Winny Immigration NSE SME IPO review (Avoid)

•    The company is primarily in visa consultancy business. 
•    It posted static top lines for the reported periods with declined bottom line for FY24.
•    Based on FY24 earnings, the issue is exorbitantly priced. 
•    The company has emptied the coffin before IPO.
•    Simply stay away from this pricey and high-risk bet. 

ABOUT COMPANY:
Winny Immigration and Education Services Ltd. (WIESL) is mainly in the visa consultancy business. It provides assistance (Service) to individual for study, travel, work, business and migration purpose. As the world becomes increasingly interconnected, the demand for skilled professionals, students, and travelers to cross borders has surged and the company has seized this opportunity to expand its business by providing guidance in the complex process of obtaining visa's for different purposes in current era. 

WIESL has successfully assisted thousands of clients in navigating the complex immigration and visa processes. By providing Visa consultancy, the company is playing pivotal role in facilitating global mobility and connecting individuals with international opportunities. With extensive experience spanning decades, network of 12 strategically located offices (9 Branches, 2 Franchisees and 1 Virtual office), and a dedicated team of over 100 professionals, it has effectively guided over many clients through the intricate procedures of immigration and visa. The array of services provided by Winny encompasses visa guidance, immigration assistance, and documentation services.

The primary objective of the Company is to streamline the visa application process for clients. It is providing consultancies in the below stated range of services:
1. Training for Language Proficiency Examinations
2. Consulting and processing a range of Temporary Residence Visas.
3. Consulting and processing Permanent Residency Visas.

As of March 31, 2024, it had 145 employees on its payroll. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 652000 equity shares of Rs. 10 each at a fixed price of Rs. 140 per share to mobilize Rs. 9.13 cr. The issue opens for subscription on June 20, 2024, and will close on June 24, 2024. The minimum application to be made is for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 30.05% of the post-IPO paid-up capital of the company. The company is spending Rs. 0.70 cr. for this IPO process and from the net proceeds, it will utilize Rs. 0.97 cr. for opening new office, Rs. 2.88 cr. for software development, Rs. 1.59 cr. for repayment of debt, Rs. 1.00 cr. for branding and advertising, and Rs. 1.99 cr. for general corporate purposes. 

The issue is solely lead managed by Interactive Financial Services Ltd., and Bigshare Services Pvt. Ltd., is the registrar to the issue. Aftertrade Broking Pvt. Ltd. is the market maker for the company. 

The company has issued entire equity capital at par so far and has also issued bonus shares in the ratio of 45 for 1 in November 2023. Thus it has emptied the coffin before IPO. The average cost of acquisition of shares by the promoters is Rs. Negligible per share. 

Post-IPO, company's current paid-up equity capital of Rs. 1.52 cr. will stand enhanced to Rs. 2.17 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 30.38 cr.  

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 10.04 cr. / Rs. 1.28 cr. (FY22), Rs. 113.98 cr. / Rs. 1.45 cr. (FY23), and Rs.11.02 cr. / Rs. 0.39 cr. (FY24). Thus, while its top line remained almost static, it marked sharp decline in its bottom line for FY24.

For the last three fiscals, it has reported an average EPS of Rs. 5.87, and an average RoNW of 79.21%. The issue is priced at a P/BV of 9.21 based on its NAV of Rs. 15.20 as of March 31, 2024, and at a P/BV of 2.66 based on its post-IPO NAV of Rs. 52.70 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 77.35. Thus the issue is exorbitantly priced. 

For the reported periods, the company has posted PAT margins of 12.78% (FY22), 12.29% (FY23), 3.63% (H1-FY24), and RoCE margins of 114.93%, 51.64%, 15.74% 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 no listed peers to compare with.

MERCHANT BANKER'S TRACK RECORD:
This is the 18 mandate from Interactive Financial in the last three fiscals, out of the last 10 listings, 3 opened at discount, 2 opened at par and the rest with premiums ranging from 2.86% to 20.74%. Thus it has a poor track record.