Touchwood Entertainment NSE SME IPO review (Avoid)

Review By Dilip Davda on Dec 6, 2017

Touchwood Entertainment Ltd. (TEL) is specializes in Events Management, offering all clients a complete variety of event facilities, ranging from event planning & marketing to production and legal services for the events. At Touchwood Entertainment, the mindscapes are an expression of the myriad skills that have been honed with each event. It’s in-house designing & production facilities are pivotal pillars that allow it to serve clients and actualize their dreams better in planned time.

To part finance its repayment of existing loans, capital expenditure for expansion, general corpus fund needs, TEL is coming out with a maiden IPO of 1053000 equity shares of Rs. 10 each at a fixed price of Rs. 40 per share to mobilize Rs. 4.21 crore. Issue opens for subscription on 11.12.17 and will close on 13.12.17. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 25.86% of the post issue paid up capital of the company. Issue is solely lead managed by Corporate Capitalventures Pvt. Ltd. and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. The average cost of acquisition of equity shares by the promoters of the company ranges from Rs. 3.68 to Rs. 8.50 per share. It has issued most of its equity at par between inception and February 2009. It converted loan into equity at a price of Rs. 500 per share in March 2006. It made a rights issue at a price of Rs. 11 per share in August 2017. It has also issued bonus shares in the ratio of 4 for 1 (March 2003), 2 for 1 (March 2005), 3 for 2 (December 2005), 3 for 1 (March 2006), 4 for 7 (March 2009) and 1 for 4 (August 2017). Post issue its current paid up equity capital of Rs. 3.02 crore will stand enhanced to Rs. 4.07 crore.

On performance front, TEL has posted turnover/net profits of Rs. 3.93 cr. / Rs. –(0.81) cr. (FY14), Rs. 6.22 cr. / Rs. 0.06 cr. (FY15), Rs. 12.77 cr. / Rs. 0.03 cr. (FY16) and Rs. 13.42 cr. / Rs. 1.01 cr. (FY17). For first five months of current fiscal, it has reported net profit of Rs. 0.33 crore on a turnover of Rs. 3.81 crore. Thus for last 15 months performance appears a bit surprising. It has posted an average EPS of Rs. 2.09 and average RoNW of 19.14% on an equity base of Rs. 2.01 crore. Issue is priced at a P/BV of 2.32 on the basis of post issue NAV. If we annualize latest earnings and attribute it on fully diluted post issue equity then asking price is at a P/E of around 19 plus. It has no listed peers to compare with. Based on track record, issue is priced aggressively.

On merchant banker’s front, this is the 2nd mandate from its stable in past three years. The only listing (Shish Ind.) took place at a premium of around 7% on the day of listing and is currently quoting at a discount of about 12% (as on 06.12.17).

Conclusion: There is no harm is giving this aggressively priced issue a miss. (Avoid).


Conclusion / Investment Strategy

There is no harm is giving this aggressively priced issue a miss. (Avoid).

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Dec 6, 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

Touchwood Entertainment IPO FAQs

  1. 1. Why Touchwood Entertainment IPO?

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

  2. 2. How is Touchwood Entertainment IPO?

    Read the Touchwood Entertainment IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Touchwood Entertainment IPO what should investors do?

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

  4. 4. Is Touchwood Entertainment IPO good?

    Our recommendation for Touchwood Entertainment IPO is to avoid.

  5. 5. Is Touchwood Entertainment IPO worth Investing?

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

  6. 6. When will Touchwood Entertainment IPO allotment status?

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

  7. 7. When will Touchwood Entertainment IPO list?

    The Touchwood Entertainment IPO will list on Thursday, December 21, 2017, at NSE SME.

3 Comments

kapil K
3. kapil K  Dec 11, 2017 10:59
On performance front, TEL has posted turnover/net profits of Rs. 3.93 cr. / Rs. –(0.81) cr. (FY14), Rs. 6.22 cr. / Rs. 0.06 cr. (FY15), Rs. 12.77 cr. / Rs. 0.03 cr. (FY16) and Rs. 13.42 cr. / Rs. 1.01 cr. (FY17).
fully avoid
kapil K
2. kapil K  Dec 11, 2017 10:56
avoid
IPO SME Researcher
1. IPO SME Researcher  Dec 8, 2017 15:20
Good Review By Mr Dilip Davda , but as per my view This company has no listed peers to compare with because Its new sector ( Event Management ) on stock exchange platform and 20 years old company from event management service sector . I hope its very early to give review on it , and welcome a new sector on board . i recommend to invest for long term as great potential in this sector for upcoming years and these kind of companies . Bullis








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