Osia Hyper Retail NSE SME IPO review (May apply)

•    OHRL is a supermarket chain with 11 stores in Gujarat.
•    All stores operated under 'Osia Hypermart' name.
•    Based on current financials, the issue appears fully priced.
•    Lead Manager has an average track record.

ABOUT COMPANY:
Osia Hyper Retail Ltd. (OHRL) is an emerging supermarket chain with a focus on value- retailing. It opened the first store in Ahmedabad, Gujarat in 2014, in the name of 'Osia Hypermart'. It works on the same economy model as other various retail showroom chains. As on date, the company has 11 stores with the retail business located across various cities in Gujarat. The Osia Hypermart stores have various divisions to meet the fluctuated shopping needs of customers. These incorporate Menswear, Women's wear, Kid's wear, Footwear, Cosmetics, Perfumes and Handbags, Household Accessories, lingerie, Gifts, Groceries, crockery, Handicrafts, utensils, handlooms, etc under one roof.

The company is also planning to trade Wholesale, which will boost-up the growth of the company and increase the scope of business and also Bulk trade with other retail stores and competitors to increase their client coverage.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans to purchase of fit-outs for stores (Rs. 8.48 cr.), working capital (Rs. 28.70 cr.) and general corpus fund (Rs. 1.60 cr.) needs, OHRL is coming out with a maiden IPO of 1578400 equity shares of Rs. 10 each at a fixed price of Rs. 252 per share to mobilize Rs. 39.78 cr. The issue opens for subscription on 26.03.19 and will close on 28.03.19. Minimum application is to be made for 400 shares and in multiples thereon thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 26.52% of the post issue paid up capital of the company. The issue is solely lead managed by Monarch Networth Capital Ltd. while Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Monarch Networth Capital Ltd. is also acting as a market maker for this issue.

Having issued initial equity at par, OHRL raised further equity in the price range of Rs. 80 and Rs. 144 between September 2016 and September 2018. It has also issued bonus shares in the ratio of 1 share for every 1 share held in November 2017. The average cost of acquisition of shares by the promoters is Rs. 12 per share. Post issue OHRL's current paid up equity capital of Rs. 4.38 cr. will stand enhanced to Rs. 5.95 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, OHRL has posted turnover/net profits of Rs. 53.54 cr. / Rs. 0.35 cr. (FY16), Rs. 95.33 cr. / Rs. 0.88 cr. (FY17) and Rs. 142.23 cr. / Rs. 5.35 cr. (FY18). For the first eight months of the current FY19, it has earned a net profit of Rs. 4.74 cr. on a turnover of Rs. 145.01 cr. Thus it has posted rising trends in the top and bottom lines.

For the last three fiscals, it has posted an average EPS of Rs. 9.33 and an average RoNW of 31.95%. The issue is priced at a P/BV of 4.42 on the basis of its NAV of Rs. 57.00 as on 30.11.18.

If we annualize latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 21 making it a fully priced offer.

COMPARISION WITH LISTED PEERS:
As per offer documents, it has shown Avenue Supermart, V-Mart Retail, V2 Retail, Aditya Consumer and Future Consumer as its listed peers. All these peers are currently trading at a P/Es of around 103, 62, 22, 31 and 156(as on 20.03.19).  However, all these peers are not strictly comparable.

MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's front, this is the 10th mandate from its stable in last three fiscals. Out of last 9 listings, 2 opened at discount, 3 at par and the rest with a premium ranging from 1.43% to 21.5% on the day of listing. Thus it has an average track record so far.