DU Digital Technologies Limited

Started in 2007, DU DigitalTechnologies is engaged in the business of providing visa processing services to embassies of different countries. It acts as a human interface between the visa applicant and the technical visa processing unit. The company plays administrative and non-judgmental tasks related to visa application, digitalisation, document verification, and biometric data collection for customers. It offers various contractual services 1. accepts documents on behalf of the Ministry, 2. attestation services, 3. collecting fingerprints, facial photos, retina scans, etc. It further provides many value-added services i.e. premium lounge, prime time application, mobile biometrics, SMS alert, and courier services. The company has Visa Application Centers (VACs) in Delhi, Kolkata, Bangalore, Mumbai and also partnered with VFS Global Services Ltd to provide processing support services in Ahmedabad, Chandigarh, Chennai, Cochin, Jalandhar, Hyderabad, Pune, Gurgaon, Jaipur, and Goa. On the financial performance front, DU Digital reported turnover/net profits (loss) of Rs. 37.48 cr./ 0.71 cr. (FY19), Rs. 32.06 cr. / Rs. (0.24) cr. (FY20) and Rs. 2.27 Cr. / Rs. 0.11 Cr. (FY21). So company has shown huge down trend and its due to current pandemic situation. For the last three years, company has posted average EPS of Rs. 0.67 and RoNW of 5.13%. The issue is priced at a P/BV of 2.59 based on its NAVs of Rs. 25.14 post issue. As per FY21 earnings and on post issue equity, IPO is valued at P/E of around 160, which looks very aggressively priced. Comparison between listed peers is shown in above table. On BRLM's front Hem Securities Limited has handled 30 IPOs in last five fiscals. From last 10 IPOs, all opened at par or above issue price. As of now from 10 IPOs, 2 are trading below and remaining are trading above issue price. ( As on 10.08.21 ) For DU Digital, financials are declining due to current pandemic, RoNW is 7.28%, P/E is around 160 for FY21 earnings and P/BV is 2.59. So issue looks aggressively priced as per current earnings, but with easing conditions business will normalise and revenue will go near to pre pandemic level. Performance of BRLM is good. So we give NEUTRAL rating to this SME IPO.

• 1 Mr. Rajinder Rai