Incorporated in 2012, Northern Spirits Limited (NSL) a New Delhi based Importer & Distributor of fine Alcoholic Beverages Company. The company is involved in the distribution of Whisky, Vodka, GIN, Red and white wine, Beer, tequila etc. in Northern Region - Delhi, North East, and West Bengal. Northern Spirits achieved 40% annual business growth in four years. Company imports and distribute leading alcohol brands such as William Grants, Bacardi Global,Shepherd Neame Beer, Carlo Rossi California Wines, and Cooper's Australian Beer. The company also imports exotic blends along with its Agency Brands and Franchisee Ownership for some class-apart liquors. Northern Spirits have collaboration with South State Beverage, Australia for manufacturing and supply of DNA Branded Alcoholic Beverages. Further, the company is planning to enhance the business and grab the high growth opportunities for the foreseeable future in the foreign liquor industry. The competitive strengthens of the company are: 1. Own infrastructure and third-party warehouse2. Sound knowledge of the market in identifying opportunities3. Quality focused products4. Strong market skills and relationships On the financial performance front, Northern has posted turnover/net profits of Rs. 3.40 cr. / Rs. 0.51 cr. (FY16), Rs. Rs. 17.36 cr. / Rs. 0.53 cr. (FY17), Rs. 25.89 cr. / Rs. 1.01 cr. (FY18). For the H1 of FY19, it has earned a net profit of Rs. 2.75 cr. on a turnover of Rs. 48.66 cr. Since FY17, company has seen exponential rise in top-line and bottom-line. Trade receivables for company in FY18 is around 8.30 Cr which is around 32% of total income. Northern has posted an average EPS of Rs. 10.94 and an average RoNW of 17.95%. The issue is priced at a P/BV of 1.50 on the basis of its NAV of Rs. 28.66 as on 30.09.18 and at a P/BV of 1.36 on the basis of post issue NAV of Rs 31.70 post issue. If we annualise latest earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 12.54 thus issue appears fully priced and if we take FY18 earnings, then P/E is around 68. Comparison with listed peers is given in above table. On BRLM's front, for Finshore Management Services Limited this is the 10th SME IPO. From last nine IPOs, 3 opened below issue price and remaining above issue price with listing gains around 1% - 20% listing gains. Currently from last nice IPOs 4 are trading below issue price and remaining above issue price. ( As on 19.03.19 ) Company has shown good results, RoNW is 17.95% and issue looks fully priced with respect to current earnings. As per the latest result trends, it's expected this rising trend will continue and performance of BRLM is poor. So we give NEUTRAL rating to this SME IPO.
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