An Initial Public Offering (IPO) is the first sale of shares that are issued by a company to the public. IPOs give investors an opportunity to subscribe to the shares and make a profit in most cases. There is also an option to hold the shares for a long-term investor. An Initial Public Offering allows investors to explore the opportunities in various sectors. But narrowing down on which IPO to invest in can be tedious and confusing for an investor.
The Equity Research Desk at Nirmal Bang provides fundamental analysis of capital market-related entities to aid wise investment decisions. The analysis also includes IPO news and updates. Nirmal Bang’s IPO Watch helps market participants to stay abreast of all the latest developments in this segment and make the right investment or trading pick.



Expected Results As On 16/02/22

Surpiya Lifescience Ltd. IPO Note


Company Overview Supriya Lifesciences Ltd (SLL) is one of the key Indian manufacturers and suppliers of active pharmaceuticals ingredients (“APIs”), with a focus on research and development. As of October 31, 2021, the company had niche product offerings of 38 APIs focused on diverse therapeutic segments such as antihistamine, analgesic, anaesthetic, vitamin, anti-asthmatic and anti-allergic. It is consistently been the largest exporter of Chlorpheniramine Maleate and Ketamine Hydrochloride from India, contributing to 45-50% and 60-65%, respectively, of the API exports from India, between FY17 and FY21. SLL is among the largest exporters of Salbutamol Sulphate in India contributing to 31% of the API exports from India in FY21 in volume terms. Company’s products were exported to 86 countries in FY21. The business operations are supported by a modern manufacturing facility located in Parshuram Lote, Maharashtra having reactor capacity of 547 KL/ day. In addition, the Company has acquired a plot of land, admeasuring 12,551, near the present manufacturing facility, wherein the Company intends to expand its manufacturing infrastructure. The manufacturing facility has received approvals from USFDA, EDQM TGA-Australia, KFDA-Korea, PMDA-Japan, NMPA (previously known as SFDA)- China, Health Canada. Details & Objects of the Issue: The issue of Rs 700 cr includes offer for sale of Rs 500 cr and Rs200 cr fresh issue which would be utilized to fund capex, repayment of borrowings Investment Rationale: a) Leadership Position Across Key and Niche Products b) Backward Integrated c) Geographically Diversified Revenues d) Quality Manufacturing Capabilities e) Consistent strong financial performance Valuation and Recommendation: The company has grown revenues at CAGR of 22% between FY18-21 in-line with industry average however EBITDA has grown at 97% during the same period, double the industry average. SLL has strong return ratios. We have compared Supriya with almost all the leading listed API players and found it quite attractive. Given the strong leadership in selected niche regions along with the healthy financials and attractive valuations we recommend “Subscribe”.

Data Patterns (India) Ltd. - IPO Note


Company Overview Data Patterns (DP) is one of the few integrated defence and aerospace electronics solutions provider catering to the indigenously developed defence products industry. DP has proven in-house design and development capabilities and experience of more than three decades in the defence and aerospace electronics space. Radars make up 62% of the order book with the rest comprising of electronic warfare suite, communications, avionics, BrahMos programme, service contracts and others. Details & Objects of the Issue: • The total issue size is Rs. 588 Cr constituting (i) Offer For Sale of up to 0.595 Cr equity shares aggregating to Rs. 348 Cr; and (ii) Fresh issue of up to 0.41 Cr equity shares aggregating to Rs. 240 Cr. The offer shall constitute 19.4% of the post-offer paid-up equity capital of the company. • DP shall utilise the proceeds from the fresh issue for repaying debt, funding working capital requirements and expanding its Chennai facility. Investment Rationale: • Integrated and strategic defence and aerospace electronics solutions provider which is well positioned to benefit from the ‘Make in India’ opportunity • Superior business positioning backed by in-house design, development and manufacturing capabilities across multiple segments • Indian military radar market to grow at ~11% CAGR till 2030 and reach USD 3.18 Bn • Strong order book of Rs. 581 Cr (2.6x FY21 revenue) and pipeline of Rs. 1500 Cr over next 3 years • Transition from development stage to production stage resulting in an increase in return ratios Valuation and Recommendation: DP is a proxy play on India’s indigenization of defence products. With strong capabilities across segments, robust order book of Rs. 581 Cr (2.6x FY21 revenue) and an order pipeline of Rs. 1500 Cr, DP is on track to deliver good growth in coming years. Even on historical basis, we note that it’s growth has outperformed listed peers. Higher margins more than compensates for the lengthy working capital cycle resulting in satisfactory cash flow based ROCE (pre-tax cash flow from operations / capital employed - at 36% over FY19-21). We recommend investors to subscribe to the issue for listing gains as well as from a long term perspective.

