Vasa Denticity Limited is in the business of marketing and distribution of a comprehensive portfolio of dental products including consumables, instruments, equipment, and accessories for diagnosing, treating and preventing dental conditions through the online portal 'Dentalkart.com'. The same is operated through the website and mobile application 'Dentalkart'. They operate an online channel housing approximately 300 domestic and international brands with a comprehensive product range of more than 10,000 dental products. In F.Y. 2021-22, they have delivered over 2 lakhs orders in all the 28 states and 6 Union Territories of Bharat. The Company operates through a centralized distribution hub of 13000 sq. ft located in Gurugram, Bharat. Through the website and mobile application - 'Dentalkart.com', they sell a broad range of dental products including dental consumables such as adhesives, filling materials, and impression materials; dental equipment such as chairs, x-ray machines, and autoclaves; and dental instruments such as forceps, probes, and mirrors. Apart from third party brands, they also market and sell under their own private label portfolio of cost-effective, high-quality dental products in the areas of orthodontics, endodontics and oral surgery such as Metal Bracket Kit, EDTA (Ethylenediaminetetraacetic acid), dental instrument etc. The breadth and depth of the products offerings address majority of the dentists' clinical needs for dental materials. Company also has a portfolio of more than 30 owned brands, which are manufactured/procured from third parties based on the specifications built by them through their dedicated research and development team. For sourced products, they have dedicated team to undertake inspection and ensure that such products are built to suit the specifications in terms of design and quality. Company's owned brands are available on their online channels, as well as at third party platforms such as Amazon, GeM and Flipkart. They also provide after sales service in relation to the products. They are accomplished to deliver the products across India and overseas to countries such as Malaysia, United Arab Emirates, Saudi Arabia, Australia, Kuwait, USA etc. with the help of the dedicated fulfillment center in Gurugram and third-party logistics services. As on December 31, 2022, the Company has employed 184 permanent full-time employees including managerial personnel in various departments. As per financial performance, Vasa Denticity Limited has posted total income/net profits of Rs 30.45 Cr / Rs 0.09 Cr (FY20), Rs 40.17 Cr / Rs 0.33 Cr (FY21), Rs 77.14 Cr / Rs 5.41 Cr (FY22) and Rs 87.57 Cr / Rs 5.02 Cr (upto 9M FY23), So company has shown good growth, but sudden jump in net profit just before IPO generates doubts. Company has posted an average EPS of Rs 2.32/- and average RoNW of 68.98% for last three fiscals. Issue is priced at a P/BV of 14.16 as per NAV of Rs 9.04/- as on 31.12.22. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 37.9 and as per annualised FY23 earnings P/E is 30.6. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Hem Securities Limited is associated with this SME IPO and handled 23 SME IPOs in last 3 years. From last 10 SME IPOs, all opened above issue price or at par on the listing day. As of now from last 10 IPOs, all are trading above issue price. ( As on 18.05.2023) As Per financials, Vasa Denticity Limited has shown good results, RoNW is 90.05% and P/E is respectively 37.9 and 30.6 as per FY22 and annualised FY23 earnings, which looks fully priced, also sudden rise in net-profit in last one and half years before IPO raises concerns. Company is in marketing and distribution of dental related products and this segmented expected to grow with good rate in next 3-5 years, but also there is high competition for local vendors. Performance of BRLM is good. So we are giving SUBSCRIBE rating to this SME IPO, but SME IPOs are very risky in nature due to limited clients.
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