Veritaas Advertising Limited is an integrated advertising agency offering 360-degree services across multiple platforms. They own advertisement spaces in West Bengal, Guwahati and Shillong, thereby making them one of the few media owning marketing and advertisement agencies. They also operate in Delhi, Mumbai and Pune. They operate/advertise in police booths and outdoor hoardings, which reduces the dependence on third parties and enables them in offering integrated services. The Company’s advertising services enables its clients to monetize their marketing collaterals and generate revenues and acts as a differentiator compared to other players in respective markets. With content at its heart, the Company builds creative stories around brands to enhance their ROI. Working across various offline platforms, the Company’s expertise includes strategizing, building compelling conversations to increase a brand’s influence and reach the desired target audience. They have created and managed successful marketing campaigns for various brands and worked with large budgets to drive the best reach and engagement for the clients. They provide high-end ecosystem and end-to-end advertising solutions platform for advertising media services consisting of Brand Strategy, Events, Outdoor (OOH) Media services which covers advertisement modes such as police booth hoardings, Newspapers insertions, Brochures, and display of Outdoor Hoardings, etc. In all such mediums of advertising “Creative” exists i.e. all the services are given keeping in mind the necessity of being creative, so they can deliver most compelling ideations, creations and communications to grab attentions of the public at large. They are dependent on third parties for space, such as pole kiosks, newspapers insertion, third party outdoor hoardings, etc. for catering the needs of the clients. While they have long term relationships with the such parties, they typically do not enter into long term agreements with such intermediaries. The innovative and diverse service portfolio and result oriented strategies have aided in curating an industry-wide client selection across various geographies they operate. They have executed project in West Bengal, Meghalaya, Assam, Delhi, Jharkhand, Mumbai and Pune, and therefore have a market presence in these states. The end-to-end solutions and integrated service offerings has enabled them in successfully inculcating a horizontal marketing approach in the business operations. The consistent efforts and specialised services have helped them in achieving a mix of clientele spread across industries inter alia, electronic, automobile, fast moving consumer goods, lifestyle, education, real estate, insurance, pharmaceuticals and information technology. In additional to multiple industries, they offer the services across multiple geographies, as well. The Company has a sales network in West Bengal, Assam and Delhi. They have the offices in Kolkata, Guwahati and Delhi. They are in the process of setting up an office in Mumbai to expand the reach in all metro cities of India. Through the strategically located offices and teams in three major cities in India, they cover almost whole of the states where they operate. As per financial performance, Veritaas Advertising Limited has posted total income / net profits of Rs 2.34 Cr / Rs 0.20 Cr (FY21), Rs 3.39 Cr / Rs 0.13 Cr (FY22), Rs 7.87 Cr / Rs 0.44 Cr (FY23) and Rs 9.04 Cr / Rs 1.57 Cr (upto 10.02.24 FY24). So as per previous financials data, company has shown good growth, but sudden increase in net profit, just before IPO generates doubts. Company has posted an average EPS of Rs 1.52 and average RoNW of 46.75% for last three fiscals. Issue is priced at a P/BV of 6.69 as per NAV of 17.05 as on 10.02.2024. 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 255.41, 73.31 and 17.72 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Horizon Management Private Limited is associated with this SME IPO and handled 4 SME IPOs in last 1 year. From last 4 SME IPOs, two opened below issue price and remaining opened above issue price on the day of listing. As of now from last 4 SME IPOs, two are trading below issue price and remaining are trading above issue price. ( As on 07.05.24 ) As per financials, Veritaas Advertising Limited has shown good growth, RoNW is 48.99% and P/E is respectively 255.41, 73.31 and 17.72 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced and sudden rise in net-profit is very surprising. Company is in business of marketing and advertising services, which is highly competitive and fragmented segment. Performance of BRLM is average. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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