Incorporated in 2013, Bhavnagar, Gujarat based Shubhlaxmi Jewel Art Limited is a company engaged in the business of jewellery and ornaments. The company is engaged in both the retail and wholesale business. The product portfolio of the company includes a wide range of jewellery made of gold, silver, diamond and platinum studded with precious and semi-precious stones. Its product portfolio includes Mangalsutra, Patla, Chains, Necklace, Mala, Kandoro, Poncho, Payal, Rings, armlet, pendants, bracelets, bangles and other wedding jewelleries It caters to high-end, mid-market and value market segments. Shubhlaxmi Jewel Art has only one showroom of 27000 sq. ft. at Bhavnagar and is in the process of setting up of own manufacturing unit. It procures materials from bullion and jewellery market deals in Gujarat. Company has 34 employees including key managerial persons as on October 05, 2018. On financial performance front, SJAL has posted turnover/net profits of Rs. 6.98 cr. / Rs. 0.03 cr. (FY14), Rs. 45.14 cr. / Rs. 1.29 cr. (FY15), Rs. 47.43 cr. / Rs. 0.37 cr. (FY16), Rs. 43.44 cr. / Rs. 0.65 cr. (FY17) and Rs. 46.85 cr. / Rs. 0.82 cr. (FY18). Thus its top line is almost static around Rs. 46 cr. on an average with fluctuating margins. For FY19 due to conversion of partnership firm into company, it has shown two periods i.e. year ended 01.05.18 and year ended 31.05.18. If we combine these data then it has posted net profit of Rs. 0.15 cr. on a turnover of Rs. 6.12 cr. Thus this working may be attributed as its first two months revenues for ongoing fiscal. For last three fiscals, it has posted an average EPS of Rs. 1.19 and an average RoNW of 14.70%. Issue is priced at a P/BV of 2.58 on the basis of its NAV of Rs. 10.06 as on 31.05.18 and at a P/BV of 1.75 based on post issue NAV of Rs. 14.87. If we annualize first two months working and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 24 against industry average of 12. As per offer documents, it has shown D P Abhushan, Moksh Ornament, Thangamayil as its listed peers that are currently trading at a P/E of around 13, 5 and 18 (as on 16.11.18 closing). On BRLM's front, for Pantomath Capital Advisors Private Limited this is the 74th IPO in last three fiscals and from last 10 IPOs, all opened above issue price with 1% to 8% premium on the day of listing. As of now, from last 10 IPOs, 5 are trading below issue price and remaining above issue price. ( As on 20.11.18 ) Company's financial performance is not so good, RoNW is 14.70% for last three fiscals and issue looks expensive. Performance of BRLM is also average after listing. So we give AVOID rating to this SME IPO.
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