Veer Global BSE SME IPO review (Avoid)

Review By Dilip Davda on Sep 26, 2020

•    VGIL is a local real estate developer for affordable residential projects.
•    Company's top line shows inconsistency.
•    This segment is witnessing subdued demand and slowdown due to pandemic.
•    Based on P/E parameter, the issue is exorbitantly priced.

ABOUT COMPANY:
Veer Global Infraconstruction Ltd. (VGIL) is a real estate developer, primarily focusing on the development of residential projects in Vasai - Virar and Palghar district. It has over 9 years of experience in, developing residential projects in the low-income affordable housing segment. Company is primarily catering for affordable housing where it tries to bring reality to the dreams of people for owning their own place to live. VGIL achieves this by creative pricing and flexible payment terms ranges within the low-income affordable housing market segment. As on the date of filing of Prospectus, it has completed 5 projects.

It focuses on residential projects, which include residential building in townships, redevelopments, etc. mainly in affordable segments. Currently, VGIL has seven ongoing projects.

ISSUE DETAILS/CAPITAL HISTORY:
To meet its plans for working capital (Rs. 4.00 cr.) and general corpus fund (Rs. 0.66 cr.) needs, VGIL is coming out with a maiden IPO of 1756000 equity shares of Rs.10 each at a fixed price of Rs. 28 per share to mobilize Rs. 4.92 cr. The issue opens for subscription on September 30, 2020, and will close on October 09, 2020. The market is surprised for such a long duration for the IPO subscription period. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME platform.

Issue constitutes 27.02% of the post issue paid-up capital of the company. The company will be spending Rs. 0.26 cr. for this IPO process.

The issue is solely lead managed by Capitalsquare Advisors Pvt. Ltd. and Purva Sharegistry India Pvt. Ltd. is the registrar to the issue. Nikunj Stock Brokers Ltd. is acting as a Market Maker for this company. Having raised initial equity at par, the company raised further equity at a fixed price of Rs. 21 per share between March 2016 and January 2020.

The average cost of acquisition of shares by the promoters is Rs. 20.48, Rs. 20.70 and Rs. 21.00 per share. Post issue, VGIL's current paid up equity capital of Rs. 4.74 cr. will stand enhanced to Rs. 6.50 cr. With this IPO, the company is looking for a market cap of Rs. 18.19 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, on a consolidated basis, VGIL has posted turnover/net profits of Rs. 2.33 cr. / Rs. 0.04 cr. (FY18), Rs. 10.08 cr. / Rs. 0.12 cr. (FY19) and Rs. 8.63 cr. / Rs. 0.16 cr. (FY20). It has shown inconsistency in the top line.

For the last three fiscals, on a consolidated basis, VGIL has posted an average EPS of Rs. 0.52 and an average RoNW of 1.62%.

The issue is priced at a P/BV of 1.28 on the basis of its NAV of Rs. 21.89 as on March 31, 2020, and at a P/BV of 1.22 on the basis of post-issue NAV of Rs. 23.00.

If we attribute FY20 earnings (on a consolidated basis) on fully diluted post issue equity, then asking price is at a P/E of around 112 making it exorbitantly priced offer.

COMPARISION WITH LISTED PEERS:
As per offer documents, VGIL has shown Suratwwala Business and Kolte Patil as its listed peers. They are currently trading at a P/Es of around 32 and 00 (as on September 25, 2020). However, they are not strictly comparable on an apple to apple basis.

MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's performance front, this is the 3rd mandate from its stable in the last two fiscals (including the ongoing one). Out of last 2 listings, 1 opened at a discount and the rest at a premium of 0.04% on the day of listing. 


Conclusion / Investment Strategy

VGIL has posted average performance with the inconsistent top line. Based on P/E parameters, the issue is exorbitantly priced. This segment is currently witnessing subdued demand and slowdown due to COVID-19 pandemic. There is no harm in giving this IPO a "MISS".

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 26, 2020

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

Veer Global Infraconstruction IPO FAQs

  1. 1. Why Veer Global Infraconstruction IPO?

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

  2. 2. How is Veer Global Infraconstruction IPO?

    Read the Veer Global Infraconstruction IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Veer Global Infraconstruction IPO what should investors do?

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

  4. 4. Is Veer Global Infraconstruction IPO good?

    Our recommendation for Veer Global Infraconstruction IPO is to avoid.

  5. 5. Is Veer Global Infraconstruction IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Veer Global Infraconstruction IPO.

  6. 6. When will Veer Global Infraconstruction IPO allotment status?

    The Veer Global Infraconstruction IPO allotment status will be available on or around Oct 14, 2020. The allotted shares will be credited in demat account by Oct 16, 2020. Visit Veer Global Infraconstruction IPO allotment status to check.

  7. 7. When will Veer Global Infraconstruction IPO list?

    The Veer Global Infraconstruction IPO will list on Monday, October 19, 2020, at BSE SME.

1 Comments

Bull Riders
1. Bull Riders  Sep 27, 2020 12:08
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