Wonder Fibromats Limited

Started in 2009, Delhi based Wonder Fibromats Limited is engaged in manufacturing, supplying, designing of motors, home appliances, energy-efficient fans and allied equipment. The company manufactures and supplies products to many well-known companies to distribute under their brand name. It also has an in-house quality management lab and professional R&D team to maintain quality and market requirements. Under the supervision of the quality check (QC) department, a client-satisfaction cell reviews the clients' complaints. The main business of Wonder Fibromats is to manufacture exhaust, ceiling, pedestal and brushless DC (BLDC) fans in different attractive patterns, color and designs. Some of the products of the company also qualify for the quality standards of the Bureau of Indian Standards. Currently, the company has a manufacturing facility located at Raipur Industrial Area, Uttarakhand. It is also setting up a new manufacturing plant with the aim of 24,00,000 fans per annum production capacity in Hyderabad. As per the financial performance front, WFL has posted turnover/net profits of  Rs. 165.65 cr. / Rs. 5.09 cr. (FY17), Rs. 294.87 Cr / Rs. 7.97 Cr (FY18) and Rs. 308.02 cr. / Rs. 6.14 cr. So company has shown growth in top-line, but bottom-line remained zig-zag. Trade receivables for FY19, is around 80.46 Cr which is 26.12% of total revenue of FY19. Various group companies are in similar activities and it may lead to conflict of interest in future. Also company doesn't has registered trademark for its products. Company has posted negative cash flow. These are some of the concerns. The issue is priced at a P/BV of 1.88 on the basis of its NAV of Rs. 47.79 post issue. If we annualise latest earnings and attribute it on fully diluted post issue equity than asking price is at P/E of 12.28, So this issue looks fully priced. As per RHP, listed peers are shown in above table, but it can't be strictly comparable. On BRLM's front, for Navigant Corporate Advisors Limited this is the 17th IPO in last three fiscals and from last 10 IPOs, one opened below issue price and remaining opened above issue price with 1% to 20% premium on the day of listing. As of now, from last 10 IPOs, 4 are trading below issue price and 6 are trading above issue price. ( As on 17.07.2019 ) Company has shown good results, RoNW is 30.67% and issue looks fully priced with respect to current earnings. Performance of BRLM is average. Considering concerns related to company like conflict of interest with group companies, trademark and negative cash flow. So we give AVOID rating to this SME IPO.

• 1 Mr. Harsh Kumar Anand
• 2 Mr. Yogesh Anand
• 3 Mr. Yogesh Sahni