Started in 2012, Lex Nimble Solutions Ltd is engaged in business of Appraisal Advisory, Certification, training and related services on quality models, IT product and development and services. The Company is a subsidiary of Lex Nimble Solutions Inc., USA that holds 97.81% stake in the company. The major revenue streams are:i. IT application development, maintenance and support: Company offers back office support in developing customer centric applications along with maintenance and support services.ii. Development and maintenance of portals and mobile applications: Company offers support in developing and maintaining enterprise information portals or corporate portals. It also develops location aware mobile solutions.iii. Corporate training: Its corporate training and consulting revolves around the certification process. Company's customised training includes understanding client specific needs and training them.iv. Consulting: Company has done several assignments in the areas of Quality management system implementation, Six sigma implementation, Information security consulting, Security testing related assignments. The Company now plans to explore new opportunities in the field of ISO certification, CMMI consulting and Introduction of SimpleLaw in the Indian market. On financial performance front, LNSL has reported turnover/net profits of Rs. 1.27 cr. / Rs. 0.07 cr. (FY13), Rs. 2.19 cr. / Rs. 0.11 cr. (FY14), Rs. 1.42 cr. / Rs. 0.12 cr. (FY15), Rs. 1.43 cr. / Rs. 0.12 cr. (FY16) and Rs. 1.74 cr. / Rs. 0.05 cr. (FY17). So it shows zigzag performance in top-line, and bottom line has almost remained static from FY14 to FY16. In FY 17 it has posted lower net profits. For last three fiscals it has reported an average EPS of Rs. 1.86 and an average RoNW of 2% on an equity base of Rs. 0.51 crore. Issue is priced at a P/BV of 3.51 on the basis of its NAV of Rs. 16.24 as on 31.10.17 and at a P/BV of 2.47 on the basis of its post issue NAV of Rs. 23.06. For the period ended on 31.10.17 of the current fiscal, it has earned net profit of Rs. 0.12 cr. on a turnover of Rs.1.01 cr. If we annualise latest earnings and calculate P/E on fully diluted equity post issue then its around 114, which is very high. As per offer documents, its listed peers are trading at a P/E of around 28 (Excel Realty), 1071 (Intrasoft Techno) and 280 (HOV) as on 01.03.18. All these are not fully comparable as the business line is not the same. Industry composite P/E is around 22. So issue is very highly priced. On merchant banker's front, this is the 2nd IPO and the only listing so far of Blueblood Ventures opened at a premium of 2% on the day of listing. As per financials, company's performance is zigzag, RoNW is 2% for last three fiscals and issue is very aggressively priced as per latest earnings. Company is in service industry and its business model is good. There is very much opportunities for growth, but issue is too highly priced. So we give AVOID rating to this SME IPO.
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