Dharni Capital Services Private Limited

Dharni Capital Services Limited was incorporated in 2015 in Bangalore, Karnataka. The Company offers diversified financial services such as Mutual Fund Distribution Services, Fixed Deposit Distribution Services, Real Estate Brokerage Services, Technical Consultancy and Outsourcing. They offer a technology enabled, comprehensive investment and financial services platform with end-to-end solutions critical for financial products distribution and presence across both online and offline channels. They are a growing Mutual Fund distributor in terms of commission and average asset under managements (AAUM) with a CAGR of 109% and 86% respectively for the three-year period ending Fiscal 2022. The increase in rate of commission is lesser as there was in increase in assets in Debt Mutual fund category, which have a lower commission percentage. They believe they have become an important interface between asset management companies ('AMCs') and Clients. Company is also empaneled as a Fixed Deposit Broker with pioneers like Shriram Transport Finance Limited, HDFC Limited, ICICI Home Finance Limited and PNB Housing Finance Limited. The company is one of the top distributors for Shriram Transport Finance company Limited in Karnataka since November 2020. The AUM of the Fixed Deposit Business has grown from nothing in FY 2019 to over 100 Crores as on March 31, 2022. As on January 06, 2023, The Company has employed 3 employees. As per financial performance, Dharni Capital Services Limited has posted total income/net profits of Rs 0.20 Cr / Rs 0.01Cr (FY20), Rs 2.55 Cr / Rs 0.15 Cr (FY21), Rs 14.69 Cr / Rs 0.97 Cr (FY22) and Rs 3.05 Cr / Rs 0.59 Cr (upto H1 FY23). So company has shown good results. Company has posted an average EPS of Rs 27.66 and average RoNW of 61.44% for last three fiscals. Issue is priced at a P/B of 3.05 as per NAV of Rs 6.56 post issue. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 42.18 and as per annualised FY23 earnings P/E is 34.68. As per RHP, comparison between listed peers are shown in above table. On BRLM's front, Srujan Alpha Capital Advisors LLP associated with this SME IPO and does not handled any SME IPOs in last three years. As per financials Dharni Capital Services Limited, has shown good results, RoNW is 42.60% and P/E is respectively 42.22 and 34.64 as per FY22 and annualised FY23 earnings, which looks aggressively priced. Company has shown good growth, but this field is very competitive and has good growth opportunity. BRLM has not handled any IPOs before. So we are giving AVOID rating to this IPO.

• 1 Mr. Hemant Dharnidharka
• 2 Mrs. Preeti Saraogi