Fonebox Retail Limited is engaged in multi-brand retail selling of Smart Phones and allied accessories from manufacturers like Vivo, Apple, Samsung, Oppo, Realme, Nokia, Narzo, Redmi, Motorola, LG and Micromax. They are also engaged in multi-brand retail selling of consumer durable electronics goods like Laptop, Washing Machines, Smart TVs, Air Conditioners, Fridges, etc. from brands like TCL, Haier, Lloyd, Daikin, Voltas, Mi, Realme, OnePlus. They operate the retail business with multiple brands. They have a portfolio of retail stores with different brands. They initially started the business operations with brand 'Fonebox', for the company owned stores as well as franchise stores. Further, they acquired famous mobile phone retail store brands such as 'Fonebook' and 'My Mobile' vide Business Purchase agreements from their respective owners in the year 2021. Over the years they have grown the operations by multile stores acqusitions. They acquired business of other shops operating under their respective registered / unregistered brands in Financial years 2022. The Company provides credit/EMI facilities to customers for buying the products for which the company has tied up with major leading credit houses like Bajaj Finance, HDB Financial Service, HDFC Bank and IDFC First Bank. The Company in order to continue relationship with the valuable customers, they also provide after sale services related to mobile handsets and tablets in the own retail and franchisee outlets. They mainly operate under the brand name of fonebook and fonebox. As on January 05, 2024 they operate from total 143 stores across the state of Gujarat. Out of 143 stores 39 stores are Company Owned and Company Operated retail outlets ('COCO Model') and 104 stores are under Franchise Owned and Company Operated retail model ('FOCO Model') distributed in more than 20 cities in Gujarat. As per financial performance, Fonebox Retail Limited has posted total income / net profits of Rs 0.10 Cr / Rs (0.02) Cr (FY21), Rs 90.92 Cr / Rs 0.13 Cr (FY22), Rs 196.26 Cr / Rs 1.60 Cr (FY23) and Rs 140.23 Cr / Rs 1.55 Cr (upto Q2 FY24). So as per previous financials data, company has shown good growth, but sudden rise in net profit just before IPO raises doubts and also cash flow of company is negative, which is big negative for such companies. Company has posted an average EPS of Rs 1.23 and average RoNW of 41.97% for last three fiscals. Issue is priced at a P/BV of 5.61 as per NAV of 12.47 as on 30.09.23. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 565.51, 44.92 and 23.14 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Beeline Capital Advisors Pvt Ltd is associated with this SME IPO and handled 26 SME IPOs in last 2 year. From last 13 IPOs, all are opened above issue price or at par on the day of listing. As of now from last 13 IPOs, two are trading below issue price and remaining are trading above issue price. ( As on 19.01.24 ) As per financials, Fonebox Retail Limited has shown average results, RoNW is 76.15% and P/E is respectively 565.51, 44.92 and 23.14 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced. Also sudden rise in net profit just before IPO and continuous negative cash flow raises doubts. Company is in business of multi-brand retail selling of Smart Phones and allied accessories, which is highly competitive and unorganised segment. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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