Pune E - Stock Broking Limited (PESB) primarily offers platform to its clients for execution of trades (Equity, Futures & Options, Currency, and Commodity) with the Stock Exchange (NSE, BSE, MCX) through CTCL (Computer to Computer Link) Terminals, Web Interface & Mobile App (Android & iOS). Along with stock broking services, company also offers ancillary services like Margin Trading Facility, Depository Accounts, Fixed Deposit & Mutual Fund Distribution. Company’s client base includes Authorised Persons (spread across 10+ Cities) as well as Direct Clients. Total count of client was 60,640 as of March 2023. The company has 2 branch offices in Ahemdabad & Delhi. Company’s business from Authorised Persons (AP) involves registration of the AP as per the requirements of SEBI & Stock Exchanges. The AP brings clients by offering all the required services like account opening, KYC, trade execution, query resolution & client servicing at his own costs. AP decides the amount of brokerage to be charged for the clients during the account opening process & based on the defined slab rates, brokerage gets charged to client at every trade. PESB retains a fixed portion of that brokerage for offering the infrastructure & back-end support. Thus, collection of all the brokerage is done by PESB accounted as Revenue from operations & it disburses the sub-brokerage on a monthly basis to the APs accounted as Expenses. Company is also engaged in proprietary trading which is currently 0.1% of total turnover of the company & Algorithm based trading, whereby company needs to have margin from the exchanges in F&O segment which requires company to place its fund as collateral in the form of Fixed Deposits with the exchanges. Banks provide double exposure against such Fixed Deposits created with the Banks. As per financial performance, Pune E-Stock Broking Limited has posted total income / net profits of Rs 34.75 Cr / Rs 6.50 Cr (FY21), Rs 46.66 Cr / Rs 10.12 Cr (FY22), Rs 41.03 Cr / Rs 9.65 Cr (FY23) and Rs 30.11 Cr / Rs 6.11 Cr (upto Q2 FY24). So as per previous financials data, company has shown good results. Company has posted an average EPS of Rs 7.81 and average RoNW of 13.16% for last three fiscals. Issue is priced at a P/BV of 1.11 as per NAV of 74.79 as on 30.09.2023. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 12.84, 13.87 and 10.64 respectively, which looks fairly priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Share India Capital Services Private Limited is associated with this SME IPO and handled 8 SME IPOs in last 1 year. From last 8 IPOs, all are opened above or at par issue price on the day of listing. As of now from last 8 IPOs, all are trading above or at par issue price. ( As on 29.02.24 ) As per financials, Pune E-Stock Broking Limited has shown good results, RoNW is 12.60% and P/E is respectively 12.84, 13.87 and 10.64 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced. Company is in business of stock broking and related services, which is highly competitive and fragmented segment. Segment is expected to show good growth. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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