Started in 2017, Vasa Retail and Overseas Ltd (VROL), before Vasa International – a partnership firm, is primarily deals in all kinds of (a) stationery products viz. artistic materials, hobby colors, scholastic colors, scholastic stationery, office products, drawing instruments, writing instruments, office stationery, adhesives, notebooks, office supplies and writing instruments, books, pens, pencils, erasers, files, copier paper, bags and bottles; (b) procuring paper pulp and supplying the same to paper mills and (c) procuring bag fabric and supplying it to the other bag manufacturers and also using the same for manufacturing its products (school and office bags). These stationery products are essentially used by school going children and offices as a part of their stationary requirements. On the other hand, paper pulp is the key raw material for the manufacturing of wide variety of paper. VROL classifies its product range into(i) school and education products (ii) fine art and hobby products and (iii) office products. VROL has exclusive license agreements dated October 01, 2014 and June 10, 2016 with Oxford Limited to market, sell, distribute, and promote various stationary products under the brand 'University of Oxford' to around twenty six (26) countries spread across Asia, Middle East and Africa including India. In domestic markets, company markets, sells, and distributes its stationary products and bags essentially under the brand 'University of Oxford' and through a network of approximately seven (07) distributors catering to more than 500 stores by way of modern retail outlets, shop in shop, traditional retail outlets, MBO's and e-commerce platform in India. Company sells its products in the overseas markets in countries like Saudi Arabia, Kuwait, Qatar, Bahrain, UAE, Oman and Mauritius. Company also markets and sells its stationery products and bags under its own brand 'VASTA' in the overseas markets. On performance front, VROL has posted turnover/net profits of Rs. 10.48 cr. / Rs. 0.11 cr. (FY13), Rs. 17.56 cr. / Rs. 0.08 cr. (FY14), Rs. 18.82 cr. / Rs. –(0.11) cr. (FY15), Rs. 21.86 cr. / Rs. –(0.15) cr., (FY16) and Rs. 23.85 cr. / Rs. 0.92 cr. (FY17). For the period ended on 20.10.17 of the current fiscal, it has reported net profit of Rs. 0.86 cr. on a turnover of Rs. 17.92 cr. Thus for last 19 months it has been doing profitable business. It posted operational losses for FY 15 and 16 despite growth in top lines. For the last three fiscals it has posted an average EPS of Rs. 0.93 and average RoNW of 16.74% (on an equity base of Rs. 2.05 crore). Asking price is at a P/BV of 3.37 (on the basis of its NAV of Rs. 8.90 as on 20.10.17) and at a P/BV of 1.97 (on the basis of post issue NAV of Rs. 15.24). However, its NAV remained below par as at the said date. If we annualise latest working and attribute earnings on fully diluted post issue equity then asking price is at a P/E of around 12 against its peers Kokuyo and Linc Pen trading at a P/E of around 2000 and 60. (As on date of 20.01.2018) On merchant banker's front, this is 34th mandate in last three fiscals (overall 44th mandate so far). Out of last 10 listings, 1 opened at 3% premium, 1 at 9% premium and the rest at 20% premiums to offer price on the listing day. As per financials, company's growth in top line is good, but bottom line hasn't increased as per top line and in FY15 and FY16 company had posted operational losses, RoNW is 16.74% for last three fiscals and issue looks reasonably priced as per latest earnings. Company is in stationary sector and Government's focus on education makes future of this sector bright and recent performance of company is encouraging. So, we give SUBSCRIBE rating to this SME IPO.
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