HRH Next Services Limited

HRH Next Services Limited is engaged in Business Process Outsourcing (BPO), offering a comprehensive suite of Call Centre Services, covering Inbound Services, Outbound Services, Backend Support, Chat Support, Email Support and more. The specialty is in providing efficient end-to-end solutions to the clients. They customise the top-notch solutions to meet specific business needs, helping the clients achieve their objectives. The company has been in the current line of business for more than a decade and the client lists include various Telecom, Foodtech, Autotech, E-Commerce, Fintech, Education, Healthcare, Government, Banking etc. Also, they help the clients with the Call Centre Services to provide a comprehensive range of services across all industry sectors to clients who are in need of special assistance. Company currently operates call centres at 7 locations and proposing to set up 2 more with seating capacity of 150 each in Kerala and Karnataka. The major clients include Foodtech and Autotech. The company has also entered into service agreements with them for providing services.  As per financial performance, HRH Next Services Limited has posted total income / net profits of Rs 24.24 Cr / Rs 0.25 Cr (FY21), Rs 44.28 Cr / Rs 0.93 Cr (FY22), Rs 51.25 Cr / Rs 3.48 Cr (FY23) and Rs 21.53 Cr / Rs 1.51 Cr (upto Q2 FY24). So as per previous financials data, company has shown good growth, but sudden rise in net-profit just before IPO is very surprising. Company has posted an average EPS of Rs 3.37 and average RoNW of 21.79% for last three fiscals. Issue is priced at a P/BV of 1.56 as per NAV of 23.11 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 35.63, 9.53 and 10.99 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table.> On BRLM's front, Finshore Management Services Limited is associated with this SME IPO and handled 23 SME IPOs in last 3 years. From last 10 IPOs, three are opened below issue price and remaining are opened above issue price or at par on the day of listing. As of now from last 10 IPOs, five are trading below issue price and remaining are trading above issue price. ( As on 22.12.23 ) As per financials, HRH Next Services Limited has shown good growth, RoNW is 33.29% and P/E is respectively 35.63, 9.53 and 10.99 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced, and company want to open more call centres using IPO money. But sudden jump in net-profit and higher issue expenses are very surprising. Company is in business of BPO, which is highly competitive and fragmented segment. Performance of BRLM is average. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Ankit Sanjay Shah
• 2 Parikshit Pankaj Shah
• 3 Tara Sanjay Shah