Safa Systems & Technologies Limited

Established on 2012, Safa Systems & Technologies Limited is engaged in the business of distributorship of consumer durable products like Mobile phones, Mobile phone accessories, Tablets, LED TVs, Home appliances and wearable devises of various brands like Xiaomi, OPPO, TECNO, Micromax, One Plus in Kerala. The company works in B2B (Business to Business) model. The company has been also awarded with ISO 9001:2015 quality certifications, for the assessment of their Quality Management System and found to conform to the requirement of ISO 9001:2015 for the scope of provisions of Marketing, trading and Distribution of -TV, Mobile Phones, Mobile Phone Accessories, Home Appliances, Tablets, and IT enable products. The range of products which they deal as on date includes Telecommunication devices, Accessories, LED television, Tablets, Internet of Things Products, Home appliances, etc. The Company is one of the key distributors of Electronic Products and accessories in Kerala. Presently the Company has its distributorship agreement with the reputed Brands like Xiaomi, OPPO, TECNO, Micromax, One Plus for distribution of the Smartphones, LED TV and accessories in the State of Kerala. As per financial performance, SSTL has posted total income/net profits of Rs 255.74 Cr / Rs 0.36 Cr (FY19), Rs 255.22 Cr / Rs 0.31 Cr (FY20), Rs 208.66 Cr / Rs 0.29 Cr (FY21) and Rs 145.91 Cr / Rs 0.27 Cr (upto 07.10.21 FY22). So company has shown average results last couple of years. Company has posted an average EPS of Rs [ . ] and average RoNW of 3.70% for last three fiscals. Issue is priced at a P/B of 1 as per NAV of Rs 10.00 post issue. As Per FY21 earnings on fully diluted equity post issue, asking price is at P/E of around 51.46 and as per annualised FY22 earnings P/E is 29. As per RHP there are no listed peers.     On BRLM's front, Finshore Management Services Limited associated with this SME IPO and handled 19 IPOs in last 3 years. From last 10 IPOs, two opened below issue price and remaining above issue price or at par. As of now from last 10 IPOs, six are trading below and remaining is trading above issue price or at par. ( As on 20.01.22 ) As per financials, SSTL has shown exceptional financials, RoNW is  3.48% and P/E is respectively 51 and 29 as per FY21 and annualised FY22 earnings, which looks aggressively priced. Performance of BRLM is poor post listing. So we are giving AVOID rating to this IPO.

• 1 Mr. Faizal Bavaraparambil Abdul Khader
• 2 Mr. Bavaraparambil  Abdhulkadher Hydrose