Rithwik Facility BSE SME IPO review (Avoid)

Review By Dilip Davda on Dec 22, 2017

Rithwik Facility Management Services Ltd. (RFMS) is engaged in the business of integrated facilities & property management and equipment & assets management. It is also engaged in the business of billing management including raising of maintenance and energy invoices and managing collections of its clients. RFMS offers services to various clients who include various corporate and developers. Company is having headquartered in Mumbai and providing services in Chennai and Coimbatore. Over the period it has raised the scope of its offerings by taking care of both facilities and assets enabling clients to concentrate on their core business. The company always strives to utilize new technologies and process, which allows it to reduce operation costs and improve life cycles of equipment and property. Now the company mulls expanding its operations in Madurai and Bengaluru.

To part finance its working capital and general corpus fund needs, RFMS is coming out with a maiden IPO of 810000 equity shares of Rs. 10 each at a fixed price of Rs. 50 per share to mobilize Rs. 4.05 crore. Issue opens for subscription on 29.12.17 and will close on 03.01.18. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Issue constitutes 26.47% of the post issue paid up capital of the company. Issue is solely lead managed by Inventure Merchant Banker Services Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Having issued initial equity at par, it raised further equity at a price of Rs. 75 per share in June 2017. It has also issued bonus shares in the ratio of 89 for 1 in March 2017 and 1 for 2 in June 2017. Post issue its current paid up capital of Rs. 2.25 crore will stand enhanced to Rs. 3.06 crore. Post allotment, shares will be listed on BSE SME. The average cost of acquisition of shares by the promoters is Rs. 11.11 and Rs. 42.86 per share.

On performance front, RFMS has posted revenue/net profits of Rs. 21.61 cr. / Rs. 0.45 cr. (FY15), Rs. 23.90 cr. / Rs. 0.34 cr. (FY16) and Rs. 21.49 cr. / Rs. 0.64 cr. (FY17). Thus while its top line has remained almost static, its bottom line has shown surge in last fiscal, that is surprising. For first quarter of the current fiscal, it has reported net profit of Rs. 0.06 cr. on revenue of Rs. 5.52 cr. For last three fiscals it has posted an average EPS of Rs. 3.76 and average RoNW of 29.40 on an equity base of Rs. 0.90 crore as at 31.03.17. Issue is priced at a P/BV of 1.68 on the basis of its NAV of Rs. 29.67 as on 30.06.17 and at a P/BV of 1.43 on the basis of its NAV of Rs. 35.05 post issue. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 64 plus against its peer trading at a P/ E of around 18 (as on 14.12.17 as per info on page 61 of offer documents). Post Issue Company’s paid up equity will be up 2.7 times. Issue pricing appears exorbitant compared to its earnings.

On merchant banker’s front, this is the 5th mandate from its stable in past three years. Out of last four listings one opened at par and the rest at a premium of 1.5% to 20% and closed on the same day just around par levels or at discount.

Conclusion: Considering high price, investors may give this issue a miss. (Avoid).


Conclusion / Investment Strategy

Considering high price, investors may give this issue a miss. (Avoid).

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Dec 22, 2017

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

Rithwik Facility IPO FAQs

  1. 1. Why Rithwik Facility IPO?

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

  2. 2. How is Rithwik Facility IPO?

    Read the Rithwik Facility IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Rithwik Facility IPO what should investors do?

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

  4. 4. Is Rithwik Facility IPO good?

    Our recommendation for Rithwik Facility IPO is to avoid.

  5. 5. Is Rithwik Facility IPO worth Investing?

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

  6. 6. When will Rithwik Facility IPO allotment status?

    The Rithwik Facility IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Rithwik Facility IPO allotment status to check.

  7. 7. When will Rithwik Facility IPO list?

    The Rithwik Facility IPO will list on Thursday, January 11, 2018, at BSE SME.








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