Signoria Creation Limited

Signoria Creation Limited is engaged in manufacturing and marketing of women apparels like Kurtis, pants, tops, Co-ord Sets, dupattas and Gowns. They are popularly known and identified in apparel market by the brand name 'Signoria'. The brand is known for its Kurtis with traditional designs having wide range of colour, patterns and sizes. The manufacturing unit-I is situated at 324, Ayekar Nagar II, Near RICCO Industrial Area, Mansarovar, Jaipur, Rajasthan – 302020 and unit-II is situated at H1-74, RIICO Industrial Area, Mansarovar, Jaipur. The design and production team consistently introduced Kurtis with the newest, most fashionable patterns and designs, attracting in more clients and thereby boosting the company’s turnover. The increase in demand stimulated the need to increase the production level as well. On September 08, 2022, the company acquired 501.33 square metre of land at H1-74, RIICO Industrial Area, Mansarovar, Jaipur, Rajasthan- 302020 near the existing factory for garment manufacturing activities which is presently under construction. The operational capacity for the F.Y. 2022-2023 from the factory totals up to over a 4,77,000 pieces of quality garments. The company also possess the ability to increase its operational capacity as and when required on the basis of customer demands. Apart from the manufacturing activity undertaken by the company, the company also gets job work done for products. As per financial performance, Signoria Creation Limited has posted total income / net profits of Rs 5.89 Cr / Rs 0.33 Cr (FY21), Rs 11.82 Cr / Rs 0.68 Cr (FY22), Rs 19.16 Cr / Rs 2.31 Cr (FY23) and Rs 6.53 Cr / Rs 0.65 Cr (upto Q2 FY24). So as per previous financials data, company has shown good growth, but sudden increase in net profit, just before IPO generates doubts. Trade receivable is around 59% of FY23 total sales and debt is also high. Company has posted an average EPS of Rs 19.44 and average RoNW of 41.25% for last three fiscals. Issue is priced at a P/BV of 1.11 as per NAV of 58.36 as on 30.09.2023. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 45.82, 13.38 and 23.97 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Holani Consultants Private Limited is associated with this SME IPO and handled 6 SME IPOs and 1 main board IPO in last 3 year. From last 6 SME IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing and from last 1 Main board IPO, that is opened above issue price on the day of listing. As of now from last 6 SME IPOs, all are trading above or at par issue price and from last 1 Main board IPO, that is trading above issue price. ( As on 05.03.24 ) As per financials, Signoria Creation Limited has shown zig-zag results, RoNW is 39.62% and P/E is respectively 45.82, 13.38 and 23.97 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced and sudden rise in net-profit is very surprising. Also trade receivable & debt is very high. Company is in business of manufacturing and marketing of women apparels, which is highly competitive and fragmented segment. Performance of BRLM is good. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Vasudev Agarwal
• 2 Babita Agarwal
• 3 Mohit Agarwal
• 4 Kritika Chachan