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Osia Hyper Retail NSE SME IPO review (May apply)

Review By Dilip Davda on Mar 20, 2019

•    OHRL is a supermarket chain with 11 stores in Gujarat.
•    All stores operated under 'Osia Hypermart' name.
•    Based on current financials, the issue appears fully priced.
•    Lead Manager has an average track record.

ABOUT COMPANY:
Osia Hyper Retail Ltd. (OHRL) is an emerging supermarket chain with a focus on value- retailing. It opened the first store in Ahmedabad, Gujarat in 2014, in the name of 'Osia Hypermart'. It works on the same economy model as other various retail showroom chains. As on date, the company has 11 stores with the retail business located across various cities in Gujarat. The Osia Hypermart stores have various divisions to meet the fluctuated shopping needs of customers. These incorporate Menswear, Women's wear, Kid's wear, Footwear, Cosmetics, Perfumes and Handbags, Household Accessories, lingerie, Gifts, Groceries, crockery, Handicrafts, utensils, handlooms, etc under one roof.

The company is also planning to trade Wholesale, which will boost-up the growth of the company and increase the scope of business and also Bulk trade with other retail stores and competitors to increase their client coverage.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans to purchase of fit-outs for stores (Rs. 8.48 cr.), working capital (Rs. 28.70 cr.) and general corpus fund (Rs. 1.60 cr.) needs, OHRL is coming out with a maiden IPO of 1578400 equity shares of Rs. 10 each at a fixed price of Rs. 252 per share to mobilize Rs. 39.78 cr. The issue opens for subscription on 26.03.19 and will close on 28.03.19. Minimum application is to be made for 400 shares and in multiples thereon thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 26.52% of the post issue paid up capital of the company. The issue is solely lead managed by Monarch Networth Capital Ltd. while Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Monarch Networth Capital Ltd. is also acting as a market maker for this issue.

Having issued initial equity at par, OHRL raised further equity in the price range of Rs. 80 and Rs. 144 between September 2016 and September 2018. It has also issued bonus shares in the ratio of 1 share for every 1 share held in November 2017. The average cost of acquisition of shares by the promoters is Rs. 12 per share. Post issue OHRL's current paid up equity capital of Rs. 4.38 cr. will stand enhanced to Rs. 5.95 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, OHRL has posted turnover/net profits of Rs. 53.54 cr. / Rs. 0.35 cr. (FY16), Rs. 95.33 cr. / Rs. 0.88 cr. (FY17) and Rs. 142.23 cr. / Rs. 5.35 cr. (FY18). For the first eight months of the current FY19, it has earned a net profit of Rs. 4.74 cr. on a turnover of Rs. 145.01 cr. Thus it has posted rising trends in the top and bottom lines.

For the last three fiscals, it has posted an average EPS of Rs. 9.33 and an average RoNW of 31.95%. The issue is priced at a P/BV of 4.42 on the basis of its NAV of Rs. 57.00 as on 30.11.18.

If we annualize latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 21 making it a fully priced offer.

COMPARISION WITH LISTED PEERS:
As per offer documents, it has shown Avenue Supermart, V-Mart Retail, V2 Retail, Aditya Consumer and Future Consumer as its listed peers. All these peers are currently trading at a P/Es of around 103, 62, 22, 31 and 156(as on 20.03.19).  However, all these peers are not strictly comparable.

MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's front, this is the 10th mandate from its stable in last three fiscals. Out of last 9 listings, 2 opened at discount, 3 at par and the rest with a premium ranging from 1.43% to 21.5% on the day of listing. Thus it has an average track record so far.


Conclusion / Investment Strategy

On the basis of current financial performance, the issue appears fully priced. Investors may consider an investment for the long term.

Review By Dilip Davda on Mar 20, 2019

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

Osia Hyper IPO FAQs

  1. 1. Why Osia Hyper IPO?

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

  2. 2. How is Osia Hyper IPO?

    Read the Osia Hyper IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Osia Hyper IPO what should investors do?

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

  4. 4. Is Osia Hyper IPO good?

    Our recommendation for Osia Hyper IPO is to subscribe for long term.

  5. 5. Is Osia Hyper IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Osia Hyper IPO.

  6. 6. When will Osia Hyper IPO allotment status?

    The Osia Hyper IPO allotment status will be available on or around Apr 2, 2019. The allotted shares will be credited in demat account by Apr 4, 2019. Visit Osia Hyper IPO allotment status to check.

  7. 7. When will Osia Hyper IPO list?

    The Osia Hyper IPO will list on Friday, April 5, 2019, at NSE SME.