Suumaya Lifestyle NSE SME IPO review (Apply at your own risk)

Review By Dilip Davda on May 18, 2018

 Suumaya Lifestyle Ltd. (SLL) which was originally incorporated as Richway Infrastructure Ltd. and rechristened itself as Richway International Ltd. and was a listed company on BSE ITP platform and opted for delisting in June 2017 has now changed its business model and has renamed itself as Suumaya Lifestyle Ltd. and is now planning to list on NSE SME. In the process even entire management got changed hands. SLL is carrying out the business of manufacturing and trading of dress materials, suits, sarees, kurtis etc. Pursuant to the business transfer agreement SLL acquired assets and liabilities of Suumaya Fashions and all the manufacturing operations were consolidated. It also kept moving its registered office during all the above process.  Company markets products under the brand name “ekka”, “ira” and “tag 9 in retail and wholesale business. It also serves customers through a range of channels such as retail and wholesale. However, company do not derive any revenues from such sale, but it takes place under logo Suumaya in the corporate and trading names.

To part finance its working capital needs,  SLL is coming out with a maiden IPO of 7688000 equity shares of Rs. 10 each at a fixed price of Rs. 18 per share to mobilize Rs. 13.84 crore. Issue opens for subscription on 22.05.18 and will close on25.05.18. Minimum application it to be made for 8000 shares and in multiples thereof , thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue consists of fresh equity issue of 1888000 shares and offer for sale of 5800000 shares. Issue constitutes 32.98% of post issue paid up equity capital of the company. Issue is solely lead managed by Gretex Corporate Services Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. After raising initial equity at par on incorporation and in March 2014, it issued further equity in the price range of Rs. 50 to Rs. 1000 and has also issued bonus shares in the ratio of 9 for 1 November 2013. Average cost of acquisition of shares by the promoters is Rs. 11 and Rs. 18 per share. Post issue, its current paid up equity capital of Rs. 22.12 cr. will stand enhanced to Rs. 24.00 crore. Company’s debt equity ratio as on 31.12.17 is 0.32.

On performance front, for last four fiscals, SLL has posted turnover/net profits of Rs. 15.47 cr. / Rs.  0.12 cr. (FY14), Rs. 37.16 cr. / Rs. 0.05 cr. (FY15), Rs. 90.53 cr. / Rs. 0.32 cr. (FY16) and Rs. 212.06 cr. / Rs. 0.45 cr. (FY16). Surprisingly it has earned net profit of Rs. 1.72 crore on a turnover of Rs. 242.29 cr. for first nine months ended on 31.12.17 of FY18. Although top line has shown northward march for all these years, bottom line has shown erratic movements. For last three fiscals it has posted an average EPS of Rs. 0.15 and an average RoNW of 1.46%. Issue is priced at a P/BV of 1.59 on the basis of its NAV of Rs. 11.34 as on 31.12.18 and 1.56 on the basis of post issue NAV of Rs. 11.57. If we annualize latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 19 against industry average of 35. But sustainability of its super profits earned for 9 months of FY18 is a million dollar question.

On merchant banker’s front, this is 11th mandate from its stable in last three fiscals. Out of last 10 listings, 3 opened at discount, 3 at par and 6 opened with a premium ranging from 1.9% to 8% on the day of listing.


Conclusion / Investment Strategy

Although pricing appears reasonable on the basis of super profits for 9 months of FY18, its sustainability raises concern. Cash surplus risk savvy investors may consider investment at their own risk.

Review By Dilip Davda on May 18, 2018

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

Suumaya Lifestyle IPO FAQs

  1. 1. Why Suumaya Lifestyle IPO?

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

  2. 2. How is Suumaya Lifestyle IPO?

    Read the Suumaya Lifestyle IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Suumaya Lifestyle IPO what should investors do?

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

  4. 4. Is Suumaya Lifestyle IPO good?

    Sorry, we didn't rate the Suumaya Lifestyle IPO.

  5. 5. Is Suumaya Lifestyle IPO worth Investing?

    Our lead analyst Mr. Dilip Davda didn't rate the Suumaya Lifestyle IPO.

  6. 6. When will Suumaya Lifestyle IPO allotment status?

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

  7. 7. When will Suumaya Lifestyle IPO list?

    The Suumaya Lifestyle IPO will list on Monday, June 4, 2018, at NSE SME.








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