BrandBucket Media BSE SME IPO review (Avoid)

•    BMTL is engaged in providing advertising and related media services.
•    It also provides an event management and social media strategies.
•    The company relies on third-party for its service portfolio.
•    Its financial data shows inconsistency, a sudden boost in bottom-line raises eyebrows.
•    Issue is aggressively priced and may be ignored. 

ABOUT COMPANY:
BrandBucket Media & Technology Ltd. (BMTL) is engaged in providing advertising and related media services. Its advertising media solutions include both offline like outdoor as well as digital media through Websites, Social Media Platforms, & Search Engines. BMTL's primary advertising offerings include Digital marketing; Ground events/activations; Events Management; Marketing Technology Services; Outdoor Media (OOH) and Print Media.

Its outdoor media operations are spread across Mumbai & Thane. It helps clients run a focused campaign in consumer populated areas. It is also engaged in Events Management which includes planning, organizing and managing events. The company manages commercial events, corporate events, cultural events and also small brand promotion events for clients. Its brand activation services include mall activations, consumer contact programs and roadshows.

BMTL also provides technology services enabling social media strategies and implementation for clients through innovation and creativity. Its expertise with the technologies, applications, standards, regulations and compliances with respect to the media and technology industry are relevant in each domain, quality of service & resource base enables it to offer a value proposition to clients.

The company relies on third parties for providing its services, including designers, purchase of media and other material required for business. It does not own any of the media and does not keep an inventory of any media on its own. It plans to buy media for clients as per the timing of their requirements. BMTL has 12 employees on its payroll as of the date of filing of these documents.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its funding needs for working capital (Rs. 2.84 cr.), Capital Expenditure (Rs. 2.71 cr.) and general corporate purpose (Rs. 2.00 cr.), BMTL is coming out with a maiden IPO of 1500000 equity shares of Rs. 10 each at a fixed price of Rs. 55 per share to mobilize Rs.8.25 cr. The issue opens for subscription on December 20, 2021, and will close on December 23, 2021. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 47.57% of the post issue paid-up capital of the company. BMTL is spending Rs. 0.70 cr. for this IPO process.

The issue is solely lead managed by Inventure Merchant Banker Services Pvt. Ltd. and Satellite Corporate Services Pvt. Ltd. is the registrar to the issue. NNM Securities Pvt. Ltd. is the market maker for this company. 

Having issued initial equity at par, the company raised further equity at a fixed price of Rs. 700 per share in May 2021. It has also issued bonus shares in the ratio of 86 for 1 in June 2021. The average cost of acquisition of equity shares by the promoters is Rs.  

Post-issue, BMTL's current paid-up equity capital of Rs. 1.65 cr. will rise to Rs. 3.15 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 17.34 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, BMTL has posted total revenue/net profits of Rs. 6.78 cr. / Rs. 0.15 cr. (FY19), Rs. 22.88 cr. / Rs. 0.35 cr. (FY20) and Rs. 15.19 cr. / Rs. 0.29 cr.(FY21). For the first five months of FY22, it has earned a net profit of Rs. 0.22 cr. on total revenue of Rs. 6.14 cr. The sudden boost in the bottom line for the current fiscal raises eyebrows. 

For the last three fiscals, it has posted an average EPS of Rs. 3.35 and an average RoNW of 36.68%. The issue is priced at a P/BV of 4.87 based on its NAV of Rs. 11.29 as of August 31, 2021, and at a P/BV of 1.59 based on its post-issue NAV of Rs. 34.60.  

If we annualize FY22 earnings and attribute it to fully diluted post IPO equity, then the asking price is at a P/E of 33.13 and on the basis of FY21 earnings, it stands at 59.78. Thus the issue is priced aggressively. 

COMPARISON WITH LISTED PEERS:
As per offer documents, BMTL has shown Pressman Advertising, Praveg Communications and Esha Media as its listed peers. They are currently trading at a P/E of 13.82, 20.96 and 00 (As of December 17, 2021). However, they are not truly comparable on an apple-to-apple basis. 
 
DIVIDEND POLICY:
The company has not declared any dividend since incorporation. It will adopt a prudent dividend policy based on its financial performance and future prospects. 

MERCHANT BANKER'S TRACK RECORDS:
This is the 6th mandate from Inventure Merchant in the last four fiscals (including the ongoing one). Out of the last five listings, 2 opened at discount and the rest with premiums ranging from 0.19% to 57.14%. Thus it has an average track record.