Adcounty Media BSE SME IPO review (May apply)

•    The company is a BrandTech company focusing on providing end-to-end brand solutions.
•    The company also operates multiple websites across various verticals.
•    It posted growth in its top and bottom lines for the reported periods.
•    Based on its recent financial data, the issue appears fully priced.
•    Well-informed investors may park funds for medium to long term.

ABOUT COMPANY:
Adcounty Media India Ltd. (AMIL) is a BrandTech company focused on providing end-to-end solutions to brands, that cover everything from branding to performance optimisation. It leverages the latest technologies to serve a diverse range of clients spanning across various industries. The firm empowers its client-base with customized advertising solutions that are designed and developed through the lenses of customers. The Company also operates multiple websites across various verticals, offers mobile apps, and provides a Programmatic tool called BidCounty, designed to enhance performance and branding campaigns of clients. 

Further, to help brands with the right user acquisition, AMIL conducts thorough market research and deliver robust ad solutions. The primary objective of the Company is to provide the best set of media solutions and leverage technological advancements to help brands, companies and businesses identify, target, acquire and retain the right audience for their products/services. Its adaptive and performance-driven solutions bridge the gap between demand and supply creating a judicious balance for both advertisers and publishers.

AMIL’s range of services include Programmatic Advertising that ensures that best conversion ratios and ad spend, Search Engine Optimisation (SEO) that amplifies online visibility and boosts organic traffic, social media marketing that enhance brand awareness; Pay Per Click (PPC), Cost Per Acquisition (“CPA”), Cost Per Sale (“CPS”), Cost Per Lead (CPL), and Cost Per Install (CPI) campaigns that aid sales, lead generation, user acquisition and re-targeting. In essence, the company provides mobile & web agency services from offices based in India. It works with multiple brands across various verticals on a performance basis to help them acquire a premium user base and achieve their marketing objectives.

Moreover, constantly adhering to a result-oriented approach, the company ensures the growth of brands while helping the publishers to monetize their traffic, thus creating a mutually beneficial ecosystem for both advertisers and publishers. Its result-oriented approach implies it usually work with companies on an outcome basis method, wherein it derives fees based on the traffic, leads, downloads, sales, clicks, conversions etc. generated for the particular company and not on a fixed fee method, commonly known as performance marketing. As a consequence, the company has established a reputation for itself as a reliable and effective marketing partner for leading Fintech, Auto, BFSI, Ecommerce, iGaming, Travel, QSR, and FMCG brands. As of May 30, 2025, it had 45 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 5963200 equity shares to mobilize Rs. 50.69 cr. at the upper cap. The company has announced a price band of Rs. 80 – Rs. 85 per share of Rs. 10 each. The issue opens for subscription on June 27, 2025, and will close on July 01, 2025. The minimum number of shares to be applied is for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.50% of the post-IPO paid-up capital of the company. From the net proceeds of the fresh equity shares, the company will utilize Rs. 14.00 cr. for capex, Rs. 25.00 cr. for working capital, and the rest for general corporate purposes / unidentified acquisitions. 

The IPO is solely lead managed by Narnolia Financial Services Ltd., and Skyline Financial Services Pvt. Ltd., is the registrar to the issue. Prabhat Financial Services Ltd. is the market maker. The issue is underwritten to the tune of 15.03% by Narnolia Financial and 84.97% by Prabhat Financial.

The company has issued initial equity shares at par value. It has issued further equity capital at a fixed price of Rs. 75 per share in June 2024, and August 2024. It has also issued bonus shares in the ratio of 1600 for 1 in June 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 0.00, Rs. 0.01, and Rs. 11.09 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 16.54 cr. will stand enhanced to Rs. 22.50 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 191.26 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 53.64 cr. / Rs. 7.64 cr. (FY23), Rs. 43.24 cr. / Rs. 8.28 cr. (FY24), and Rs. 69.58 cr. / Rs. 13.75 cr. (FY25). While it posted a setback in top line for FY24, it posted higher net profit. Boosted top and bottom lines for FY25 raise eyebrows and concern over its sustainability going forward.

For the last three fiscals, the company has reported an average EPS of Rs. 6.70 and an average RoNW of 56.52%. The issue is priced at a P/BV of 3.71 based on its NAV of Rs. 22.92 as of March 31, 2025, and at a P/BV of 2.16 based on its post-IPO NAV of Rs. 39.37 per share (at the upper cap).

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 13.91. Based on FY24 earnings, the P/E stands at 23.10. The issue relatively appears fully priced. 

For the reported periods, the company has posted PAT margins of 14.25% (FY23), 19.41%, (FY24), 19.96% (FY25), and RoCE margins of 83.78%, 54.36%, 47.27% respectively for the referred periods. The margins posted are unbelievable in comparison with so called listed peers.

DIVIDEND POLICY:
The company has not paid any dividends for any financial year so far. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Affle 3I, and DAPS Adv., as their listed peers. They are trading at a P/E of 71.2, and 11.4 (as of June 25, 2025). However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
This is the 18th mandate from Narnolia Financial in the last three fiscals, including the ongoing one.  From the last 10 listings, 3 opened at discount, and the rest with a premium ranging from 2.60% to 110.36% on the listing date.