Homesfy Realty Limited

Homesfy Realty Limited was incorporated on May 06 2011, headquartered in Thane, Maharashtra. They are engaged in providing real estate broking services to Real Estate Developers, retail buyers/sellers and investors for residential and commercial space. They deal in new constructed properties, whereby they assist the Real Estate Developers in selling and potential customers in purchasing the properties. They operate business through direct selling from in-house sales team and Direct Selling Agent listed on mymagnet platform for referral services. Company runs its brokerage business in name of Homesfy and is well partnered by mymagnet platform. They have more than 9 years of experience of enabling housing transactions through Homesfy. Currently they generate 80% of revenue via direct selling and remaining 20% via mymagnet platform. Their business model is defined by the majority of the revenue generated by the In-house team at Homesfy and rest though mymagnet tech based platform.  Company has established and currently maintain a network of 7 offices located in 4 cities, Mumbai, Pune, Noida and Bangalore, which primarily engage in sales, marketing and payment collection activities for the business. Company had a total of 380 employees as on October, 2022 on their payroll. As per financial performance, HomesFY has posted total income/net profits of Rs 11.93 Cr / Rs 0.91 Cr (FY20), Rs 14.76 Cr / Rs 1.99 Cr  (FY21), Rs 30.40 Cr / Rs 3.18 Cr (FY22) and Rs 12.39 Cr / Rs 1.39 Cr (Q1 FY 23). So company has shown good results with growth. Company has posted an average EPS of Rs 481.62 and average RoNW of 30.32% for last three fiscals. But trade receivables are around 23% of total income in FY22, which is very high. Issue is priced at a P/B of 1.74 as per NAV of Rs 113.17 post issue. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 18.90 and as per annualised FY23 earnings P/E is 10.86. There are no listed peers as per RHP. On BRLM's front, Sarthi Capital Advisor Private Limited is associated with this SME IPO and handled 46 SME IPOs in last 10 years. From last 10 IPOs, two IPOs opened issue below price and remaining issue above or at par. As of now from last 10 IPOs, six are trading below and remaining are trading above issue price or at par. ( As on 16.12.22 ) As per financials, HomesFY has shown good results, RoNW is 33.37% and P/E is respectively 18.90 and 10.86 as per FY22 and annualised FY23 earnings, which looks fairly priced. But higher trade receivables is matter of concern. Company is in business of real estate broking. As we expect Good growth in real estate sector and so such companies may show good growth, but broking business is highly competitive. Also performance of BRLM is not good. So we are giving NEUTRAL rating to this IPO.

• 1 Mr. Ashish Kukreja