Jungle Camps BSE SME IPO review (Apply)

•    The company specialized in wild life safari coupled with leisure tour and related services.
•    It suffered a setback for FY23 on account of non-active additional rooms that were under furnishing.
•    It posted boosted top and bottom lines from FY24 onwards and trends are likely to continue on completion of ongoing expansion plans.
•    Based on FY25 annualized earnings, the issue appears fully priced. 
•    Investors may park funds for long term. 

ABOUT COMPANY:
Jungle Camps India Ltd. (JCIL) is specialized in providing wild life safari along with hospitality and related services. Founded in 2002 with its first lodge Pench Jungle Camp situated in the natural forested estate, the founding lodge provided an intimate connection with the jungles. This was followed by the launch of Kanha Jungle Camp in 2018. The interim years provided a learning curve to the team. Due to the positive feedback and encouragement from the guests and the trade alike, there were more lodges added to the expansion plan -Tadoba Jungle Camp in 2021 and Rukhad Jungle Camp in 2022.

The company is focused on delivering the luxury with conservation focused camps were set up not only as a business venture but to offer guests a unique and memorable experience in the most natural and rustic environment. The aim was to offer authentic, responsible and immersive experience to every guest and to showcase the best Indian wildlife and hospitality has to offer. Pench Jungle Resorts Private Limited with the object of operating wildlife camps and hotels, motels, inns, guest house, holidays home, health club, catering houses, restaurants in India and elsewhere and service related there to.

JCIL is a conservation focused hospitality group with a collection of four award winning boutique resorts located at prime wildlife and tiger reserves national parks across central India, a highway retreat, a restaurant and many other bespoke travel related experiences. Currently, the Company along with its subsidiary companies owns and manages total of 87 room accommodation which includes villa, cottages, deluxe rooms, safari tents etc along with other infrastructure including banquet halls, meeting rooms, restaurants, bars, cafés, swimming pool, spa facilities and other associated amenities and facilities.

While presently the Company owns and operates two boutique wildlife resorts and one highway retreat and one highway restaurant on standalone basis, other two boutique resorts are owned and operated respectively through wholly owned subsidiary, Divine Enterprises Private Limited and a subsidiary, Versa Industries Private Limited. Further, the Company has recently set up another wholly owned subsidiary, Madhuvan Hospitality Private Limited as a special purpose vehicle owning and operating 60 room four-star hotel project at Mathura. As on the date of filing this offer document, it had 194 employees on its payroll.

According to the management, clubbing of subsidiary performances and the added rooms helped it to post higher top and bottom lines from FY24 onwards and the trends will continue considering its expansion plans afoot. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 4086400 equity shares of Rs. 10 each to mobilize Rs. 29.42 cr. at the upper cap. It has announced a price band of Rs. 68 - Rs. 72 per share. The issue opens for subscription on December 10, 2024, and will close on December 12, 2024. 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 26.37% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, the company will utilize Rs. 7.00 cr. for capex on Sanjay Dubri National Park project, Rs. 3.50 cr. capex on Pench Jungle Camp, Rs. 11.50 cr. for investment in subsidiary Madhuvan Hospitality Pvt. Ltd., and the rest for general corporate purposes. (The IPO price band ad has shown 4086000 shares on offer which is incorrect, the company issued corrigendum to that effect on 05.12.24).

The IPO is solely lead managed by Khambatta Securities Ltd., and Skyline Financial Services Pvt. Ltd., is the registrar to the issue. Nikunj Stock Brokers Ltd., is the Market Maker for the company, as well as a syndicate member. 

Having issued initial equity shares at par value, the company issued further equity shares in the price range of Rs. 23.40 - Rs. 100.00 per share between March 2008 and July 2024. It has also issued bonus shares in the ratio of 1 for 1 in March 2024, and 3 for 5 in May 2024. The average cost of acquisition of shares by the promoters is Rs. 3.13, Rs. 4.75, Rs. 4.84, Rs. 5.31, and Rs. 7.04 per share. 

Post-IPO, company's current paid-up equity capital of Rs. 11.41 cr. will stand enhanced to Rs. 15.50 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 111.59 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue/net profit of Rs. 7.81 cr. / Rs. 0.73 cr. (FY22), Rs. 11.25 cr. / Rs. 0.48 cr. (FY23), and Rs. 18.11 cr. / Rs. 4.01 cr. (FY24). For Q1 of FY25 ended on June 30, 2024, it earned a net profit of Rs. 1.17 cr. on a total revenue of Rs. 5.72 cr. It marked degrowth in bottom lines for FY23 as the rooms added were not operative during the fiscal, but helped it to boost its performance in the following fiscal. 

For the last three fiscals, the company has reported an average EPS of Rs. 3.06 and an average RoNW of 13.34%. The issue is priced at a P/BV of 4.14 based on its NAV of Rs. 17.40 as of June 30, 2024, but its post-IPO NAV data is missing in the IPO price band ad.

If we attribute FY25 annualized super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 23.84, and based on FY24 earnings, it stands at 27.91. The issue relatively appears fully priced.

For the reported periods, the company has posted PAT margins of 9.86% (FY22), 4.05% (FY23), 20.54% (FY24), 19.57% (Q1-FY25), and RoCE margins of 10.30%, 7.67%, 24.75%m 7.42%, respectively for the referred periods. 

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 Best Eastern Hotels, The Byke Hospitality, Espire Hospitality, and Ras Resorts as their listed peers. They are trading at a P/E of 185, 66.1, 111, and 56.4 (as of December 05, 2024). However, they are not truly comparable on an apple-to-apple basis. The peers list appears to be an eyewash.

MERCHANT BANKER'S TRACK RECORD:
This is the 11th mandate from Khambatta Securities in the last three fiscals (including the ongoing one).  From the 10 listings so far, all listed with a premiums ranging from 0.06% to 306.88% on the listing date.