Alkosign Limited

Alkosign Limited is engaged in manufacturing of visual presentation systems namely writing boards/display boards/notice boards of different types along with its associated accessories and stands used for these boards, school benches, desks and their accessories.The Company has purchased the business of M/s Alkosign Display Systems vide Purchase of Business Agreement dated March 20, 2020 entered into between M/s Alkosign Display Systems and Alkosign Private Limited. The Company manufacturing facility is well equipped with required facilities including machinery, other handling equipments to facilitate smooth manufacturing process and easy logistics. As on date, they have several designs in  product basket, which are marketed under various trademarks such as 'Alkosign', 'Sit and Study', 'Brainee', 'Glassy-BO', 'Ultra- EX', 'Ultra'. The company supplies products in around 22 states and is also moving ahead towards establishing its presence in the international market. The company has around 50 registered dealers. For e-retailing, the company has developed their own website and have tie-ups with e-commerce platforms in India and for the international market. The company has the biggest dedicated manufacturing unit with a production space of more than 5,00,000 sq. feet, for writing boards and display boards in India.. On the financial performance front, Alkosign Limited reported turnover/net profits (loss) of Rs 13.27 Cr / 0.66 Cr (FY20) and Rs 5.92 Cr / (0.64) Cr. (FY21). Very limited financial data is available as company is formed recently. For the last year, company has posted EPS of Rs. 10.86 and RoNW of 98.51%. The issue is priced at a P/BV of 1.84 based on its NAV of Rs 24.41 post issue. Trade receivables is around 38% of FY21 total revenue and debt is also high. As per FY21 earnings, on fully diluted equity post issue, IPO is priced at P/E of around 37, which looks aggressively priced. As per RHP, there is no listed peers.  On BRLM's front, Shreni Shares Private Limited associated with this SME IPO and handled 7 IPOs in last 2 years. From last 7 IPOs, two opened below issue price and remaining above issue price or at par. As of now from 7 IPOs, three are trading below and remaining is trading above issue price or at par. ( As on 13.01.22 ) For Alkosign Limited, very limited financial data is available and issue is priced at P/E of around 37 as per FY21 earnings on fully diluted equity post issue, which looks aggressively priced. Pandemic has badly affected this sector as schools and classes moved to online platforms and situation is still not normalised. Performance of BRLM is average after listing. So we give AVOID rating to this SME IPO.

• 1 Samir Narendra Shah 
• 2 Akshay Narendra Shah