Started in 1990, Roopshri Resorts Limited is a Mumbai based company engaged in hospitality services. The company operates Hotel Alexander at Matheran, a hill station near Mumbai. This property is in the category of heritage living with nature. The Hotel Alexander is taken on lease and license through a one-time refundable security deposit by the company. The company doesn't pay any rentals or license fees to the hotel owners. Hotel Alexander is one of the oldest hotels in Matheran. It has 13 private cottage rooms and 12 executive rooms of which only 4 private cottage rooms are in operational condition. The hotel offers lodging facilities only. The property is almost 3.75 acres in size. The less than half acres are currently being used for the hotel facilities. With the fund received from the IPO, the company is planning to renovate the property. The company is also looking for similar opportunities at other locations. The company has a net worth (promoter's fund) of Rs 4 Cr and debt of Rs 1.57 Cr as on October 31, 2018. The company proposes to repay the debt of Rs 1.50 Cr from the proceeds of the IPO. This will make the company almost debt free. The competitive strengths of the company are:1. The hotel is located at Matheran hill station2. Large hotel property size3. Experienced promoters. On the financial performance front, Roopshri has posted turnover/net profits of Rs. 0.37 lakhs / Rs. 0.02 lakhs (FY16), Rs. 0.41 lakhs / Rs. 0.02 lakhs (FY17), Rs. 1.43 lakhs / Rs. 0.10 lakhs (FY18). For the 31.10.18 of FY19, it has earned a net profit of Rs. 0.08 lakhs on a turnover of Rs. 1.94 lakhs. For last three fiscals, Roopshri has posted (on a consolidated basis) an average EPS of Rs. 0.02 and an average RoNW of 9.33%. The issue is priced at a P/BV of 1.50 on the basis of its NAV of Rs. 15.83 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 7400 thus issue appears very highly priced. Comparison with listed peers is given in above table. On BRLM's front, for BCB Brokerage Pvt Ltd this is the 2nd SME IPO. For Aryaman Financial Services limited this is the 41st IPO in last three fiscals. From last 10 IPOs, 1 at below issue price and remaining above issue price with around 2% above issue price at max. As of now, from last 10 IPOs, 1 is trading below issue price and remaining above issue price with gain of around 0 - 63%. ( As on 18.03.19 ) Company has very poor financials, RoNW is 9.33% and issue looks very highly priced with respect to current earnings. So we give AVOID rating to this SME IPO.
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