Abysmal earnings, absurd peer comparison!
|
OFFER AT A GLANCE |
|
|
Name |
Billwin Industries Ltd |
|
Offer Amount |
Rs 2.46 cr |
|
Offer Quantity |
6.66 lakh shares of Rs 10 each |
|
Offer on Total Equity |
31.26% |
|
Post-issue Promoter stake |
68.74% |
|
Post-IPO Capital |
Rs 2.13 cr |
|
Offer Price |
Rs 37 |
|
Minimum Application Qty |
3000 |
|
Offer Opens |
June 18, 2020 |
|
Offer Closes |
June 22, 2020 |
|
Listing |
SME Platform of BSE |
|
Rating |
Nil |
|
Lead Manager |
Gretex Corporate Services |
|
Market Maker |
Gretex Share Broking |
|
Underwriter |
Altina Securities (84.68%), Gretex Corporate (15.32%) |
|
Registrar |
Bigshare Services |
The Offer
The present offer is an initial public issue of 6,66,000 equity shares of face value of Rs 10 at a price of Rs 37 a piece aggregating to Rs 246 lakh from the Mumbai-based six- year-old protective gears manufacturer, Billwin Industries Ltd. Of the public offer, 36,000 shares (Rs 13.32 lakh) are reserved for the Market Maker. The public float constitutes 31.26% of the company’s post-IPO paid up equity share capital (Rs 2.13 cr). The promoters’ stake in the enlarged capital would be 68.74%.
This fixed price offer is proposed to be listed on the SME platform of BSE. Investors should apply for a minimum quantity of 3000 shares (Rs 1,11,000). The issue manager, Gretex Corporate whose group company Gretex Share Broking is acting as a Market Maker, has underwritten to an extent of only 15% (Rs 37.74 lakh) of the issue amount while Altina Securities has underwritten as much as 85% (Rs 208.68 lakh).
Issue Object
Of the IPO proceeds Rs 54 lakh (21.9%) is budgeted for issue related expenses and the balance Rs 192.42 lakh (78.1%) is earmarked for working capital.
Business & Background
Billwin is reportedly engaged in the business of manufacturing of protective gears using coated fabric as raw material. The company is also involved in trading of protective gears. The product range includes Rainwear Coat, Rain Jacket, Pulsar Jacket, Winter Jacket, River Raft Boat, Inflatable Boats Dinghys, Sleeping Bags, School Bags, Life jackets, Rucksack, facial mask, etc. The company’s manufacturing facility of 5190 sq. ft. is located at Bhandup, Mumbai.
The company has been promoted by Smita Subrata Dey and Subrata Dey. In the year 2006 Smita Dey formed a proprietary firm under the name and style of Billwin Industries and set up a manufacturing unit at Nahur/Bhandup. In 2014 Smita Dey and Subrata Dey incorporated Billwin Waterproof Private Limited which was renamed as Billwin Industries Private Ltd. In the Year 2020, through a Business Transfer Agreement (BTA), the private limited company acquired the promoter’s proprietor firm.
Financial Performance
Even though Billwin is in existence for more than a decade, its financial performance is far from convincing. At its peak in 2018, Billwin posted a top line of Rs 1.85 cr on which it netted a profit of Rs 11.47 lakh. Next year, revenue dropped to Rs 61 lakh and profit slid to Rs 10.79 lakh. In the recently concluded fiscal, sales depleted further down to Rs 38.42 lakh and bottom line ended at Rs 3.47 lakh.
Until March 2018, the company’s equity capital was just Rs 1 lakh which was increased to Rs 6 lakh in FY19. This has shot up to Rs 73.24 lakh in fiscal 2020 and before the public issue it has doubled to Rs 146.47 lakh. Post-IPO, equity capital will stand at Rs 213 lakh.
Financial Track (Rs Lakh)
|
PERIOD ENDED |
Mar-20 |
Mar-19 |
Mar-18 |
Mar-17 |
|
MONTHS |
12 |
12 |
12 |
12 |
|
REVENUE |
38.42 |
60.72 |
184.61 |
46.37 |
|
EBITDA |
6.81 |
16.25 |
16.15 |
0.75 |
|
OPM% |
17.7 |
26.8 |
8.7 |
1.6 |
|
INTEREST |
2.0 |
0.0 |
0.0 |
0.0 |
|
DEPRECIATION |
0.1 |
0.0 |
0.0 |
0.2 |
|
NET PROFIT |
3.47 |
10.79 |
11.47 |
0.28 |
|
EQUITY |
73.24 |
6 |
1 |
1 |
|
EQUITY PENDING |
213.07 |
6 |
1 |
1 |
|
RESERVES |
200.93 |
10.2 |
11.63 |
0.16 |
|
RESERVES PENDING |
307.52 |
10.2 |
11.63 |
0.16 |
Valuation
The six-year-old Billwin is asking for an IPO premium of Rs 180 lakh (Rs 27 per share). How does it justify? At the end of March 2020 its accumulated earned surplus amounted to only Rs 12.67 lakh. However, in March 2020, as if to justify the IPO premium the promoters acquired their own proprietary business and created a share premium of Rs 188 lakh in the books! Of this, Rs 73 lakh was capitalized in the same month by way of issuing bonus shares. Post-IPO, the company will have an equity base of Rs 2.13 cr and share premium will be increased to Rs 2.95 cr.