Medplus Health Services Ltd. IPO Note


Company Overview Medplus Health Service Ltd. (Medplus) is the second largest pharmacy retailer in India, in terms of (i) revenue from operations for the FY21, and (ii) number of stores as of March 31, 2021. The company offers a wide range of products, including (i) pharmaceutical and wellness products, medicines, vitamins, medical devices and test kits, and (ii) fast-moving consumer goods, such as home and personal care products, including toiletries, baby care products, soaps and detergents, and sanitizers. The company was founded in 2006 by Gangadi Madhukar Reddy to reduce the problem of fake medicines in the system. Medplus has maintained a strong focus on scaling up its store network, having grown from operating the initial 48 stores in Hyderabad at the conception of the business to operating India’s second largest pharmacy retail network of over 2,000 stores distributed across Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Odisha, West Bengal and Maharashtra. Details & Objects of the Issue: The issue of Rs 1398 cr includes offer for sale of Rs 793 cr and Rs 600 cr fresh issue which would be utilized for investment into its material subsidiary, Optival for funding working capital requirements Investment Rationale: a) Established Brand and Value Proposition to Customers b) Omni-Channel Model c) Cluster Based Expansion d) Increased share of Private Labels e) Continued Improvement in Operational Efficiency Valuation and Recommendation: The company has been opening stores at CAGR of 12% since FY10 which has skewed towards the end of the decade at 17.2% between FY20-1HFY22. However, due to increased leverage on account of omni-channel and higher share of private label sales, profitability has grown at much higher rate. Gross margins have grown at a CAGR of 22.7% between FY19 to FY21 and EBITDA at 63.2% during the same period. The cluster-based strategy gives higher penetration in the selected regions. We believe that Medplus is a well-established brand among its clusters and has positioned itself as a genuine and good quality pharmaceutical products supplier through its omni-channels, which will continue to drive its gains in market share. We recommend “Subscribe for Long Term”.

Metro Brands Ltd. IPO Note


Company Overview Metro Brands Ltd (MBL) is one of the largest Indian footwear specialty retailers, having brands that are among the aspirational Indian brands in the footwear category. As of September 30, 2021, the Company operated 598 Stores across 136 cities spread across 30 states and union territories in India. MBL retail footwear under its own brands of Metro, Mochi, Walkway, Da Vinchi and J. Fontini, as well as certain third-party brands such as Crocs, Skechers, Clarks, Florsheim, and Fitflop, which complement its in-house brands. MBL also offer accessories such as belts, bags, socks, masks and wallets, at its stores. Details & Objects of the Issue: The issue of Rs 1368 cr includes offer for sale of Rs 1073 cr and Rs 295 cr fresh issue which would be utilized for (a) Expansion of 260 stores over 3 years (b) general corporate purposes Investment Rationale: a) One of India's largest pan India footwear retailers with a brand appeal among aspirational consumer segments b) Wide range of brands and products catering to all occasions across age groups and market segments c) Presence across multiple formats and channels d) Asset light business with an efficient operating model leading to sustained profitable growth e) Strong track record of growth, profitability and financial discipline Valuation and Recommendation: Metro Brand has a legacy of 65+ years behind it and has created a brand for itself. The management has built a winning formula across different formats. The management is looking to open 260 stores in next 3 yrs. MBL has grown at CAGR of 16-17% in last 10 years. MBL has one of the best and consistent EBITDA margins among the listed peers and highest realization per unit. We believe this is owing to its asset light model and focus on the customer nerve by keeping close track of consumer preferences. Due to pandemic, the industry has opened up much more growth opportunities like transition from large unorganized segment to organized players, many acquisition prospects, e-commerce expansion etc. We expect MBL to continue the growth momentum, given above set-up in addition to tying up with third party brands like FitFlops. We recommend “Subscribe for Long Term”.

