Naturewings Holidays BSE SME IPO review (May apply)

•    The company is a tour operator with prime focus on Himalayan Destinations.
•    It has recently started international destination tour management.
•    The company has posted steady growth in its top and bottom lines for the reported periods. 
•    Small equity post-IPO indicates longer gestation period for migration.
•    IPO expenses indicates full structured mode of this IPO.
•    Well-informed investors may park funds for medium to long term.

PREFACE:
Aho Ashi.e. 17.07%), which indicates that the issue is fully structured with financing arrangements and hence has not bothered to give IPO opening info well in time. It this being done in a right spirit??

ABOUT COMPANY:
Naturewings Holidays Ltd. (NHL) is a tourism company with its primary focus being the entire Himalayan destination across India, Nepal and Bhutan. It offers specialized and curated holiday packages for leisure travelers visiting the Himalayan ranges. The company offers end to end travel solutions including land and air bookings, hotel bookings, in-transit arrangements, local sightseeing and such other destination management services. 

NHL designs travel packages for both individuals and groups traveling to the Himalayan destinations. It is one of the Indian companies that is registered with the Tourism Council of Bhutan, through its representative. The company recently started its international division to offer services on international destination. Besides, it also started providing value added service such as travel related foreign exchange & payment solutions. Go-to-market strategy spans the entire value chain of leisure holiday packages for the Himalayan Ranges covering B2C (Business to Consumer) and B2B (Business to Business which includes business to agents). 

Its travel agent network provides additional scale to business by leveraging destination knowledge and experience in order to aggregate consumer demand from over 100 travel agents in more than 12 major cities across India as of March 31, 2024. It also offers non-curated standard holiday packages to the Himalayan Ranges through its website, https://online.naturewings.com. NHL's online portal provides necessary details to the travelers about the packages, like detail itinerary, site to visit, hotel sets and any special notes related to the package. Its website is supported by payment gateways thus enabling potential customers to book and pay for their holiday packages.

As of March 31, 2024 it had access to over 750 hotels across Bhutan, Nepal, North East, Sikkim-Darjeeling and Kashmir-Ladakh in the Himalayan Ranges and in various international destinations. It continuously innovates product and services offerings with the flexibility to meet the changing needs of customers and to address their needs better. Its focused approach on competitors. As of March 31, 2024, it had 51 employees on its payroll. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 950400 equity shares of Rs. 10 each at a fixed price of Rs. 74 per share to mobilize Rs. 7.03 cr. The issue opens for subscription on September 03 2024, and will close on September 05, 2024. 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 30.07% of the post-IPO paid-up capital of the company. The company is spending Rs. 1.20 cr. for this IPO proceeds, and from the net proceeds, it will utilize Rs. 3.95 cr. for working capital, Rs. 1.02 cr. for marketing and business promotions, and Rs. 0.86 general corporate purposes. 

The issue is solely lead managed by Fedex Securities Pvt. Ltd., and Bigshare Services Pvt. Ltd. is the registrar to the issue. Pure Broking Pvt. Ltd. is the market maker for the company. 

The company has issued entire initial equity shares at par value so far and has also issued bonus shares in the ratio of 16 for 1 in August 2022, and 16 for 10 in October 2023. The average cost of acquisition of shares by the promoters is Rs. 0.24, and Rs. 0.37 per share. 

Post-IPO, company's current paid-up equity capital of Rs. 2.21 cr. will stand enhanced to Rs. 3.16 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 23.39 cr.  

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 4.18 cr. / Rs. 0.20 cr. (FY22), Rs. 11.76 cr. / Rs. 0.65 cr. (FY23), Rs. 21.90 cr. / Rs. 1.12 cr. (FY24). 

For the last three fiscals, it has reported an average EPS of Rs. 3.66, and an average RoNW of 38.92%. The issue is priced at a P/BV of 6.16 based on its NAV of Rs. 12.02 as of March 31, 2024, and at a P/BV of 2.41 based on its post-IPO NAV of Rs. 30.66 per share. 

If we attribute FY24 earnings to its post-IPO fully diluted paid-up capital, then the asking price is at a P/E of 20.90. 

For the reported periods, the company has posted PAT margins of 4.82% (FY22), 5.56% (FY23), 5.13% (FY24), and RoCE margins of 30.07%, 53.05%, 57.37% 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. 

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Sailani Tours as their listed peers. It is trading at a P/E of 40.8 (as of August 30, 2024). However, they are not comparable on an apple-to-apple basis.

MERCHANT BANKER'S TRACK RECORD:
This is the 33rd mandate from Fedex Securities in the last four fiscals (including the ongoing one), out of the last 11 listings, all listed with premiums ranging from 1.43% to 140.82% on the date of listing.