Billwin is comparing itself with Mallcom (India) whose size, stature, and product range are far from comparable. Even at Mallcom’s current discounting Billwin may not deserve any premium based on its present earnings.
|
(Amount in Lakh) |
Mallcom |
Billwin |
|
REVENUE |
30078.76 |
38.42 |
|
OTHER INCOME |
18.73 |
0.00 |
|
INTEREST |
394.71 |
2.00 |
|
OPM |
10.60 |
17.7 |
|
DEPRECIATION |
565.15 |
0.10 |
|
NET PROFIT |
1493.97 |
3.47 |
|
EQUITY |
624.00 |
73.24 |
|
RESERVES |
8697.35 |
200.93 |
|
BOOK VALUE (Rs) |
149.38 |
37.43 |
|
EARNINGS PER SHARE (Rs) |
23.94 |
0.47 |
|
PROMOTERS’ STAKE (%) |
73.7 |
68.7 |
|
PRICE (Rs) |
260.50 |
37.00 |
|
P/E RATIO (x) |
10.9 |
78.1 |
Perception & Concern
Billwin’s current level of operation does not exude much optimism. The company has not paid the undisputed GST liability as per books. Also, it has not filed GST returns for FY 2018-19 and 2019-20. Interest and penalty payable on filing GST Return has not been provided for in the books. The company has negative cash flows from operating activities. The company’s office premises have been taken on lease from Smita Dey, main promoter of the Company. The company auditors have been changed just a year before the IPO.
Track of Market Maker & Lead Manager
Billwin’s public offer is managed by Gretex Corporate which has handled 16 IPOs in last four years. Though Gretex-managed IPOs have collectively fetched more than 86% return, as many as seven IPOs are still quoting below the offer prices.
PERFORMANCE OF GRETEX -MANAGED IPOs (Amt in Cr)
|
ISSUER NAME |
IPO DATE |
IPO |
CUR. |
GAIN |
GAIN% |
|
Anuroop Packg |
8-Nov-19 |
2.64 |
1.68 |
-0.95 |
-36.2 |
|
Misquita Engg |
23-Sep-19 |
1.93 |
5.73 |
3.79 |
196.3 |
|
BCPL Railway |
5-Oct-18 |
17.01 |
20.53 |
3.52 |
20.7 |
|
B&B Triplewall |
28-Sep-18 |
19.99 |
19.71 |
-0.28 |
-1.4 |
|
Mac Hotels |
19-Sep-18 |
1.94 |
8.51 |
6.56 |
337.5 |
|
Aaron Indust |
20-Aug-18 |
4.78 |
5.37 |
0.59 |
12.4 |
|
Deep Polymer |
8-Aug-18 |
15.24 |
28.71 |
13.47 |
88.4 |
|
Debock Sale |
24-May-18 |
4.44 |
0.80 |
-3.64 |
-82.0 |
|
Suumaya Life |
22-May-18 |
13.84 |
30.56 |
16.72 |
120.8 |
|
Diggi Multi |
11-Dec-17 |
3.38 |
2.64 |
-0.74 |
-21.9 |
|
Kids Medical |
11-Dec-17 |
6.00 |
1.60 |
-4.40 |
-73.4 |
|
Dhruv Wellness |
31-Aug-17 |
5.57 |
23.07 |
17.50 |
314.3 |
|
Riddhi Corp |
12-Jun-17 |
12.35 |
63.21 |
50.86 |
411.8 |
|
Yug Decor |
18-May-17 |
2.88 |
2.14 |
-0.74 |
-25.8 |
|
Jash Deal |
15-Mar-17 |
5.40 |
3.11 |
-2.30 |
-42.5 |
|
Veeram Secur |
23-Dec-16 |
5.12 |
10.72 |
5.61 |
109.6 |
|
122.51 |
228.09 |
105.57 |
86.2 |
As regards the track record of Gretex as a Market Maker, of the ten IPOs not even one could provide the stipulated 75% liquidity. In other words, the price or premium reported by Gretex as market maker was meaningless for the SME investors.
Gretex’s Market Making Track
|
ISSUER_NAME |
IPO DATE |
DAYS |
DAYS |
Liquid% |
|
Anuroop Packg |
8-Nov-19 |
139 |
69 |
49.6 |
|
Gensol Engg |
30-Sep-19 |
164 |
61 |
37.2 |
|
Misquita Engg |
23-Sep-19 |
170 |
43 |
25.3 |
|
BCPL Railway |
5-Oct-18 |
399 |
191 |
47.9 |
|
Mac Hotels |
19-Sep-18 |
415 |
155 |
37.3 |
|
Diggi Multi |
11-Dec-17 |
607 |
102 |
16.8 |
|
Siddharth Edu |
29-Sep-17 |
657 |
144 |
21.9 |
|
Sagar Diamond |
14-Sep-17 |
668 |
267 |
40.0 |
|
Yug Decor |
18-May-17 |
749 |
173 |
23.1 |
|
Jash Deal |
15-Mar-17 |
793 |
181 |
22.8 |