C.E. Info Sytems Ltd - IPO Note


Company Overview MapmyIndia is a leading provider of advanced digital maps, geospatial software, and location-based IoT technologies in India. Having pioneered digital mapping in India in 1995, the company have earned its market leadership position in this industry and built a strong moat by capitalizing on its early mover advantage. The company derive majority of its revenue from B2B and B2B2C enterprise customers and has serviced over 2,000 enterprise customers as of Sep, 2021. Details & Objects of the Issue: The public issue consists of Offer for sale of ~Rs 1040 cr by Promoter and selling shareholder Investment Rationale: a) Growth in the industry will lead to growth for the company b) New Guidelines By GOI for acquiring and producing Geospatial Data by only Indian company creates opportunity c) Marquee customers across sectors with strong relationships and capability to up-sell and cross-sell d) High operating leverage company leads to higher margins Valuation and Recommendation: Over FY19-21 the company sales have grown by 6%, new orders for the same period have grown by 82%. With Covid situation normalizing and , looking at good order book, we expect, conversion of these orders will happen going ahead. With this in H1FY22, company recorded a growth of 81.3% YoY and revenue came at Rs 100.3 cr. Going ahead, the company will be able to leverage its leadership position in India and with expansion in different country, acquisition of new customers and with cross sell and upsell opportunity to existing customers, we feel, the company has the potential to show good growth ahead. Since most of its products, platforms and solutions are digital, created in-house, and then deployed and delivered over the cloud, the company has high operating leverage with relatively low variable cost and high fixed cost which will enables company to grow profitability faster than revenue growth. The same is visible in H1FY22 wherein Ebitda margin stood at 45.2%, indicating higher sales is leading to high profitability to the company. Company is debt free and OCF for the company stands at Rs 83.2 cr in FY21 indicating lower working capital requirement by the company. ROE for FY21 stands at 16.6%. At the given upper price band of issue of Rs 1033, C.E. Infosystem is offered at PE of 58.8x annualized H1FY22 EPS which we feel is attractive. We recommend subscribing to the issue.

IPO Note - Anand Rathi Wealth


Company Overview ARW (Anand Rathi Wealth) is one of the leading non-bank wealth solutions firms in India and has been ranked amongst the top three non-bank mutual fund distributors in the country. ARW offers wealth solutions, financial product distribution and technology solutions to its clients. It provides services primarily through its flagship PW (Private Wealth) vertical where it manages Rs. 29,472 Cr in AUM as on Aug, 2021. The company's PW vertical caters to 6,564 active client families, through a team of 233 RMs. ARW generates higher revenue yields compared to competition as the company has consciously avoided stock broking and stock advisory businesses and restricted its focus to the high yielding segments of distribution of structured products and mutual funds. Details and Objects of the Issue The total issue size is Rs. 659 Cr constituting Offer For Sale of up to 1.2 Cr equity shares. Investment Rationale: • Focus on the underserved and less price sensitive HNI segment • Presence in the structured products or non-convertible market linked debentures • Uncomplicated, holistic and standardized solutions offered to clients based on an objective-driven approach • Focus on safety net and estate planning services provides value addition to clients Valuation and Recommendation The wealth management business has characteristics (annuity revenue, degree of cyclicality, ROE) which are skewed more towards AMCs than stock brokers. We observe that ARW’s ROE has consistently been higher than peers like IFL Wealth and Edelweiss Wealth. Although ARW’s FY19-21 growth in revenue & profits has lagged Edelweiss Wealth, its current year growth has been encouraging and above that of both the peers. At valuations of 18.7x Apr-Aug’21 annualized earnings, ARW does offer some scope for upside on listing, given ~20% earnings CAGR potential in the longer term combined with cross cycle ROE range of 20-30%. We recommend subscribing to the issue.

