Parin Furniture NSE SME IPO review (Apply)

• The company manufactures established brand furniture.
• Enjoys good market network across 18 states.
• Company gains from use of new technology and innovations.
• Issue is reasonably priced.

ABOUT COMPANY:
Parin Furniture Ltd. (PFL) is a provider of wide and exclusive range of furniture and lifestyle products for several consumers. The company is consistent in supplying of quality products round the year as customized products are made available to them as per the market demand. PFL's subsidiary Company namely Pearl Furniture Private Limited has well established manufacturing unit located at Survey No. 26, Shapar Main Road, Village, Shapar, Taluka – Kotada Sangani, Dist – Rajkot-360024, having high tech equipments and design facility to manufacture various combination and size of products as per specification and needs of the customers. It is equipped with all facilities to execute all types of manufacturing activities such as panel cutting, edge bidding, post forming, painting line, fabrication, moulding, cutting and polishing & packaging, etc. The company is using latest machineries & technology and keeps on up-grading its manufacturing set-up, design capabilities and workmanship to deliver superior quality products with on-time deliveries and with emphasis on quality.

PFL's business network is spread in 18 States. It has COCO (Company owned – Company Operated) Flagship Retail Stores and around 900 dealers. The company has huge stock keeping facilities having storage area with strong supply chain management. In addition to this, it has created spacious, specially designed showrooms for display of r various products like home furniture, office furniture, hospital furniture, institutional furniture etc.

The company consistently introduces new design in products. It has integrated in-house capabilities to market, distribute and retail conceptualized furniture. Its subsidiary has hired an international designer from Turkey who develops new product design. To maintain space and remain competitive in today's changing market place, the company follows various business verticals like B2B, Projects – Government & Private, Retail and E-Commerce. PFL follows the regime of honest price policy for customers. If understand the customer needs, market trends mapping and provide value for money products. The Company has obtained certifications like ISO- 9001:2015, ISO-14001:2015, ISO-13485:2012, OHSAS 18001:2007 & Assured Green Guard Business. Apart from this, it also has registered membership of BIFMA Certification.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance repayment of certain secured borrowings, working capital and general corpus fund needs, PFL is coming out with a maiden IPO of 3000000 equity shares of Rs. 10 each via book building issue. It has fixed a price band of Rs. 60-Rs. 63 per share. PFL mulls to mobilize Rs. 18.00 cr. to Rs. 18.90 cr. based on lower and upper price bands. Issue opens for subscription on 26.09.18 and will close on 28.09.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Hem Securities Ltd. while Karvy Computershare Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.98% of the post issue paid up capital of the company. As on 31.03.18 it has bank loans of Rs. 9.48 cr. out of which, it will repay Rs.9 crore from the funds mobilized through this issue. Thus it will become debt free company post issue.

Having issued initial equity at par, it raised/converted further equity in the price range of Rs. 22 to Rs. 202.79 per share between March 2009 and March 2018. It has also issued bonus shares in the ratio of 10 for 1 on 17.03.18 and 1 for 5 on 24.03.18. Average cost of acquisition of shares by the promoters is Rs. 6.56, Rs. 7.34 and Rs. 13.48 per share. Post issue, PFL's existing paid up capital of Rs. 8.12 cr. will stand enhanced to Rs. 11.12 cr.

FINANCIAL PERFORMANCE:
On financial performance front, for last four fiscals, PFL has (on standalone basis) posted turnover/net profits of Rs. 28.76 cr. / Rs. 0.28 cr. (FY15), Rs. 61.78 cr. / Rs. 1.01 cr. (FY16), Rs. 59.94 cr. / Rs. 1.36 cr. (FY17) and Rs. 64.59 cr. / Rs. 2.62 cr. Having realigned its group companies last year, on consolidated basis it has posted turnover of Rf. 65.32 cr. with a net profit of Rs. 4.19 cr. For last three fiscals (on standalone basis) it has posted an average EPs of Rs. 3.56 and an average RoNW of 20.41%. Issue is priced at a P/BV of 3.07 on the basis of its consolidated NAV of Rs. 20.52 as on 31.03.18 and at a P/BV of 1.97 on the basis of post issue NAV at upper cap of issue. If we consider consolidated FY18 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 16.70 plus thus it is reasonably priced against industry average of 29. As company is clearing its high cost debt in full, it will reduce its interest liability resulting in increased margins.

COMPARE WITH LISTED PEERS:
As per offer documents, it has shown Nilkamal as its listed peer that is trading at a P/E of around 22 (as on 21.09.18).

MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's front, this is the 49th mandate from its stable in last six fiscals. Out of last 10 listings, 2 opened at discount and the rest with a premium ranging from 2.78% to 20% on the day of listing.