BAG Convergence NSE SME IPO review

•    The company is engaged in the digital media space and running various content applications in Hindi and English.
•    It marked steady growth in its top and bottom lines for the reported periods.
•    It is operating in a highly competitive field with many big as well as small regional players.
•    Based on its recent financial data, the issue is fully priced.
•    Well-informed/risk seekers may park moderate funds for medium term.

ABOUT COMPANY:
B.A.G. Convergence Ltd. (BCL) was founded with the vision of becoming a key player in the digital media space. Started its journey in 2007 with the launch of first website, news24online.com. Soon after, it introduced a Hindi version, hindi.news24online.com, to cater to a wider audience. Expanding into the entertainment space, the company launched e24bollywood.com, covering Bollywood news and updates. In the beginning, it relied on Google AdSense for ad revenue, but as it grew, content aggregators like Times Internet Limited (TIL), Daily hunt and direct clients including government agencies helped it generate additional income and build brand recognition over a period.

Over a few years, it has constantly adapted to technological advancements to stay relevant in the competitive market and shifting user preferences. Initially, its websites were desktop-focused, but with the rise of smartphones and mobile internet, the company shifted focus to mobile users. Google’s move to mobile-first indexing made this shift even more important. The company also developed mobile apps viz. News24, E24 to offer a more personalised experience to readers. The transition from 2G to 5G has allowed it to create more mobile-friendly content and quickly connect with audience.

BCL is focusing on expanding business in the coming years. This includes launching new digital channels, building custom CMS systems and podcasts. It is also growing in regional markets, especially in the Hindi-speaking areas, as demand for video content is rising. To meet this demand, it is producing more videos for website and platforms like YouTube, Facebook, Instagram, and X. At the same time, it has entered into the Connected TV (CTV) space by partnering with Samsung India Electronics Pvt. Ltd. via TV PLUS Agreement dated November 11, 2024 for preinstallation of its apps in their TVs. At present, its channels are live and accessible on their platform. The term “Samsung Platform” refers to the Samsung TV Plus platform (including any successor versions) that allows its users to display and perform video and other media content on a compatible Samsung device where this platform is integrated.

Today, BCL is a growing digital media and technology company focused on delivering various form of content to all kind of screen. Its focus is on creating engaging content, optimising for mobile users, and expanding presence on new platforms like CTV to stay ahead in the digital world. As of August 31, 2025, it had 887 employees on its payroll and 58 consultants for various departments.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 5600000 equity shares to mobilize Rs. 48.72 cr. at the upper cap. The company has announced a price band of Rs. 82 – Rs. 87 per share of Rs. 10 each. The IPO is opening for subscription on September 30, 2025, and will close on October 03, 2025. The minimum application to be made is for 3200 shares and in multiple of 1600 shares thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.39% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 13.49 cr. for expansion of existing business, Rs. 13.30 cr. for acquisition/production of content, Rs. 5.00 cr. for brand building expenses, and the rest for general corporate purposes. The company is spending Rs. 4.80 cr. for IPO proceeds.

The IPO is solely lead managed by Inventure Merchant Banker Services Pvt. Ltd., while Maashitla Securities Pvt. Ltd., is the registrar to the issue. ACME Capital Market Ltd., is the market maker, as well as a syndicate member. The issue is underwritten to the tune of 15% by Inventure Merchant and 85% by ACME Capital.

After issuing initial equity shares at par value, the company issued further equity shares at a fixed price of Rs. 75.00 per share in July 2024. It has also issued bonus shares in the ratio of 1 for 1 in August 2024. The average cost of acquisition of shares by the promoters is Rs. 0.01 per share.

Post-IPO, company’s current paid-up equity capital of Rs. 15.62 cr. will stand enhanced to Rs. 21.22 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 184.60 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total Income/Net Profit of Rs. 24.96 cr. / Rs. 4.99 cr. (FY23), Rs. 30.33 cr. / Rs. 8.05 cr. (FY24), and Rs. 35.85 cr. / Rs. 9.41 cr. (FY25). The company marked growth in its top and bottom lines for the reported period. However, boosted top and bottom lines for FY25 raise surprises and concern over its sustainability.

For the last three fiscals, the company has reported an average EPS of Rs. 5.28, and an average RoNW of 58.13%. The issue is priced at a P/BV of 6.12 based on its NAV of Rs. 14.22 as of March 31, 2025, and at a P/BV of 2.60 based on its post-IPO NAV of Rs. 33.43 per share (at the upper cap).

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 19.64, and based on its FY24 earnings, the P/E stands at 22.89. Thus, based on its recent financial data, the issue appears fully priced.

The company has posted PAT margins of 19.95% (FY23), 26.48% (FY24), 25.37% (FY25), but RoCE Margins data is missing. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy, based on its financial performances and future prospects.

COMPARISON WITH LISTED PEERS:
As per offer document, the company has shown TV Today, Zee Media, as its listed peers. They are currently trading at a P/E of around 26.1 and NA (as of September 29, 2025).  However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORDS:
This is the 15th mandate from Inventure Merchant in the last five fiscals (including the ongoing one). Out of the last 11 listings, 3 opened at discount, 1 at par, and the rest with premium ranging from 0.45% to 90% on the date of listing.