Spectrum Talent Management Limited

As per financial performance, Spectrum Talent Management Limited has posted total income/net profits of Rs 323.62 Cr / Rs 6.76 Cr (FY20), Rs 302.96 Cr / Rs 4.76 Cr (FY21), Rs 483.72 Cr / Rs 15.53 Cr (FY22) and Rs 584.16 Cr / Rs 19.97 Cr (9M FY23), So company has shown good results, but the sudden rise in net profit just before IPO is very surprising. Company has posted an average EPS of Rs 10.25/- and average RoNW of 42.99% for last three fiscals. Issue is priced at a P/BV of 2.89 as per NAV of Rs 59.83/- post issue. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 25.74 and as per annualised FY23 earnings P/E is 15. As per RHP, comparison between listed peers are shown in above table. On BRLM's front, Sarthi Capital Advisors Private Limited is associated with this SME IPO and handled 5 SME IPOs in last 3 years. Sarthi Capital Advisors Private Limited : This is 6th IPO from this BRLM. From last 5 IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing. As of now, from last 5 IPOs, one is trading below issue price and remaining are trading above issue price or at par. ( As on 06.06.23 ) As Per financials, Spectrum Talent Management Limited has shown good results, RoNW is 54.89% and P/E is respectively 25.74 and 15 as per FY22 and annualised FY23 earnings, which looks fully priced. Also sudden rise in net profit just before IPO raises concerns, as during the same period profits of peers not increased in same proportion. So it may be difficult to maintain similar margins in future. Company is in human resource and staffing services, which is highly competitive and fragmented. Performance of BRLM is good. So we are giving NEUTRAL rating to this SME IPO, readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Mr. Vidur Gupta
• 2 Mr. Sidharth Agarwal