Debock Sales and Marketing Limited

Started in 2008, Debock Sales and Marketing Limited, is Jaipur - Rajasthan based Company, engaged in the business of manufacturing and trading of agricultural equipment. Company is manufacturer and suppliers of range of agricultural equipment mainly Tractor Trolley, Agricultural Thresher, Mould Board Ploughs, Mounted Disc Ploughs, Tillers, Tanker, Combine Machine, Seed Drill Machine, Mounted Disc Harrows, Tractor Cultivators, Chaff Cutters etc.  Company is also engaged in the hospitality services and opened a class hotel (Hotel Debock Inn) in July 2015 at Deoli in Tonk Districton NH -12 in July 2015. In this regard the Company entered into a MOU with Rajasthan Government. Company's manufacturing facilities are located at Panwad Mod, NH-12, Gopipura Post, Deoli, Tonk Rajasthan. As on the date of this Prospectus, company has nine employees on payroll in the registered office, there are two permanent employees in the factory apart from the hired labour as per the requirement and there are eight employees in hotel segment. As per DRHP, there are a number of cases registered against promoter of company. As per financial performance, DSML has posted total revenue/net profits of Rs. 4.09 cr. / Rs. 0.02 cr. (FY15), Rs. 10.27 cr. / Rs. - (0.02) cr. (FY16) and Rs. 16.15 cr. / Rs. 0.51 cr. (FY17). For upto Q3 of the FY18 it has earned net profit of Rs. 0.27 cr. on a turnover of Rs. 7.71 cr. So company has shown improvement in top-line, but bottom-line remain zigzag. For last three fiscals it has posted an average EPS of Rs. 5.76 and an average RoNW of 16.23%. The issue is priced at a P/BV of 0.74 on the basis of post issue NAV of Rs. 27.05. If we annualise latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 45. As per offer documents, industry average P/E is 84. But, issue looks expensive as per latest earnings.  On BRLM's front, for Gretex Corporate Services Pvt Ltd, this is the 12th IPO since last three fiscals and out of recent 10 listings, 3 listed below issue price, 3 at par and remaining with 1% to 10% premium on the day of listing. As of now from last 10 IPOs, only 3 are trading above issue price and remaining below issue price. So track record of BRLM is very poor. As per financials, company's performance is not so good, RoNW is 16.23% and issue is highly priced as per latest earnings. So we give AVOID rating to this SME IPO as per current market situation.

• 1 Mr Mukesh Manveer Singh