NOVATEOR RESEARCH LABORATORIES LIMITED

Started in 2011, Novateor Research Laboratories Limited is engaged in the development of novel personal care products that are intended to provide safe, easy and innovative approach to the existing traditional personal care solutions. At Novateor Research Facility, they develop products that could provide significant clinical as well as commercial advantage. The manufacturing facility located at Sanand Taluka, Ahmedabad District is well equipped with the state of the art building structure, machineries and technology. Through the semi-Automation of our manufacturing processes, they are able to reduce reliance on manual labours and raw materials wastage. The company is mainly known by its teeth whitening products which sold in the market under the brand name of SmiloShine. Their product range includes Whitening Toothbrush, Teeth Whitening Charcoal Gel Strips and Teeth Whitening Strips. Currently, the company have its presence only in Gujarat and Maharashtra. But they also sell their products online through Amazon, Flip-cart and Nykaa.com. The company is also planning to tie-up with multiple distributors, dentists and other modern retail for marketing, selling and branding their products. The total strength of manpower as on 31st March 2019 was 12 employees. As per the financial performance front, Novateor has posted turnover/net profits of Rs. 16.18 lakhs / Rs. - (0.30) lakhs (FY17), Rs. 11.33 lakhs / Rs. 0.09 lakhs (FY18) and Rs. 51.41 lakhs / Rs. 21.85 lakhs (FY19). Company has shown zig-zag results, but extra ordinary growth of FY19 very surprising.  For last three fiscals, Novateor has posted an average EPS of Rs. 0.37 and an average RoNW of 2.66%. The issue is priced at a P/BV of 1.35 on the basis of its NAV of Rs. 17.73 post issue. If we take FY19 earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 53, thus issue appears aggressively priced. Comparison between listed peers is shown in above table, but they are not strictly comparable. On BRLM's front, for First Overseas Private Limited this is the 14th IPO in last three fiscals and from last 10 IPOs, 5 opened below issue price and remaining opened above issue price with 0.05% to 25% premium on the day of listing. As of now, from last 10 IPOs, 9 are trading below issue price and remaining above issue price. ( As on 30.08.2019 ) Company has shown zig-zag results, RoNW is 2.66% for last three fiscals and issue looks aggressively priced with respect to latest earnings. Main concern is sudden rise in top-line and bottom-line in FY19. Performance of BRLM is not good. So we give AVOID rating to this SME IPO.

• 1 Mr. Navdeep Subhashbhai Mehta
• 2 Mrs. Tejal Navdeep Mehta