Eleganz Interiors NSE SME IPO review (Apply)

•    EIL enjoys virtual monopoly in providing D&B, GC related solutions and services.
•    It marked steady growth in its top and bottom lines for the reported periods.
•    Its order book stood at Rs. 435+ cr. as of December 31, 2024.
•    It is poised for bright prospects ahead with its creamy clients are on expansion spree.
•    It may attract fancy as first mover in the segment post listing.
•    Based on its recent financial performance, the issue appears fully priced.
•    Investors may park funds for medium to long term.

ABOUT COMPANY:
Eleganz Interiors Ltd. (EIL) is engaged in the business of providing interior fit-out solutions, dedicated towards crafting corporate & commercial spaces which includes corporate offices, research & development facilities, laboratories, airport lounge, flexible workspace and commercial retail spaces, amongst others. Its services are focussed towards creating captivating and functional spaces on a pan India level. It elevates the aesthetic and functional aspects of workspaces by delivering interior fit-out solutions. EIL’s solutions range from bare shell to fully furnished commercial spaces. Its range of services include Design & Build services (“D&B”) and General Contracting (“GC”) services. 

Under D&B, it provides end-to-end services which includes designing, shop drawings of the projects, resource planning & procurement of materials, project execution, final walkthrough & handing over the projects and providing post project support. Under GC services, its scope includes (a) civil and interior works i.e. plumbing, POP works, painting, carpentry work and polishing; (b) mechanical work includes ducting, insulations, copper piping, cassette, chiller & air handling units, dampers & diffusers and grills; (c) electrical work includes panels & distribution boards, cables & cable trays, conduiting & wiring, lights fixtures, UPS & batteries, switch sockets & isolators, fire alarm system, sprinklers, and earthing works and (d) final refinements for whole or part of the project which includes windows installation, wall finishes, flooring installation, furniture installation, fixture and appliance installation, signage & branding, quality inspection and touch-ups.

The Company bids for domestic tenders’ issued by large domestic and multi-national corporations, project management consultants and international property consultants’ tenders issued by large domestic and multinational corporations, project management consultants and international property consultants for D&B and GC services. It is awarded projects on work order basis. The work orders usually contain all codes and standards applicable to the project, as may be set out in the specifications, drawings and Bill of Quantities (“BOQ”).

For the reported periods of the offer document, it has successfully completed over 200 projects aggregating to more than 45 lakhs Sq. Ft area of development. As of December, 31, 2024, its Order Book includes 47 ongoing projects with an aggregate contract value of Rs. 434.86 cr. and about 40 lakhs Sq. Ft area of development. Its ongoing projects are currently spread across 12 cities in India. It has a diverse client base representing a broad range of industries such as information technology, manufacturing, banking and financial services, insurance companies, pharmaceutical and healthcare, FMCG, oil and gas, educational institutes, real estate & infrastructure development and renewable energy. The company is a founding member of the IGBC (Indian Green Building Council), which is actively involved in promoting the green building concept in India and have obtained platinum and gold “LEED” certifications for some of the projects executed by it for clients. These affiliations have strengthened its commitment to sustainable and innovative design practices while enabling it to tap into valuable networks and resources within the industry.  As of December 30, 2024, the Company had 63 permanent employees and had engaged 380 persons on retainership basis. It also hires contract labour for various departments as and when required.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden combo IPO of 6005000 equity shares to mobilize Rs. 78.07 cr. (at the upper cap). The company has announced a price band of Rs. 123.00 – Rs. 130.00 per share of Rs. 10 each. The issue opens for subscription on February 07, 2025, and will close on February 11, 2025. The minimum number of shares to be applied is for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.57% of the post-IPO paid-up capital of the company. From the net proceeds of the issue, the company will utilize Rs. 30.00 cr. for working capital, Rs. 25.00 cr.  for repayment of certain borrowings, and the rest for general corporate purposes. 

The IPO is solely lead managed by Vivro Financial Services Pvt. Ltd., Bigshare Services Pvt. Ltd., is the registrar to the issue. Rikhav Securities Ltd., is the Market Maker for the company. Vivro Financial is also a syndicate member. 

Having issued initial equity shares at par value, the company issued further equity shares at a fixed price of Rs. 81 per share (based on Rs. 10 FV) between May 2024 and July 2024. It has also issued bonus shares in the ratio of 2 for 1 in September 1999, 3 for 1 in March 2010, 1 for 1 in October 2010, 1 for 1 in June 2017, and 150 for 1 in August 2023. The average cost of acquisition of shares by the promoters is Rs. 1.77 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 16.60 cr. will stand enhanced to Rs. 22.60 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 293.80 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 155.34 cr. / Rs. 5.09 cr. (FY22), Rs. 191.17 cr. / Rs. 10.31 cr. (FY23), and Rs. 223.09 cr. / Rs. 12.21 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it earned a net profit of Rs. 9.54 cr. on a total income of Rs. 192.40 cr. According to the management, it suffered a minor setback for the Pandemic in FY21 and FY22, but is back on track and currently has an order book worth Rs. 435 cr. The trends set for FY23 onwards will be continued and the company will report improved top and bottom lines going forward.

For the last three fiscals, the company has reported an average EPS of Rs. 6.76 and an average RoNW of 26.86%. The issue is priced at a P/BV of 5.40 based on its NAV of Rs. 42.73 as of September 30, 2024, and at a P/BV of 1.97 based on its post-IPO NAV of Rs. 65.92 per share (at the upper cap).

If we attribute FY25 annualized super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 15.40. Based on FY24 earnings, the P/E stands at 24.07. Based on its recent earnings, prima facie, the issue relatively appears fully priced. But it is set for bright prospects ahead based on inflow of new repeat as well as fresh orders.

According to the management, the company is serving many renowned domestic and global customers for their expansion of office buildings/corporate offices/furniture-fixtures etc.

For the reported periods, the company has posted PAT margins of 3.31% (FY22), 5.42% (FY23), 5.52% (FY24), 4.96% (H1-FY25), and RoCE margins of 15.34%, 21.46%, 24.23%, 15.09%, for the referred periods, respectively.

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 performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.

MERCHANT BANKER’S TRACK RECORD:
This is the 5th mandate from Vivro Financial in the last two fiscals.  Out of the last three listings, all listed at premiums ranging from 43.98% to 99.46% on the date of listing.