Started in 2001, Sonam Clock Limited is a clock manufacturing Company situated in Morbi, Gujarat. Company offers a wide range of table and wall clocks at various price points across budget, mid-level and premium styles. As on February 2018, Company is offering clocks from a price range of 100 to 1800 which includes LED digital clocks, LCD clocks, light sensor clocks, pendulum clocks, musical clocks, rotating pendulum musical clocks, sweep clocks, office clocks, designer clocks, alarm clocks, table clocks and regular clocks. They also offer customised corporate clocks in bulk quantities for corporate gifting purpose. The products are sold mainly to clock dealers, retailers, corporates, gifts and novelties stores, through which it reaches to end consumers. SCL sells products under the brand name of Sonam, ampm and Lotus. In F.Y. 2016-17, company's net revenue from operations comprised of Rs. 37.93 cr. of which approximately 40% comprised of export sales to Middle - East countries such as Dubai and Iraq. They are also engaged in sale of clock parts which includes clock movements, clock cases etc. Company's Manufacturing facility is located in Morbi, Gujarat and has present installed production capacity of approximately 72 lakhs p.a. for clocks and 240 lakhs p.a. for clock movements. They are operating at around 50% capacity utilisation for clocks and around 29% capacity utilisation for clock movements. A Clock movement, also known as caliber, is an internal mechanical part of the clock, which drives hour, minute and second hands of clock in motion. Company has total 304 employees at various level of organisation. . As per financial performance, SCL has posted total revenue/net profits of Rs. 33.71 cr. / Rs. 0.46 cr. (FY13), Rs. 33.55 cr. / Rs. 0.58 cr. (FY14), Rs. 34.06 cr. / Rs. 0.41 cr. (FY15), Rs. 36.82 cr. / Rs. 2.68 cr. (FY16) and Rs. 39.03 cr. / Rs. 0.81 cr. (FY17). For upto Q3 of the FY18 it has earned net profit of Rs. 2.26 cr. on a turnover of Rs. 38.62 cr. So company's top-line and bottom-line are increased marginally since FY13 to FY17. There is sudden jump in bottom line with same top-line in FY16 and FY18 which looks surprising. For last three fiscals it has posted an average EPS of Rs. 1.28 and an average RoNW of 10.75%. The issue is priced at a P/BV of 1.66 on the basis of post issue NAV of Rs. 21.7. If we annualise latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 12. As per offer documents, it has shown Opal Luxury Time Products Limited as its listed peers and it has posted loss for FY17. As per latest earnings its reasonably priced, but its look difficult if company is able to maintain same in bottom line in future. On BRLM's front, for Hem Securities Limited, this is the 48th IPO and from last 10 IPOs, 2 listed below issue price and remain with 2% to 20% premium on the day of listing. As of now, from recent 10 IPOs, 3 are trading below issue price and remaining above issue price. As per financials, company's performance is stable, but there is sudden jump in bottom line which is surprising, RoNW is 10.75% and issue is reasonably priced as per latest earnings. Company's capacity utilisation is around 50% and 29% and expected future capacity utilisations are also nearly similar. Performance of BRLM is good, but recent two listings were below issue price. So we give NEUTRAL rating to this SME IPO as per current market situation.
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