Vasa Retail NSE SME IPO review (May apply)

Review By Dilip Davda on Jan 18, 2018

Vasa Retail and Overseas Ltd. (VROL) (erstwhile Vasa International – a partnership firm) is primarily deals in all kinds of (a) stationery products viz. artistic materials, hobby colors, scholastic colors, scholastic stationery, office products, drawing instruments, writing instruments, office stationery, adhesives, notebooks, office supplies and writing instruments, books, pens, pencils, erasers, files, copier paper, bags and bottles; (b) procuring paper pulp and supplying the same to paper mills and (c) procuring bag fabric and supplying it to the other bag manufacturers and also using the same for manufacturing its products (school and office bags). These stationery products are essentially used by school going children and offices as a part of their stationary requirements. On the other hand, paper pulp is the key raw material for the manufacturing of wide variety of paper. VROL classifies its product range into (i) school and education products; (ii) fine art and hobby products; and (iii) office products.

VROL also has exclusive license agreements dated October 01, 2014 and June 10, 2016 with Oxford Limited to market, sell, distribute, and promote various stationary products under the brand "University of Oxford" to around twenty six (26) countries spread across Asia, Middle East and Africa including India. This arrangement can be renewed for a further period on mutual consent subject to Company achieving the expected milestones as referred under the license agreement. Currently company distributes its product range through a network of 7 distributors and caters to more than 500 stores. In addition to the above business activities, Company also acts as a supplier of copier paper under the brand "Trion" (not owned by it) to certain paper dealers in the Middle East. VROL’s in house brand is “VASTA”.

To part finance its working capital and general corpus fund needs, VROL is coming out with a maiden IPO of 1600000 equity shares of Rs. 10 each at a fixed price of Rs. 30 per share to mobilize Rs. 4.80 crore. Issue opens for subscription on 24.01.18 and will close on 29.01.18. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 26.70% of the post issue paid up capital of the company. Issue is solely lead managed by Hem Securities Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Average cost of acquisition of shares by the promoters is Rs. 10. Having issued major equity shares at par at the time of MoA, it issued further 200000 shares at Rs. 30per share in December 2017. Post issue its current paid up equity capital of Rs. 4.39 crore will stand enhanced to Rs. 5.99 crore.

On performance front, VROL has posted turnover/net profits of Rs. 17.56 cr. / Rs. 0.08 cr. (FY14), Rs. 18.82 cr. / Rs. –(0.11) cr. (FY15), Rs. 21.86 cr. / Rs. –(0.15) cr., (FY16) and Rs. 23.85 cr. / Rs. 0.92 cr. (FY17). It posted operational losses for FY 15 and 16 despite growth in top lines. For the last three fiscals it has posted an average EPS of Rs. 0.93 and average RoNW of 16.74 (on an equity base of Rs. 2.05 crore). Asking price is at a P/BV of 3.37 (on the basis of its NAV of Rs. 8.90 as on 20.10.17) and at a P/BV of 1.97 (on the basis of post issue NAV of Rs. 15.24). For the period ended on 20.10.17 of the current fiscal, it has reported net profit of Rs. 0.86 cr. on a turnover of Rs. 17.92 cr. Thus for last 19 months it has been doing profitable business. However, its NAV remained below par as at the said date. If we annualize latest working and attribute earnings on fully diluted post issue equity then asking price is at a P/E of around 12 against its peers Kokuyo and Linc Pen trading (as on 18.01.18) at a P/E of around 2000 and 60.

On merchant banker’s front, this is 34th mandate in last three fiscals (overall 44th mandate so far). Out of last 10 listings, 1 opened at 3% premium, 1 at 9% premium and the rest at 20% premiums to offer price on the listing day.

Conclusion: Although issue appears reasonably priced, dismal performance in the recent past raises concern. However, stationery sector is poised for bright prospects as Government is giving major thrust on education. Considering recent encouraging performance and bright prospects ahead, investors may consider investment for long term. (Subscribe – for long term).


Conclusion / Investment Strategy

Although issue appears reasonably priced, dismal performance in the recent past raises concern. However, stationery sector is poised for bright prospects as Government is giving major thrust on education. Considering recent encouraging performance and bright prospects ahead, investors may consider investment for long term. (Subscribe – for long term).

Review By Dilip Davda on Jan 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

Vasa Retail IPO FAQs

  1. 1. Why Vasa Retail IPO?

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

  2. 2. How is Vasa Retail IPO?

    Read the Vasa Retail IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Vasa Retail IPO what should investors do?

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

  4. 4. Is Vasa Retail IPO good?

    Our recommendation for Vasa Retail IPO is to subscribe for long term.

  5. 5. Is Vasa Retail IPO worth Investing?

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

  6. 6. When will Vasa Retail IPO allotment status?

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

  7. 7. When will Vasa Retail IPO list?

    The Vasa Retail IPO will list on Tuesday, February 6, 2018, at NSE SME.








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