Review By on June 30, 2017
7NR Retails Ltd (7NRR) is engaged in the business of trading of apparels in the wholesale and retail segments. It focused on providing distinctive, high quality and trusted products to consumers at right price. Currently company is supplying and marketing all sizes of Kids Garments in attractive designs with eco-friendly products. It is selling its products under the Brand name “Gini & Jony” on retail as well as wholesale basis. Company has entered into master franchise agreement with Gini &Jony Limited for operating in the state of Gujarat. Currently 7NRR operates and manages four retail stores exclusively for kids apparel brand “Gini & Jony” across the state of Gujarat. It is also selling shirting and suiting under wholesale segment.
To part finance its working capital needs, the company is coming out with a maiden IPO of 1896000 equity share of Rs. 10 each with a fixed price of Rs. 27 per share. Issue opens for subscription on 05.07.17 and will close on 10.07.17. Minimum application to be made is for 4000 shares and in multiples thereon, thereafter. Post allotment shares will be listed on BSE SME. Issue is solely lead managed by Guiness Corporate Advisors Pvt Ltd and Cameo Corporate Services Ltd is the registrar to the issue. From MoA signing till March 2015 it issued all equity at par. In February 2017 it raised further equity at a price of Rs. 12 per share. Post issue, its current paid up equity capital of Rs. 5.09 crore will stand enhanced to Rs. 6.98 crore.
On performance front, the company has posted turnover/net profits of Rs. 5.02 cr. / Rs. – (0.16) cr. (FY14), Rs. 5.13 cr. / Rs. – (0.05) cr. (FY15), Rs. 3.45 cr. / Rs. – (0.30) cr. (FY16) and Rs. 11.42 cr. / Rs. 0.38 cr. (FY17). Thus while it has inconsistency in top line till FY 16 it reported sudden jump in it for FY17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 50 and at a P/BV of 2.54. For last three fiscals, its average RoNW is negative at – (1.17) %. Thus issue is aggressively priced. As per offer documents, it has no listed peer to compare with.
On merchant banker’s front, this is the 31st mandate from its stable since 2012. However, from fiscal 2015-16 till this issue date, this is 16th IPO and out of last 10 IPO, four IPOs opened below the offer price on the day of listing.
Conclusion: Issue is aggressively priced and the company has inconsistent track record till FY16. Sudden jump in top line for FY 17 is surprising. There is no harm in giving this issue a miss.
Review By on June 30, 2017
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of 7NR Retail Ltd. offers an early investment opportunity in 7NR Retail Ltd.. A stock market investor can buy 7NR Retail IPO shares by applying in IPO before 7NR Retail Ltd. shares get listed at the stock exchanges. An investor could invest in 7NR Retail IPO for short term listing gain or a long term.
Read the 7NR Retail IPO recommendations by the leading analyst and leading stock brokers.
7NR Retail IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the 7NR Retail IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is 7NR Retail IPO?"
Our recommendation for 7NR Retail IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the 7NR Retail IPO.
The 7NR Retail IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit 7NR Retail IPO allotment status to check.