IPO Note - Tega Industries Ltd.


Company Overview Tega Industries Ltd. (Tega) is a leading manufacturer and distributor of specialized ‘critical to operate’ and recurring consumable products for the global mineral beneficiation, mining and bulk solids handling industry. Globally, they are the 2nd largest producers of polymer-based mill liners. Tega has 6 manufacturing sites, including 3 in India, at Dahej in Gujarat and at Samali and Kalyani in West Bengal, and 3 sites in major mining hubs of Chile, South Africa and Australia. Details and Objects of the Issue The issue of Rs 619 Cr comprises of Offer for sale of 13,669,478 Equity Shares and the proceeds will go to the Selling Shareholders, in proportion to the Equity Shares offered by them in the Offer for Sale. Investment Rationale • Oligopolistic Market Structure • Insulated from mining capex cycles, provides recurring revenues • Marquee global customer base with strong global manufacturing and sales capabilities. • Consistent growth, driven by operational efficiency and high repeat business. Valuation and Recommendation The global crushing, screening and mineral processing equipment faced some headwinds due to the pandemic. The overall industry witnessed a decline in demand. However, with the re-opening of the global economy the industry is likely to grow at a CAGR of 6.3% by 2030. We believe Tega is well placed across the value chain of a mineral processing as it provides wide range of products and solutions. The company uses strong technology that is backed by R&D and expertise, which provides a distinct and entry barrier for the company. Tega has marquee global customers and a robust order book position of Rs 316 Cr, which are key positives for the company. On financial front, company’s performance has been strong wherein Sales/EBITDA grew at a CAGR of 8%/25% between FY19-21. The company has an attractive ROE of 22% and is available at P/E of 22x FY21. We are positive on this company with the growth momentum likely to continue going forward and recommend “Subscribe to the issue”.

IPO Note - Star Health and Allied Insurance Co


Company Overview STAR (Star Health and Allied Insurance Co) is one of the largest private health insurers in India with overall market share of 15.8% and retail share of 31.3%. The company primarily focuses on retail health insurance segment (89% mix). Its network distribution includes 779 health insurance branches across 25 states and 5 union territories in India. STAR has also built one of the largest health insurance hospital networks in India with more than 11,778 hospitals. Details and Objects of the Issue The public issue is of Rs. 7239 Cr consisting of – (i) Offer for sale of Rs. 5,239 Cr by investors and (ii) Fresh issue of Rs. 2,000 Cr to augment its capital base and maintain the solvency levels. Investment Rationale: • Retail health insurance industry to grow at 23% CAGR till FY25 • Industry leading growth with focus on profitable retail segment • Largest private health insurance company in India • Largest and well spread distribution network • Focus on innovative and specialized products • Strong risk management focus with domain expertise Valuation and Recommendation STAR being the leader in fast growing retail health insurance segment with a market share of 31.3%, offers an attractive opportunity to participate in this granular (retail health mix at 89%), high growth business (FY18-21 GWP CAGR of 31%). In comparison, ICICI Lombard’s growth has lagged at just 4% CAGR owing to a downturn in the motor business (50% mix). STAR and ICICI Lombard both share equally impressive operating metrics, except for the years FY21/22 which are an aberration (due to covid) for STAR, being focused only on the health segment. We view STAR’s valuations at 8.2x Sep 2021 BV favorably in comparison to similar levels for ICICI Lombard, as we expect STAR to continue to grow at much higher growth rates while maintaining decent ROE in the post covid era. We recommend subscribing to the issue from a long term perspective.

