Innovanna Thinklabs Limited

Started in 2015, Innovana Thinklabs Limited (Formerly known as PCVARK Software Limited) is Jaipur, Rajasthan based software and application development company. Innovana design, develop and maintain software systems and solutions, create new applications and enhance the functionality of their customers' existing software products. Company's product portfolio includes Ad-blocker, disk cleanup, space reviver, file opener and privacy protector etc. Innovana Thinklabs has developed number of utilities which are used in 13 different languages and over 126 countries. Innovana employs total of 84 employees (including permanent and on-call software professionals/technicians). On performance front, ITL has reported turnover/net profits of Rs.6.64 cr. / Rs. 0.59 cr. (FY16) and Rs. 15.77 cr. / Rs. 0.97 cr. (FY17). For Q1 of current fiscal, it has posted net profit of Rs. 0.28 crore on a turnover of Rs.5.39 crore. It has reported an average EPS of Rs. 5.28 and average RoNW of 61.67% on an equity base of Rs. 0.20 crore. Issue is priced at a P/BV of 3.03 on the basis of post issue NAV. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 25 plus against industry average of 18. Thus issue is priced aggressively. As per offer documents its peers are trading at a P/E ranging from 13 to 17. On merchant banker’s front, this is the 8th mandate from its stable. Last 7 IPOs have opened with a premium ranging from 4.5% to 20% on the offer price on the day of listings. As per financials, company's growth is good, RoNW is 61.67% for last two fiscals and issue is aggressively priced as per latest earnings. Company is working in software and application development domain, which is very competitive and issue is priced above industry highest valuations. Also company is started in 2015, so only for limited period financials and track record available, so we give AVOID rating to this SME IPO.

• 1 Mr. Chandan Garg
• 2 Mr. Kapil Garg