Started in 2011, Uttar Pradesh based SBC Exports Limited is a trader of cushion covers, bedspreads, cotton quilts and handmade carpets in the Mirzapur. Initially, the company was only known for trading of good quality readymade apparels. Later, it had expanded its business in some other areas like tour & travels, manpower supply and information technology services. The company also started trading of hosiery fabrics & hosiery garments for Ladies, Mens' and Kids' in Mirzapur. SBC Exports Ltd operates primarily in three key segments: - Online & offline Hotel / Travel / Vacation Bookings- IT Services & Manpower supply and- Textiles, Garments trading including Carpets The company has two manufacturing plants located at Mirzapur and Ghaziabad in Uttar Pradesh. A variety of products such as Jackets, trousers, leggings, denim, T-shirts, and sweatshirts etc. are sold by the company under SBC DESIGN+, IEDEE, and SBC F-ROUTE brand names. It also has an online selling website www.frouteclothing.com and mobile APP to sell products online. The competitive strengths of the company are:. 1. Manufacturing units located near to the source of the raw materials. 2. Innovative product designing services.3. Varied product range4. Quality assurance 5. Diversified business model. On the financial performance front, SBC Exports has posted turnover/net profits of Rs. 21.16 cr. / Rs. 0.07 cr. (FY16), Rs. 28.69 cr. / Rs. 0.33 cr. (FY17), Rs. 64.21 cr. / Rs. 0.83 cr. (FY18). For upto Q3 of FY19, it has earned a net profit of Rs. 0.69 cr. on a turnover of Rs. 58.52 cr. So company has shown healthy growth over the years. Trade receivables for company in FY18 is around Rs 7.44 cr which is around 12% of total income and that's reasonable. Promoters are taking around 17 lacs as salary For last three fiscals, SBC Exports has posted an average EPS of Rs. 53.53 and an average RoNW of 52.44%. The issue is priced at a P/BV of 1.25 on the basis of its NAV of Rs. 22 post issue. If we annualise latest earnings and attribute it on fully diluted post issue equity than asking price is at P/E of 25 and as per FY18 earning P/E is 28, So this issue looks highly price. As per RHP, listed peers are shown in above table, but it can't be strictly comparable. On BRLM's front, for Navigant Corporate Advisors Ltd this is the 16th SME IPO. From last 10 IPOs, 2 opened below issue price and remaining above issue price with listing gains around 1% to 20%. Currently from last 10 IPOs, 4 are trading below issue price and remaining above issue price. ( As on 20.06.19 ) As per financials, company has shown growth, RoNW is 58.70% and issue looks highly priced with respect to latest earnings with P/E of 25. Company has diversified business and if company can maintain same growth over the next couple of years, than it may be good in next 2-3 years. Performance of BRLM is average, So we give NEUTRAL rating to this SME IPO.
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