Crayons Advertising Limited is Integrated marketing and communications agency, providing 360 degree solutions to its wide array clients. Wide area of scope of work being offered and provided by Crayons to its clients make it is one of the few agencies that can truly claim to be a fully integrated and independent in providing the marketing and communications solutions. They provide high-end ecosystem and end-to-end ad-tech communication solutions platform for advertising media services consisting of Brand Strategy, Events, Digital Media, Print Media, Outdoor (OOH) Media services which covers advertisement modes such as Newspapers, Brochures, Magazines, Television Channels, FM channels and display of Outdoor Hoardings, etc. Company prefers to speak with the people in the language they think in and the results are always outstanding. They consider this as a success recipe, indeed it has helped them to create some very effective campaigns for both the Government of India as well as the private sector. Some of their notable campaigns are 'Desh Ki Mitti' for Kajaria, 'Wings of Change' for TATA Air India and the global launch of the 'Incredible India' campaign. Apart from being seared into the minds of the public, the campaigns have also won them several accolades such as the Montreux Awards in Switzerland, Gold Aster Award in New York and Bronze at IPA awards London among numerous others. Company offers following services:A. BRAND STRATEGYB. CREATIVEC. MEDIAD. EVENTS Some of the marque clients of company are Kajaria Ply, Lotto Shoes, Nayati, Kohinoor Foods Limited, Leela, Fortis, Casio, SBI, Air India, LIC, Delhi Police, etc. As on date of RHP, company has the total strength of 188 in various departments. As per financial performance, Crayons Advertising Limited has posted total income/net profits of Rs 163.68 Cr / Rs 1.17 Cr (FY20), Rs 106.61 Cr / Rs 0.13 Cr (FY21), Rs 194.05 Cr / Rs 1.61 Cr (FY22) and Rs 203.75 Cr / Rs 12.67 Cr (upto 9M FY23), So company has shown good growth and able to beat its pre-covid earnings, but sudden jump in net profit just before IPO generates doubts. Company has posted an average EPS of Rs 0.58/- and average RoNW of 2.82% for last three fiscals. Issue is priced at a P/BV of 2.34 as per NAV of Rs 27.73/- as on 31.12.22. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 98.4 and as per annualised FY23 earnings P/E is 9.4. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Corporate Capital Ventures Private Limited is associated with this SME IPO and handled 6 SME IPOs in last 2 years. From last 6 SME IPOs, 4 opened above issue price or at par and remaining opened below issue price on the listing day. As of now from last 6 IPOs, 2 are trading below and remaining are trading above issue price or at par. ( As on 17.05.2023) As Per financials, Crayons Advertising Limited has shown good results, RoNW is 4.3% and P/E is respectively 98.4 and 9.4 as per FY22 and annualised FY23 earnings, which looks aggressively priced, also sudden rise in net-profit in just before IPO raises concerns. Company is in advertising business and its highly competitive, but also there is huge growth opportunity. Performance of BRLM is average. So we are giving SUBSCRIBE rating to this SME IPO, but SME IPOs are very risky in nature due to limited clients.
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