Manas Properties BSE SME IPO review (May apply)

Manas Properties Ltd (MPL) is primarily into the business of acquiring properties and leasing / letting it out to its clients thereby earning lease rentals / license fees as consideration, as well as earning price appreciation (as the case may be). Currently ther company owns a property admeasuring approximately 3,078 square metres of built up area located at Plot No 16, Juhu Tara Road Santacruz (West), Mumbai -400049, which has been leased out to Junobo Hotels Private Limited, for operating “Soho House” , a private luxury club the lease rentals of which shall be received from financial year 2017-18. Further MPL also acts as a real estate marketing and consultancy company; wherein it support sales/ lease targets of builders/ developers in return for commission on a fixed/ percentage basis. Currently the real estate marketing and consultancy business is being carried out for its Group Company; i.e. Dev Land and Housing Private Limited and it has begun the process of entering into such agreements with other developers in order to expand its customer base and available inventory portfolio for clients for providing these services.

To part finance repayment of loans, property acquisitions, general corpus fund needs, the company is coming out with a maiden IPO of 1110000 equity share of Rs. 10 each (comprising of 150000 fresh equity issue and 960000 offer for sale) at a fixed price of Rs. 360 per share to mobilize Rs. 39.96 crore. Issue opens for subscription on 17.03.17 and will close on 22.03.17. Minimum application is to be made for 300 shares and in multiples thereon, thereafter. Post allotment shares will be listed on BSE SME. Issue is solely managed by Aryaman Financial Services Ltd and Bigshare Services Pvt Ltd is the registrar to the issue. Its entire equity is issued at par. Its current paid up equity capital of Rs. 4.01 cr. will stand enhanced to Rs. 4.16 cr. post issue.

On performance front, the company has posted turnover/net profits of Rs. 11.03 cr. / Rs. -0.24 Cro. (FY13), Rs. 8.28 cr. / Rs.-2.80 cr. (FY14), Rs. 7.11 cr. / Rs. -1.61 cr. (FY15) and Rs. 7.73 cr. / Rs. 5.34 cr. (FY16). For the eight months’ period ended on 30.11.16 it has earned net profit of Rs. 1.25 cr. on a turnover of Rs. 1.98 cr. Thus it has erratic trends of performance. Sudden jump in net profit for FY 15 is surprising. If we annualize the latest earnings and attribute it on the fully diluted equity post issue, then asking price is at a P/E of around 79 and P/BV if 28 times plus making it a costly offer. The company posted profits only in FY 16 and thereafter. As per prospectus the company has no listed peers to compare with.

On merchant banker’s front, this is the 15th mandate in last three years and past mandates have shown mixed trends.

Conclusion: Issue is highly priced and hence there is no harm in giving it a miss. However, risk savvy cash surplus investors may consider investment at their discretion.