Parin Furniture Limited

Started in 2006, Parin Furniture Limited is Rajkot - Gujarat based company in business of wide and exclusive range of furniture and lifestyle products. The product portfolio of company offers diversified product range which includes variety of furniture like home furniture, office furniture, hospital furniture, institutional furniture and education furniture. The business network of Parin Furniture is spread in 18 States. Company has COCO Flagship Retail Stores in Ahmedabad, Rajkot and Mumbai and around 900 dealers associated with them. It has 4 warehouses in Rajkot, Surat, Mumbai, and Kolkata. Company has also entered into franchise agreements with other companies in Junagadh, Mehsana, and Hyderabad for Retail showrooms. The Subsidiary Company namely Pearl Furniture Private Limited has manufacturing unit located at Rajkot, having high tech equipments and design facility to manufacture various combination and size of products as per specification and needs of the customers. It is equipped with all facilities to execute all types of manufacturing activities such as panel cutting, edge bidding, post forming, painting line, fabrication, moulding, cutting and polishing & packaging, etc. As on July 31, 2018, company has 137 employees. As per the financial performance, PFL has posted turnover/net profits of Rs. 30.03 cr. / Rs. 0.61 cr. (FY14), Rs. 28.76 cr. / Rs. 0.28 cr. (FY15), Rs. 61.78 cr. / Rs. 1.02 cr. (FY16), Rs. 59.94 cr. / Rs. 1.36 cr. (FY17) and Rs. 64.59 cr. / Rs. 2.62 cr. (FY18). Top-line for last three fiscals remained almost similar, but bottom line increased significantly in FY18, which is surprising. Trade receivables are above 25% of total revenue in last three fiscals. Issue is priced at a P/BV of 2.04 on the basis of its NAV of Rs. 30.92 post issue at higher price band. For last three fiscals, it has posted an average EPS of Rs. 3.56 and an average RoNW of 20.41%. If we take into account latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 26.76 and as per RHP industry average P/E is 29. So issue looks fully priced. On BRLM's front, for Hem Securities Limited this is the 32nd IPO in last three fiscals and from last 10 IPOs, two opened below issue price and other listed with 1% to 20% premium on the day of listing. As of now, from last 10 IPOs, 6 are trading below issue price and remaining above issue price. ( As on 19.09.18 ) As per financials, company's performance is almost static in top line and sudden increase in bottom line for FY18, RoNW is 20.41% for last three fiscal and issue is fully priced as per latest earnings. Also company faces strong competition from unorganised local players as well as other private players. Performance of BRLM is poor after listing. So we give AVOID rating to this SME IPO as per current market situation.

• 1 Mr. Umesh Dhirajlal Nandani
• 2 Mr. Deven Dipesh Nandani
• 3 Mr. Parin Umeshbhai Nandani