Priti International Ltd. (PIL) is primarily engaged in manufacturing and exporting of Handicraft Products. It also deal in manufacturing of wooden, metal and textile based furniture and handicrafts products, upcycling and recycling of various kinds of raw, unusable and waste metal and wooden articles.
Business
PIL’s products range from solid wooden and metal furniture articles, home furnishing items, creative wooden and metal articles for various uses, textile based products like cushions, pillow covers, rugs and carpets, handbags, travel bags and backpacks, pet products, etc.
The company that was in origin a proprietary concern of the promoters was merged with PIL in November 2017 as going concern. PIL was incorporated on 30.06.2017.
Offer
To part finance purchase of plant and machinery with related civil works, working capital and general corpus fund needs, PIL is coming out with a maiden IPO of 700800 equity shares of Rs. 10 each at a fixed price of Rs. 75 per share to mobilize Rs. 5.26 cr.
Issue opens for subscription on 11.06.18 and will close on 13.06.18. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter.
Post allotment shares will be listed on NSE SME Emerge. Issue constitutes 27.01% of the post issue equity capital of the company.
Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue.
Having raised initial equity at par, it converted loans into equity at a rate of Rs. 75 per share in December 2017. Average cost of acquisition of shares by the promoters is Rs. 10.00, Rs. 63.58, Rs. 74.95 and Rs. 74.95 per share. Post issue, company’s current paid up equity capital of Rs.1.89 crore will stand enhanced to Rs. 2.59 crore.
Performance
On performance front, as a proprietary concern, it posted turnover/net profits of Rs. 20.04 cr. / Rs. 0.76 cr. (FY14), Rs. 20.55 cr. / Rs. 3.39 cr. (FY15), Rs. 21.98 cr. / Rs. 0.94 cr. (FY16) and Rs. 20.33 cr. / Rs. 1.11 cr. (FY17).
Thus while top line remained static for all these years, it has seen heavy ups and downs for bottom lines raising concern of sustainability going forward.
For the period ended 10.11.17 it has earned net profit of Rs. 0.64 cr. on a turnover of Rs. 10.94 cr. Post conversion into a public limited company, for the period ended on 31.12.17 it has posted net profit of Rs. 0.16 cr. on a turnover of Rs. 3.24 cr.
If we combine workings of period ended 10.11.17 and 31.12.17, then it has earned net profit of Rs. 0.80 cr. on a turnover of Rs. 14.18 cr.
If we annualize this merged performance and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 18 plus.
It has no listed peers to compare with. Issue is priced at a P/BV of 3.55 on the basis of its NAV of Rs. 21.13 as on 31.12.17 and at a P/BV of 2.10 on the basis of post issue NAV of Rs.35.68. Thus issue appears fully priced.
On merchant banker’s front, this is 72nd mandate from its stable in last four fiscals. Out of last 10 listings, 1 opened at par and 9 with a premium ranging from 1.59% to 20% on the day of listing.
Investment Strategy
Considering fully priced issue from new sector company having inconsistency in bottom line, cash surplus investors may consider investment at their own risk.
