its P/E cannot be ascertained. The issue is exorbitantly priced on all parameters. Its tiny equity post IPO also indicates higher gestation for migration to the mainboard. Investors may skip this highly-priced issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Nov 12, 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 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

Net Pix Shorts IPO FAQs

  1. 1. Why Net Pix Shorts IPO?

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

  2. 2. How is Net Pix Shorts IPO?

    Read the Net Pix Shorts IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Net Pix Shorts IPO what should investors do?

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

  4. 4. Is Net Pix Shorts IPO good?

    Our recommendation for Net Pix Shorts IPO is to avoid.

  5. 5. Is Net Pix Shorts IPO worth Investing?

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

  6. 6. When will Net Pix Shorts IPO allotment status?

    The Net Pix Shorts IPO allotment status will be available on or around Nov 26, 2020. The allotted shares will be credited in demat account by Dec 1, 2020. Visit Net Pix Shorts IPO allotment status to check.

  7. 7. When will Net Pix Shorts IPO list?

    The Net Pix Shorts IPO will list on Wednesday, December 2, 2020, at BSE SME.








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