Bizotic Commercial Limited

Indong Tea Company Limited incorporated in the year 1990, owns and operates a Tea Garden under Government lease and is engaged in Tea Plantation & Manufacturing of CTC Tea at Indong Tea Estate situated at Jalpaiguri District of West Bengal. The Indong Tea Estate is spread over an area of 740.38 Hectares which comprises of Tea Plantation, Tea Factory, Withering Trough House, Officer's Bunglows, Staff Quarters, Labour Quarters, Pump House, General Stores, Dairy Farm etc. Company has employed approximately 1346 employees at various levels of the Organization including temporary labour.   As per financial performance, Bizotic Commercial Limited has posted total income/net profits of Rs 11.14 Cr / Rs 0.16 Cr (FY20), Rs 16.8 Cr / Rs 0.34 Cr (FY21), Rs 53.42 Cr / Rs 0.6 Cr (FY22) and Rs 37.49 Cr / Rs 2.90 Cr (upto 9M FY23). So company has shown good growth, but exceptional rise in net-profit in IPO year is very surprising and generates doubts. Company has posted an average EPS of Rs 0.82 and average RoNW of 51.27% for last three fiscals. Issue is priced at a P/B of 15.38 as per NAV of Rs 15.38 as on 31.12.22. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 236 and as per annualised FY23 earnings P/E is 36. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Interactive Financial Services Limited associated with this SME IPO and handled 7 SME IPOs in last 2 years. From last 7 SME IPOs, 5 opened above issue price or at par and remaining below issue price on the listing day. As of now from last 7 IPOs, 5 are trading below and remaining are trading above issue price or at par. ( As on 08.06.23 ) As per financials, Bizotic Commercial Limited has shown good results, RoNW is 48.36% and P/E is respectively 236 and 36 as per FY22 and annualised FY23 earnings, which looks very aggressively priced. Sudden jump in next profit in IPO year and higher issue related expenses raises some doubts. Company is in business of readymade garments, which is very competitive and fragmented. Performance of BRLM is poor post listing. So we are giving AVOID rating to this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Sanjay Gupta
• 2 Sangita Aggarwala