Icon Facilitators BSE SME IPO review (Avoid)

•    The company is engaged in offering focused and integrated business services for B2B segment.
•    Though it posted growth in its top lines for the last three fiscals, it marked inconsistency in its bottom lines. 
•    The boosted top and bottom lines for FY25 i.e., in pre-IPO year raise eyebrows and its sustainability going forward as it is operating in a highly competitive and fragmented segment.
•    Based on its recent financial data, the issue appears aggressively priced.
•    There is no harm in skipping this pricey bet being “High Risk/Low Return”.

ABOUT COMPANY:
ICON Facilitators Ltd. (IFL) is a focused and integrated business services platform in India offering technical facilities management services to customers, primarily concentrated in North India presence. It is engaged in business of providing technical facilities management services such as: -
- Electrical System Management Operation, - Captive Power Management, - STP/ETP and Water Treatment, - HVAC Management, - Building Management System (BMS), - Fire & Safety Equipment’s, - Elevators Escalators Operations & Maintenance, and - Annual Maintenance Contract of E&M Equipment. Thus, it provides complete bouquet of solutions to all commercial, retail, industrial and residential clients.

The Company primarily provides Hard Services to industrial, commercial, retail, and residential clients on B2B model. Typical facility management includes maintaining electrical systems, machinery, operating DG sets during outages, managing STP/ETP plants, and ensuring fire safety operations. It delivers comprehensive technical facility management solutions under one roof, catering to the diverse needs of clients. However, its role is limited to the Operations and Maintenance of facilities, and it is not involved in the design or installation of machinery or systems.

IFL Operations are mainly concentrated in the Northern part of India, having major presence in Haryana, Uttar Pradesh and Delhi with 68, 34 and 22 sites respectively in Fiscal 2025. The company also has a presence in other regions, including Rajasthan with 4 sites, Punjab, and Himachal Pradesh, with 1 site each. IFL opened a new office in Bengaluru on August 06, 2024, as part of its strategic expansion into the southern region of India. The company anticipates business growth in this new geography and are eager to capitalize on the opportunities to expand its client base and strengthen presence in the region. As of March 31, 2025, it had 2030 employees on its payroll, and 130 number of sites. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 2100000 equity shares to mobilize Rs. 19.11 cr. at the upper cap. The company has announced a price band of Rs. 85 – Rs. 91 per share of Rs. 10 each. The issue opens for subscription on June 24, 2025, and will close on June 26, 2025. The minimum number of shares to be applied is for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes xx% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, the company will utilize Rs. 16.00 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Khambatta Securities Ltd., and Maashitla Securities Pvt. Ltd., is the registrar to the issue. Nikunj Stock Brokers Ltd. is the market maker as well as a syndicate member.

The company has issued initial equity shares at par value. It issued further equity shares at a fixed price of Rs. 91 per share in September 2024. The company also issued bonus shares in the ratio of 550 for 1 in August 2024. The average cost of acquisition of shares by the promoters is Rs. 0.02 per share. The company has emptied coffins ahead of IPO.

Post-IPO, company’s current paid-up equity capital of Rs. 5.76 cr. will stand enhanced to Rs. 7.86 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 71.52 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 42.96 cr. / Rs. 1.92 cr. (FY23), Rs. 49.85 cr. / Rs. 1.76 cr. (FY24), Rs. 58.07 cr. / Rs. 4.47 cr. (FY25). Boosted top and bottom lines for FY25 raises eyebrows and concern over its sustainability. It appears to be a window dressing for pre-IPO year to get fancied valuations. Trade receivables of Rs. 16.40 cr. as of March 31, 2025 is also alarming.

For the last three fiscals, the company has reported an average EPS of Rs. 5.60 and an average RoNW of 35.15%. The issue is priced at a P/BV of 4.05 based on its NAV of Rs. 22.47 as of March 31, 2025, but its post-IPO NAV data is missing from the documents. The company is operating in a highly competitive and fragmented segment.

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 15.99. Based on FY24 earnings, the P/E stands at 40.63. The issue relatively appears aggressively priced.

For the reported periods, the company has posted PAT margins of 4.48% (FY23), 3.54%, (FY24), 7.70% (FY25), and RoCE margins of 37.95%, 33.46%, 37.09% for the referred periods, respectively. 

DIVIDEND POLICY:
The company has not paid any dividends since incorporation. 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 Updater Services, Krystal Integrated, and Rithwik Facility, as their listed peers. They are trading at a P/E of 16.1, 13.9, and 14.2 (as of June 19, 2025). However, they are not truly comparable on an apple-to-apple basis. These peers compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
This is the 12th mandate from Khambatta Securities in the last four fiscals, including the ongoing one.  From the last 11 listings, all listed with a premium ranging from 0.61% to 181.46% on the listing date.