Go Fashions (India) Ltd. - IPO Note


Company Overview Go Fashion (India) is a women’s bottom-wear brand in India, with a market share of approximately 8% in FY20. Under the brand name “Go Colors” the company is the first to launch a brand exclusively dedicated to women’s bottom-wear category (ethnic, western wear, fusion and denims) and have leveraged this advantage to create a direct-to-consumer brand with a diversified and differentiated product portfolio of premium quality products at competitive prices Details & Objects of the Issue: The public issue consists of fresh issue of Rs 125 cr for the following • Funding roll out of 120 new EBOs;(Rs 33.7 cr) • Funding working capital requirements (Rs 61.3 Cr ) Offer for sale of ~Rs 888 cr by Promoter and selling shareholder Investment Rationale: a) Growth in the industry will lead to growth for the company b) Expansion through EBO and Online Channel c) Strong financials Valuation and Recommendation: Over FY19-21, the company sales has de grown at a CAGR of 6.3% impacted due to Covid. FY20 the company sales has grown by 37.4%, although in FY21 revenue dipped due to Covid. Q1FY22, company recorded a growth of 200.8% YoY and revenue came at Rs 31 cr, indicating recovery. With covid situation normalizing, we expect revenue to bounce back. Going ahead, with Growth in the bottom wear industry and with shift from unorganized to organized market, with higher number of EBOs at right location will lead to higher revenue to the company. Q1FY22, although gross margins stood at 64.2% levels, however, company reported loss of Rs 5.9 cr which was majorly due to impacted sales. Taking, FY20 into consideration since it was less impacted year with Covid , EBitda margins for FY20 stood at 32.3%.With Improvement in sales and with change in mix to higher EBOs revenue with limited discount offers to selling price, will lead to higher profitability, going ahead.FY21, Being covid impacted year , Working capital for the company stands at 171 days vs 141 days in FY20. Going ahead management indicates of bringing down the working capital days to 120 , majorly with reduction in inventory days to 90 from 106 in FY20, receivable days to 30 from around 56 days in FY20. Cash flow from operations of the company stands at Rs 57 cr, FCFF at Rs 29 cr in FY20 . Total debt for FY20 stands minimal at Rs 2.8 cr, indicating company is debt free. Going ahead, higher growth accompanied with reduction in working capital cycle will lead to higher operating cash flows to company. This will lead to funding of opening of new stores through internal accrual. ROE stands at 18.4% for FY20. Looking at the good growth potential , At the given upper price band of issue of Rs 690, Go fashions is offered at PE of 70.8 x FY20 EPS which we feel is attractive. We recommend subscribing to the issue.

Tarsons Products Ltd. IPO Note


Company Overview Tarsons Products Ltd (TPL) is an Indian labware company engaged in the designing, development, manufacturing and marketing of ‘consumables’, ‘reusables’ and ‘others’ including benchtop equipment, used in various laboratories across research organizations, academia institutes, pharmaceutical companies, Contract Research Organizations (“CROs”), Diagnostic companies and hospitals. As of June 30, 2021 it had a diversified product portfolio with over 1,700 SKUs across 300 products. The product portfolio is classified into three key categories which include consumables, reusables, and others. TPL caters to a diverse range of end customers across various sectors which include research organizations, academic institutions, pharmaceutical companies, CROs, diagnostic companies, and hospitals and currently operates through five manufacturing facilities located in West Bengal. Details & Objects of the Issue: The issue of Rs 1024 cr includes offer for sale of Rs 874 cr and Rs 150 cr fresh issue which would be utilized for (a) repayment of debt (b) funding capex of new manufacturing facility Investment Rationale: a) Leading Indian Supplier b) Expanding Product Portfolio c) Increasing Global Footprint d) Strong Financials Valuation and Recommendation: The company is growing at CAGR of 13% with industry leading margins. EBITDA margins improved further to 53% in Q1FY22 from 45% in FY21. Though there is no one off in these number, we believe that company can maintain margins at around 50% given the leading position and economies of scale. Covid has turned out to be a boon for the companies in healthcare space as worldwide governments have started allocating more funds and people in general have become more conscious towards the healthcare benefits. Given TPL has created a niche for itself in the industry backed by its strong quality standards and a reliable supplier. At upper band of Rs 662, the P/E comes to 51.1x FY21 however we expect TPL to grow faster than current CAGR given the laboratory instrument industry is growing at 20%. We recommend “Subscribe”.

