SecUR Credentials Ltd is engaged in the business of Background Screening (also known as BGC - Background Check) and Due Diligen. They are one of the very few India-based BGC companies who provides end-to-end screening services to various corporates in the country. They offers background screening services for organisations not just in India, but across the globe through their NAPBS connections and provided their service in countries such as US, UK, Philippines and Srilanka Company is headquartered in Andheri, Mumbai, with branch offices in Mumbai, Delhi, Bengaluru, Hyderabad and Chandigarh. They covers every PIN code of the country through their intricate hub and spoke model, which multiplies the geographies they cover through the the branch offices. Issue constitutes 30.01% of the post issue paid up capital of the company. Cost of acquisition of shares by promoters is Rs. 0.94 per share. On performance front, SCL has posted turnover/net profits of Rs. 4.41 cr. / Rs. 0.02 cr. (FY16), Rs. 10.16 cr. / Rs. 1.81 cr. (FY17). Till FY14 company was engaged in the business of providing insurance services and human resource solutions provider. It has no operation for FY 15 and had just minuscule other income with working resulting in net loss of around Rs. – (0.09) cr. On July 26, 2016 company Promoter, Pankaj Vyas, took over the management and control of Company. Post this change company was transformed and engaged in the business of Background Screening (also known as BGC - Background Check) and Due Diligence. For Q1 of current fiscal it has reported net profit of Rs. 1.25 crore on a turnover of Rs. 5.90 crore. It has posted an average EPS of Rs. 4.12 and RoNW of 50.21% for last three fiscals on an equity base of Rs. 0.01 crore. Based on post issue NAV of Rs. 71 issue is priced at a P/BV of 2.88. If we annualize latest working and attribute it to fully diluted equity post issue, then asking price is at a P/E of 20 plus. It has no listed peers to compare with. There is big Jump in bottom line for Q1, which is very surprising. On merchant banker’s front, this is 3rd mandate from its stable in last three fiscals. Previous 2 IPOs gave positive returns ranging from 2.2 to 20% in opening on the day of listing. However, they both closed on the same day with negligible gains. Company's equity has shot up from mere Rs. 0.01 crore to Rs. 4.89 crore between April 2017 – August 2017. As per financials, company's growth is good, RoNW is 50.21% for last three fiscals and issue is reasonably priced at P/E of 20 with unique business model. But company has only two fiscals report card to show, so its very hard to predict, if company will continue same growth in future also (as growth is very dramatic). So we give NEUTRAL rating to this SME IPO.
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