Toss The Coin BSE SME IPO review (May apply)

•    The company is engaged in marketing consulting and related services.
•    The company posted inconsistency in its financial performance for the reported periods.
•    Tiny paid-up capital post IPO indicates longer gestation period for migration.
•    Based on FY25 supper annualized earnings, the issue appears fully priced.
•    Well-informed investors may park moderate funds for medium term. 

ABOUT COMPANY:
Toss the Coin Ltd. (TTCL) is a marketing consulting company, which provides custom made marketing services to clients. It is growth accelerators who help businesses grow by implementing marketing operations that is creative, responsible and sustainable. TTCL works with companies to bring a new-age modern perspective to their brand. It believes in the power of build go-to-market strategies that are tailored to individual customer needs. It has a team and a set of enviable offerings for clients spanning the entire length & breadth of marketing.

TTCL is dedicated team well-versed in all technology, enabling businesses to thrive with strategy-led and creatively backed market plans. With years of experience in exploring tech and marketing, toss the coin has led businesses to get creative with out-of-the-box GTM (Go-To-Market) strategies. At toss the coin, it brings the best of marketing and innovation to lead business to success.

Its services offerings are structured in a way to be able to handle all types of clients' needs across Marketing, Pre-sales, Lead-gen, Branding and Communications etc. The company is marketers who thrive in creatively adding meaning to brands with services. With a proven method, it creates the right visual language and voice for organizations to help brands de-clutter from competition. As of September 30, 2024, it had 43 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 504000 equity shares of Rs. 10 each to mobilize Rs. 9.17 cr. at the upper cap. It has announced a price band of Rs. 172 - Rs. 182 per share. The issue opens for subscription on December 10, 2024, and will close on December 12, 2024. The minimum number of shares to be applied is for 600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.67% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, the company will utilize Rs. 2.95 cr. for capex on development of microservices application, Rs. 1.20 cr. capex on new offices opening, Rs. 2.00 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Beeline Capital Advisors Pvt. Ltd., and Link Intime India Pvt. Ltd. is the registrar to the issue. Spread X Securities Pvt. Ltd., is the Market Maker for the company as well as the syndicate member. 

Having issued initial equity shares at par value, the company issued further equity shares at a fixed price of Rs. 220 per share in November 2020. It also issued bonus shares in the ratio of 10 for 1 in June 2024. The average cost of acquisition of shares by the promoters is Rs. 0.91 per share. 

Post-IPO, company's current paid-up equity capital of Rs. 1.39 cr. will stand enhanced to Rs. 1.89 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 34.40 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 3.00 cr. / Rs. 1.05 cr. (FY22), Rs. 4.84 cr. / Rs. 1.78 cr. (FY23), and Rs. 4.96 cr. / Rs. 1.10 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it earned a net profit of Rs. 1.16 cr. on a total income of Rs. 4.39 cr. While it marked a setback for FY24, the boost in its bottom lines for H1-FY25 raise eyebrows and concern over its sustainability. 

For the last three fiscals, the company has reported an average EPS of Rs. 9.45 (simple average) and an average RoNW of 37.96%. The issue is priced at a P/BV of 5.06 based on its NAV of Rs. 36.00 as of September 30, 2024, and at a P/BV of 2.43 based on its post-IPO NAV of Rs. 74.93 per share (at the upper cap).

If we attribute FY25 annualized super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 14.81, and based on FY24 earnings, the P/E stands at 31.33.  The issue relatively appears fully priced.

For the reported periods, the company has posted PAT margins of 35.31% (FY22), 37.27% (FY23), 22.59% (FY24), 26.66% (H1-FY25), and RoCE margins of 98.84%, 85.28%, 34.32%, 32.49%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has declared dividend of 30% (FY22), 60% (FY23), and 200% (FY24). It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

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

MERCHANT BANKER'S TRACK RECORD:
The merchant banker associated with the issue has handled 50 public issues out of which 2 issues closed below the issue price on listing date.