Party Cruisers NSE SME IPO review (Avoid)

Review By Dilip Davda on Feb 18, 2021

•    The company is engaged in wedding and other event management.
•    Based on financial parameters, the issue is aggressively priced.
•    Lead Manager has average track records.
•    Changed lifestyle post-COVID-19 is a major concern for the sustainability of the business.
•    There is no harm in avoiding investment in this pricy offer.

ABOUT COMPANY:
Party Cruisers Ltd. (PCL) is engaged in wedding management and events management business since its inception. It offers a complete variety of wedding and event facilities that included pre-wedding, during the wedding, post-wedding events that cover planning and marketing to production and décor etc. The company currently operates from Mumbai only with a headcount of 30.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans for expansion of business through strategic investments (Rs. 3.40 cr.), additional working capital (Rs. 3.50 cr.) and general corporate funds (Rs. 0.30 cr.) needs, PCL is coming out with a maiden Initial Public Offer (IPO) of 1520000 equity shares of Rs. 10 each at a fixed price of Rs. 51 per share to mobilize Rs. 7.75 cr. The issue opens for subscription on February 22, 2021, and will close on February 25, 2021. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.14% of the post issue paid-up capital of the company. PCL is spending Rs. 0.55 cr. for this issue process.

The issue is solely lead managed by First Overseas Capital Ltd. and KFin Technologies Pvt. Ltd. is the registrar to the issue. NNM Securities Pvt. Ltd. is a Market Maker for this issue.

Having issued initial equity at par, PCL issued further equity at Rs. 65 per share in April 2019. The company has also issued bonus shares in the ratio of 8 shares for 1 share held in June 2018. The average cost of acquisition of shares by the promoters is Rs. 0.52 and Rs. 1.79 per share.

Post issue, PCL's current paid-up equity capital of Rs. 4.08 cr. will stand enhanced to Rs. 5.60 cr. With the IPO pricing, the company is looking for a market cap of Rs. 28.56 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, PCL has posted turnover/net profits of Rs. 15.36 cr. / Rs. 1.48 cr. (FY18), Rs. 18.88 cr. / Rs. 1.93 cr. (FY19) and Rs. 15.89 cr. / Rs. 1.30 cr. (FY20). For the first half ended on September 30, 2020, it has earned a net profit of Rs. 0.15 cr. on a turnover of Rs. 1.71 cr.

For the last three fiscals, the company has posted an average EPS of Rs. 52.09 and an average RoNW of 17.63%. The issue is priced at a P/BV of 2.19 based on its Net Asset Value (NAV) of Rs. 23.26 and at a P/BV of 1.66 based on post issue NAV of Rs. 30.76.

If we annualize latest earnings and attribute it to fully diluted post issue equity, then asking price is at a P/E of around 94 thus making it a costly bet.

COMPARISION WITH LISTED PEERS:
As per the offer documents, the company has shown Touchwood Entertainment as its listed peers, which is currently trading at a negative P/E (as of 18.02.2021). However, it is not fully comparable on an apple to apple basis.

MERCHANT BANKER'S TRACK RECORD:
On merchant banker's front, this is the 16th mandate from its stable in last five fiscals (including the ongoing one). Out of last 7 listings, 1 opened at discount, 2 at par and the rest with a premium ranging from 1.40% to 25% on the day of listing. Out of these 7 listings, only 2 are trading at premiums, rest is at discount. (Refer page 203 of offer documents).


Conclusion / Investment Strategy

The issue is aggressively priced. Post COVID-19 restriction on Wedding parties, events etc has dented working of the company drastically and changed lifestyle post-pandemic may raise concern for the sustainability of its business model. Considering all these, there is no harm in giving this issue a MISS.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Feb 18, 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

Party Cruisers IPO FAQs

  1. 1. Why Party Cruisers IPO?

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

  2. 2. How is Party Cruisers IPO?

    Read the Party Cruisers IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Party Cruisers IPO what should investors do?

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

  4. 4. Is Party Cruisers IPO good?

    Our recommendation for Party Cruisers IPO is to avoid.

  5. 5. Is Party Cruisers IPO worth Investing?

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

  6. 6. When will Party Cruisers IPO allotment status?

    The Party Cruisers IPO allotment status will be available on or around Mar 2, 2021. The allotted shares will be credited in demat account by Mar 4, 2021. Visit Party Cruisers IPO allotment status to check.

  7. 7. When will Party Cruisers IPO list?

    The Party Cruisers IPO will list on Friday, March 5, 2021, at NSE SME.

Comments

Add a public comment...








Search Chittorgarh.com:

Download Our Mobile App

Android App iOS App