Salebhai Internet, a B2C online marketing service company is making a BSE SME IPO offer. The Salebhai Internet BSE SME IPO’s offering constitutes 26.58% of the post issue capital.
BUSINESS
Salebhai Internet Ltd. (SIL) is the owner of Salebhai.com e-commerce portal. This portal enables people living away from home to order a range of specialties directly from their hometowns. It is also a one-stop solution for those who want to discover regional products from across India.
People can pick from a wide variety of delicious consumable items like sweets, namkeen, chocolates, bakery, spices, dry fruits, beverages, and pickles. Salebhai also offers other products such as handicrafts, paintings, puja items, handloom goods, and herbal & wellness items.
Salebhai identified the market gap led by people migrating within Indian and abroad and goods representing their culture resulting in short supply.
After studying migration trends among Indian citizens, it was observed that most people moved to fast-growing cities like Ahmedabad, Bangalore, Chennai, Delhi, Kolkata, and Mumbai – either due to employment opportunities, education, or marriage.
The market gap also demonstrated that migration created a void in people‘s lives. Therefore, driven by back-to-roots philosophy, this E-commerce marketplace focuses on requirements of over 17 Diaspora communities living in big Indian cities as well as those who live abroad.
With 8500 products sourced from over 100 cities and 300 select vendors, the company provides people with an opportunity to buy products in various categories from sellers across India as well as discover new items from different communities and cultures.
Furthermore, the products available on Salebhai.com are priced exactly as displayed in the shops where they are available. All products listed on this platform come with a detailed description, which includes – popularity, benefits, facts, place of origin, usage, etc. Apart from these, all consumable products come with serving ideas from reputed chefs. The platform also lists complete information about vendors such as their history, lineage, and reputation.
Salebhai.com plans to further deepen its offerings to customers by penetrating into smaller towns for sourcing, will widen our offering by adding new categories which are missed by people. The company has a strong team which consists of professionals with proven expertise in IT, marketing, content development, innovation, disruptive thinking, channel management, logistics, and customer support.
Having raised initial equity at par, it raised further equity in the price range of Rs. 950 to Rs. 1500 per share between April 2016 and February 2018. It has also issued bonus shares in the ratio of 9 shares for every 1 share held in March 2018. As on 31.03.18 it’s paid-up equity capital was Rs. 6.24 crore.
OFFER
To meet operating expenditures, customer acquisition, IT development, Brand Building & Promotion, general corpus fund needs, SIL is coming out with a maiden IPO of 2259600 equity shares of Rs. 10 each at a fixed price of Rs. 105 per share to mobilize Rs. 23.73 crore. The Salebhai Internet BSE SME IPO opens for subscription on 27.07.18 and will close on 02.08.18.
Minimum application is to be made for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The Salebhai Internet BSE SME IPO issue is solely lead managed by Monarch Networth Capital Ltd. Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Post issue, its current paid up equity capital of Rs. 6.24 crore will stand enhanced to Rs. 8.50 crore.
PERFORMANCE
For the last two years, SIL posted turnover/net profits/ – (loss) of Rs. 0.04 cr. / Rs. – (1.11) cr. (FY16), Rs. 0.46 cr. / Rs. – (2.88) cr. (FY17). For 10 months ended on 31.01.18 of the current fiscal, it has posted a loss of Rs. – (1.60) cr. on a turnover of Rs. 1.13 cr. Thus, the company has been incurring losses for all these years.
For the last two years, it has posted an average negative EPS of Rs. (416.14) and an average RoNW of (148.31%). Hectic premiums collected for further equity helped the company to have a NAV of Rs. 97.93 as on 31.01.18. However, as on 31.03.18 its NAV is around Rs. 18.88 and on the basis of it, asking price at a P/BV of 5.56. Due to negative earnings, its P/E remains negative.
COMPARISON
As per offer document, it is showing Infibeam Incorporation as its listed peers. Infibeam is trading at a P/E of around 672 (standalone) as on 20.07.18. (as per 31.03.18 earnings). Peer is not comparable in stricter norms.
On merchant banker’s front, this is the 10th mandate from its stable in last five fiscals. Out of the past nine listings, two opened at discount, two at par and the rest with a premium ranging from 1.42% to 45% on listing day.
INVESTMENT STRATEGY
Taking into account negative earnings, aggressive pricing and non-impressive financial data, tissue is not worth considering for investment. However, considering fancy of its peer, cash surplus risk savvy investors may consider investment at their own risk.