Latent View Analytics Ltd. - IPO Note


Incorporated in 2006, Latent View is the leading pure play analytics services company in india.The company provides services such as data and analytics consulting, business analytics & insights, advanced predictive analytics, data engineering, and digital solutions Details & Objects of the Issue: The public issue consists of fresh issue of Rs 474 cr for the following • Funding inorganic growth initiatives ( Rs 147.9 Cr ) • Funding working capital requirements (Rs 82.4 Cr ) • Investment in Subsidiaries to augment their capital base for future growth( Rs 130 cr ) Offer for sale of Rs ~126 cr by the Promoter and the selling shareholder Investment Rationale: a) Growth in the industry will lead to growth for the company b) Recognized leadership position in data and analytics with a wide range of capabilities c) Strong financials Valuation and Recommendation: Over FY19-21, the company sales have grown at a CAGR of 3.1%. In FY 19, management started a strategy to defocus on a book of work that was high volume but less margin accretive and less of value add for clients. These were essentially contracts where the company was providing point expertise to its clients in the form of people. The company wanted to consciously move to a higher portion of Managed Services where bulk of the work was delivered from Centers of Excellence in India. With this, the COE or Managed services component of the business during this period FY19-21 has gone up from 40% to 65% levels. While this meant lower revenue in absolute terms however, the quality of earnings went up which is reflected in the margin profile improvement. FY21, Q1 and Q2 were impacted by COVID as clients hit the pause button on new deals. But Q3 21 onwards the company have witnessed a very strong bounce back and the company could record revenue at par with FY20 for FY21. Q1FY22, the company has recorded a growth of 20.3% YoY, indicating recovery. Acquisition of new larger accounts and with cross sell and up sell opportunities available to its acquired clients, supported with inorganic growth, will help the company to grow ahead. In FY21 Ebitda margins stood at 35.2% higher than FY19 margins which stood at 25.2% , which indicates the company’s strategy of focusing on margin accretive clients is playing well. We feel with covid situation normalizing , some of the expenses like travel expense, other expense is likely to come back going ahead and is likely to impact the margins by 2%. FCFF for the company stands at Rs 88 cr. ROCE of the company stands at 20.4% in FY21 and ROE stands at 20.9% in FY21. At the given upper price band of issue of Rs 197, Latent Analytics is offered at PE of 43.7x annualized Q1FY22E earning which we feel is attractive. We recommend subscribing to the issue.

Sapphire Foods Ltd. IPO Note


Sapphire Foods Ltd. (SFL) is one of YUM’s franchisee operators in the Indian subcontinent operating brands like KFC, Pizza Hut etc. It is also Sri Lanka’s largest international QSR chain, in terms of revenue for the FY21 and number of restaurants operated as of March 31, 2021 (with 68 restaurants representing 39% of the total number of outlets in the market). SFL also established a presence in the Maldives. As of June 30, 2021, it owned and operated 209 KFC restaurants in India and the Maldives, 239 Pizza Hut restaurants in India, Sri Lanka and the Maldives, and two Taco Bell restaurants in Sri Lanka. Details & Objects of the Issue: The whole issue of Rs 2073 cr is offer for sale Investment Rationale: a) Focus on Omnichannel Platform b) Leading QSR Brands with a Substantial Market Presence and Scale c) Business Transformation to Drive the Store Economics d) Disciplined Financial Approach Valuation and Recommendation: Due to Covid related disruptions, the company’s revenues declined by 24% in FY21 over FY20 after growing 12% in FY20. Nonetheless, the company continued to work on its business transformation while focusing on omni channel platform. The company reduced the average store size while maintaining almost same levels of store revenues. This has resulted in offsetting margin decline from 14.2% to 13.6% in FY21. We believe the full benefits of operational changes have not yet been accounted in current profitability and would continue to improve EBITDA in coming years as well. Considering the globally known brand portfolio, growing stores, improving profitability, we have a positive view on the company. At upper band of Rs 1180, the EV/Sales come to 7.4x FY21 Sales. We recommend “Subscribe”.

