Times Green Energy BSE SME IPO review (Avoid)

•    The first 'All women board of director' company goes public.
•    Though novel concept, its financial data is non-encouraging.
•    The issue is priced exorbitantly.
•    With tiny equity, it will take a longer time for migration to the mainboard.

ABOUT COMPANY:
Times Green Energy India Ltd.(TGEIL) is a women entrepreneurial venture having an all-women board of directors.

The company is deeply involved in the rural ecosystem surrounding women in and around certain villages of Telangana, Andhra Pradesh & border areas of Karnataka. It also involves local agents and traders based in the state of Telangana for selling its goods. Likewise, the Company also procures goods from local dealers and vendors via local agents based in the state of Telangana. As of Dec 31, 2020, the Company employs 13 persons on its payroll.

TGEIL is currently involved in three core business activities - namely distribution of - Agro Products; Agrochemicals (including organic bio-products) and Sanitary Napkins.

With a growing network of women among these villages, the company started helping to create awareness about women hygiene products such as Sanitary Napkins along with other organizations doing such work. Thereafter in 2018 it formally entered into Woman Hygiene & Safety Segment by launching Sanitary Napkins under the brand name - 'Monthly times'.

The Company has recently launched an application in September 2020, on the play store by name of Bharatbazaar (Kisaan to Kitchen) wherein it sells various categories of products i.e. it has more than 1,000 products in its catalogue ranging from cooking essentials such as oil, basmati rice to bakery and dairy items, snacks and branded foods, beverages and sanitary napkins etc. The Company provides delivery service in and around Hyderabad.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans for working capital (Rs. 0.54 cr.), purchasing and setting up of registered office (Rs. 1.19 cr.), purchase of vehicles and ERP package (Rs. 0.53 cr.), funding of Sanitary Napkin SBUs set up (Rs. 0.60 cr.) and general corpus fund (Rs. 0.82 cr.) needs, TGEIL is coming out with a maiden IPO of 664000 equity shares of Rs. 10 each at a fixed price of Rs. 61 per share to mobilize Rs. 4.05 cr. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. The issue is opening for a subscription on June 16, 2021, and will close on June 22, 2021. Post allotment, shares will be listed on BSE SME. The issue constitutes 39.90% of the post issue paid-up capital of the company. The company is spending Rs. 0.37 cr. for this IPO process.

The issue is solely lead managed by Aryaman Financial Services Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Aryaman Capital Markets Ltd. is the market maker for this IPO.

The company has issued entire equity at par so far. The average cost of acquisition of shares by the promoters is Rs. 10.00 and Rs. 42.78 per share (maybe loan conversion cost).  

Post issue TGEIL's current paid-up equity capital of Rs. 1.00 cr. will stand enhanced to Rs. 1.66 cr. Based on the issue pricing, the company is looking for a market cap of Rs. 10.15 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, the company has posted turnover/net profits of Rs. 20.19 cr. / Rs. 0.08 cr. (FY18), Rs. 15.16 cr. / Rs. 0.10 cr. (FY19) and Rs. 14.15 cr. / Rs. 0.12 cr. (FY20). For the nine months period ended on December 31, 2020, of FY21, it has earned a net profit of Rs. 0.13 cr. on a turnover of Rs. 5.87 cr. Thus while its top-line marked a declining trend, surprisingly, its bottom line posted growth.

For the last three fiscals, the company has posted an average EPS of Rs. 1.67 and an average RoNW of 10.44%. The issue is priced at a P/BV of 4.23 based on its NAV of Rs. 14.43 as of December 31, 2020, and at a P/BV of 1.63 based on its post-issue NAV of Rs. 37.46.

If we annualize FY21 earnings and attribute it to fully diluted post issue equity, then the asking price is at a P/E of around 59.80. Thus the issue is exorbitantly priced.

COMPARISON WITH LISTED PEERS:
As per offer documents, the company has no listed peers to compare with.

MERCHANT BANKER'S TRACK RECORD:
This is the 27th mandate from Aryaman Financial in the last four fiscals (including the ongoing one). Out of the last 10 listings, 2 opened at discount and the rest with premiums ranging from 0.04% to 2.16% on the day of listing.