Grill Splendour Services Private Limited is a chain of gourmet Bakery and Patisserie spread across Mumbai through 17 retail stores, a centralized production facility and multiple corporate clients. Out of these 17 retail stores, 5 stores are running under the franchisee model (franchisee owned, and company operated) and rest 12 stores are owned by company. They offer fresh food products from traditional to ‘made to order’ as required by the Customers. Both the Promoters individually have 30+ years of experience in Hospitality industry. Grill Splendour Services Private Limited was incorporated in November 2019 as a hospitality company to acquire the bakery and confectionary business along with brand Birdy’s Bakery and Patisserie from WAH Restaurants Private Limited. The acquisition was done via a Business Transfer and Intellectual Property Assignment Agreement dated December 27, 2019 (Acquisition Agreement). After that the company proceeded to invest in the business and grow the brand and spread presence. The company plans to spend around 5% of its revenues on marketing and promotion. This would be predominantly done in the digital world in addition to influencers. Customers love to visit brands that are popular and have a good vibe. Hence, they need to build the brands. Since the roll out is aggressive, they will not have the luxury of organic growth and will need to support growth with promotion and brand building. As per financial performance, Greenhitech Ventures Limited has posted total income / net profits of Rs 8.25 Cr / Rs (0.03) Cr (FY21), Rs 11.52 Cr / Rs 0.03 Cr (FY22), Rs 15.31 Cr / Rs 1.99 Cr (FY23) and Rs 8.85 Cr / Rs 0.61 Cr (upto 30.11.23 FY24). So as per previous financials data, company has shown good growth, but sudden increase in net profit, just before IPO generates doubts. Issue is priced at a P/BV of 2.81 as per NAV of 42.65 as on post issue. 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 1806.31, 31.39 and 67.58 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Inventure Merchant Banker Services Private Limited is associated with this SME IPO and handled 8 SME IPOs in last 3 year. From last 8 SME IPOs, three opened below issue price and remaining opened above issue price or at par on the day of listing. As of now from last 8 SME IPOs, All are trading below issue price. ( As on 10.04.24 ) As per financials, Greenhitech Ventures Limited has shown good growth, RoNW is 99.16% and P/E is respectively 1806.31, 31.39 and 67.58 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced and sudden rise in net-profit is very surprising. Company is in business of gourmet Bakery and Patisserie spread across Mumbai through 17 retail stores, which is highly competitive and fragmented segment. Performance of BRLM is average. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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