Landmark Immigration BSE SME IPO review (May apply)

•    The company is engaged in providing integrated global consultancy for immigration related services.
•    It posted spectacular performance from FY24 onwards i.e. for pre-IPO periods that raise eyebrows and concern over its sustainability going forward.
•    Higher spending for IPO process indicates fully structured mode of the IPO.
•    Based on its recent super earnings, the issue appears fully priced. 
•    Well-informed investors may park moderate fund for medium term.

PREFACE:
Though this IPO is opening on January 16, 2025, and its offer document is dated January 10, 2025, it was not available on any web till the eve of January 13, on any public domain, and designated exchange had not uploaded the same till this morning i.e. January 14, 2025. The IPO announcement ad was published on January 11, 2025. This kind of bad practice is being followed and there are no watch or control by the watchdog body. This is really surprising.

ABOUT COMPANY:
Landmark Immigration Consultants Ltd. (LICL) offers an integrated Global Consultancy Services which includes (i) Global Education Consultancy (“GEC”) services to students, aspiring to build career abroad majorly in Canada and (ii) Immigration Consultancy (“IC”) Services for Tourist/Business and application for Permanent Residency (PR). Within GEC, it assists Students in making smarter educational decisions and within IC, the company assists customers in making visa application for tourist or business purpose and who are eligible to obtain a PR in that respective country. 

The Company provides a one-stop solution to the students and customers predominantly from various parts of Punjab, Chandigarh and Vadodara. The Company’s vision is to empower the aspiring students of India and fulfil the dreams of the citizens to position themselves successfully in the global landscape. Company offers a comprehensive range of professional programs in global education consultancy which includes a) Education Consultancy b) Education Loan Guidance and Scholarships c) Admission application Formalities, d) Training for Language Proficiency Tests, e) Study/Schooling Visa etc., Also, it provides Admission support to students right from the time when they enrol with it. Career support is embedded throughout programs rather than at the end of a course. 

Company also offers a range of services in Immigration Consultancy which includes a) Tourist/Business Visa Services b) Permanent Residency Services. it provides consultancy services to customers right from the time when they provide their preferences to travel or to settle in a particular country. The company provides them service which includes detailed consultancy on identifying the right time to travel, destination of travel, the type of documents which are involved in the visa process for tourist/business purpose and for permanent residency purpose. As of September 30, 2024, it had 128 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden book building route IPO of 5600000 equity shares to mobilize Rs. 40.32 cr. (at the upper cap). The company has announced the price band of Rs. 70 – Rs. 72 per share of Rs. 10 each. The issue opens for subscription on January 16, 2025, and will close on January 20, 2025. The minimum application to be made is for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 27.17% of the post-IPO paid up equity capital of the company. The company is spending Rs. 4.72 cr. for this IPO process, and from the net proceeds, it will utilize Rs. 11.01 cr. for capex on setting up of new branches, Rs. 13.95 cr.  for advertisement on creating brand awareness, Rs. 9.60 cr. for inorganic growth, and the rest for general corporate purposes. 

The issue is solely lead managed by Shreni Shares Ltd., and KFin Technologies Ltd. Is the registrar to the issue, Rikhav Securities Ltd. is the market maker for the company, and Shreni Shares Ltd. is a syndicate member. 

After issuing initial equity shares at par value, the company issued bonus shares in the ration of 1500 for 1 in March 2024. The average cost of acquisition of shares by the promoters is Rs. NIL, and Rs. 0.03 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 15.01 cr. will stand enhanced to Rs. 20.61 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 148.39 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 19.32 cr. / Rs. 3.94 cr. (FY22), Rs. 21.63 cr. / Rs. 4.44 cr. (FY23), and Rs. 37.07 cr. / Rs. 11.12 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it earned a net profit of Rs. 5.40 cr. on a total income of Rs. 19.25 cr. 

For the last three fiscals, the company has posted an average EPS of 5.13 and an average RoNW of 23.99%. The issue is priced at a P/BV of 2.56 based on its NAV of Rs. 28.08 as of September 30, 2024, and at a P/BV of 1.80 based on its posts-IPO NAV of Rs. 40.02 per share (at the upper cap). 

If we attribute FY25 annualized super earnings to its post-IPO fully diluted paid-up capital, then the asking price is at a P/E of 13.74. Based on FY24 earnings, the issue is at a P/E of 13.33. The issue relatively appears fully priced based on its recent financial performance. Super earnings in pre-IPO period raise eyebrows.

For the reported periods, the company has posted PAT margins of 21.45% (FY22), 22.65% (FY23), 31.87% (FY24), 30.08% (H1-FY25), and RoE margins of 20.47%, 18.94%, 35.64%, 13.69%, respectively for the referred periods.

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. 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 shown Winy Immigration, as their listed peer. It is trading at a P/E of 191.0 (as of January 14, 2025). However, they are not truly comparable on an apple-to-apple basis.  

MERCHANT BANKER’S TRACK RECORD:
This is the 37th mandate from Shreni Shares in the last three fiscals. Out of the last 10 listings, 1 opened at par, and the rest with premiums ranging from 4.09% to 90% on the date of listings.