IPO - One 97 Communications Ltd.


Company Overview Paytm (One 97 Communications) was launched in 2009 as a “mobile-first” digital payments platform. Paytm offers products and services across “payment services”, “commerce and cloud services” and “financial services”. The two-sided (consumer and merchant) ecosystem enables commerce, and provides access to financial services through its financial institution partners, by leveraging technology to benefit consumers as well as merchants in growing their business. Details and Objects of the Issue • The total issue size is Rs. 18,300 Cr constituting (i) Offer For Sale of up to 4.65 Cr equity shares aggregating to Rs. 10,000 Cr by investors; and (ii) fresh issue of up to 3.86 Cr equity shares aggregating to Rs. 8,300 Cr. The offer shall constitute 13.1% of the post-offer paid-up equity capital of the company. • Paytm proposes to utilise the proceeds from the fresh issue towards (i) growing the ecosystem through acquisition of consumers & merchants and providing them with greater access to technology & financial services; and (ii) investing in new business initiatives, acquisitions and strategic partnerships. Investment Rationale • Multiple benefits for consumers and merchants. • Strong industry tailwinds ensure growth visibility. • Paytm’s network effect creates sustainable advantages. • Financial Services vertical to scale up rapidly; shall drive next leg of growth. Valuation and Recommendation With many large global investors and tech companies having taken stakes or bought out entire companies, we expect competition to heat up, especially in the merchant payment solutions. Although this would lead to faster penetration of the addressable merchant market of 80 mn accounts and grow industry revenues, it could well limit the addressable profit pool in the longer run. Also in case of Paytm, the consolidated revenue growth has lagged unlisted peers owing to de-focus on commerce and consumer payments verticals which would continue to be a drag in the near term until the verticals of merchant payments and financial services become sizable. At 49.7x FY21 revenue, we are not comfortable subscribing to the issue owing to heightened competition, sub-par revenue growth and uncertain profitability metrics. We rate the issue as “NEUTRAL”.

SJS Enterprises IPO


Company Overview SJS (SJS Enterprise Ltd.) is one of the leading players in the Indian decorative aesthetics industry, designing, manufacturing and supplying decals and body graphics, 2D appliques and dials, 3D appliques and dials, 3D lux badges, domes, overlays, aluminum badges, in-mold labels, or decoration parts, lens mask assembly, and chrome-plated printed, painted injection moulded plastic parts to auto, consumer durables/appliances, farm equipment, and sanitary ware industries. The company has a global presence and supplied over 115 million parts to around 170 customers across 20 countries in FY21. Details and Objects of the Issue • The total issue size is Rs. 800 Cr constituting (i) Offer for Sale of up to 1.48 Cr equity shares aggregating to Rs. 800 Cr by Evergraph and K.A. Joseph; The Offer shall constitute 49.63% of the post-offer paid-up equity capital of the company. Investment Rationale • Leading decorative aesthetics supplier with a wide portfolio of premium products. • Strong manufacturing capabilities and established supply chain network • Comprehensive product portfolio makes the company a preferred supplier • Long standing customer relationships; geographically diversified revenue base • Innovative product designing capabilities • Strong position in the balance sheet Valuation and Recommendation SJS enterprises is a leading player in the Indian decorative aesthetics industry. On the back of growing aesthetic decorative industry (20% CGAR in FY2021-2026E, as per CRISIL) and being key industry supplier, the company has potential to grow business going forward. Although there is no listed comparable peer to SJS, we compare it with prominent auto component players. We observe that SJS’s financial metrics as well as valuations are better than other players. The historical growth is lagging others which is compensated by the company’s higher return ratios. Considering these metrics, we recommend subscribing to the issue from a long term perspective.

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