CRP Risk Management Ltd

Started in 2000, CRP Risk Management Limited is Mumbai-based risk management and risk mitigation enterprise. CRP Risk verifies critical information for large and mid-sized corporate. Company initially offered services related to Employee Background checks & Credit Verification agency and later becomes an integrated risk mitigation solutions company with professional management team and international best practices. CRP Risk Management business portfolio is segmented in 3 verticals:1. BFSI (Corporate) related verification i.e. Retail & Corporate loans, claims investigation2. Retail KYP check for verity of services including domestic help, Drivers, Electrician etc.3. Veterinary Division - Poultry feed enzymes, Animal & Fish Food and Other related products. On financial performance front, CRP has reported total revenues/net profits of Rs. 76.80 cr. / Rs. 4.46 cr. (FY13), Rs. 98.75 cr. / Rs. 5.12 cr. (FY14), Rs. 92.31 cr. / Rs. 4.21 cr. (FY15), Rs. 74.71 cr. / Rs. 1.78 cr. (FY16) and Rs. 82.11 cr. / Rs. 5.05 cr. (FY17). It has suffered a severe setback for FY16 in top and bottom lines. For first four months of the current fiscal ended on 31.07.18 it has posted net profit of Rs.1.64 crore on total revenues of Rs. 24.59 cr. The company has reported an average EPS of Rs. 2.94 and an average RoNW of 14.20% for last three fiscals on the basis of equity capital of Rs. 6.50 crore. Issue is priced at a P/BV of 2.51 on the basis of its NAV as on 31.07.18 and at a P/BV of 1.86 on the basis of its post issue NAV of Rs. 32.30. If we annualise latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 21 plus. According to offer documents, it has no listed peers to compare with. Company has preferred to give current financial performance for only four months instead of first half. Issue appears fully priced as per latest earnings. On merchant banker's front, this is the 6th mandate from its stable and out of last five listings 1 opened at par 2 at a premium ranging from 1.5% to 2% and 2 at 20% premium to offer price on the day of listing. As per financials, top line is in decreasing mode since FY14 and bottom line has shown zigzag effect, RoNW is 14.20% for last three fiscals and issue is fully priced as per latest earnings. So we give NEUTRAL rating to this SME IPO.

• 1 Mr Hitesh Asrani