Shift from 2012 to 2014

 NURECA IPO

(ZEE BUSINESS)

BASIC DETAILS ABOUT IPO  (15 Feb-17 Feb)
Price Band	396-400
Bid Lot	35
Fresh Issue- AT  Upper Band	100cr
Fresh Issue (Shares)-Cr	0.25
Total issue amount- AT Upper Band	100cr
Post issue Implied Market Cap	400cr
Post issue (Shares) Cr	1cr
Book Runner and Lead Managers: ITI Capital Limited

 

 

SHAREHOLDING
Particular	Pre-Issue	Post-Issue
Promoter	93.3%	70%
Public	6.7%	30%
Total	100%	100%

 

 

 

 

 

 

BASIC FINANCIALS
(Amount in cr)	1HFY21	FY20	FY19	FY18
Revenue From Operation	122.2	99.4	61.9	20.0
Growth		60.6%	209%	-
PAT	36.2	6.4	6.2	3.1
PAT Margin	29.6%	6.4%	10.0%	15.5%
PAT –(Excluding changes in inventory)	24.2	4.2	-0.9	0.8
PAT Margin	19.8%	4.2%	-1.4%	3.7%
Purchase of stock in Trade	63.3	67.5	50.1	14.3
PST % of RFO	51.8%	67.9%	80.9%	71.4%
Other Expenses	24	22	11.8	4.2
Other Expenses as % of Revenue	19.6%	22.1%	19.1%	21.0%
Changes in Inventory -Which reduced expenses	15.4	2.9	10.0	3.2
Inventory (BS item)	30.3	16.4	13.6	3.5
Total Expenses	74.3	90.9	53.1	15.8
Total Expenses % of RFO	60.8%	91.4%	85.8%	78.8%
Total expenses -Excluding changes in Inventory	89.7	93.8	63.1	19.0
Calculated Total expenses % of RFO	73.4%	94.4%	101.9%	94.8%
PBT – Reported	48.7	8.6	8.8	4.3
PBT as % of RFO	39.8%	8.7%	14.2%	21.2%
PBT- Excluding Inventory changes	32.5	5.6	-1.2	1.04
Calculated PBT as % of RFO	26.6%	5.6%	-1.9%	5.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ABOUT PROMOTER/MANAGEMENT

·         Its chairman and MD is SaurabhGoyal who also holds 46.67% share pre issue in the company . He holds a bachelor’s degree in business administration from Amity University and master’s degree in science in international management from King’s college, London and has around just 10 year experience in marketing.He is aged 35 years.

·         Vijay Kumar Sharma who was previously Chariman, MD for LIC is also on the board as independent director  which company brought on Board just on 21 October 2020 (May be to raise the quality of board before IPO)

·         Rajendra Sharma who is an under graduate althouth aged 56 years is a No-executive Director and his experience in the field could not be found in RHP.

·         Other than above two all management have experience of less than 10 years.

 

PRO’s

 

·         Company operates in the Business segment which has good potential to grow .Comopany’s segment include Chronic Device products (Like pulse oximeters, thermometers , blood pressure monitors etc) which COVID19 brought a significant turnaround  and which company sells from its Flagship brand Dr.Trustalso in Orthopedic Products (Like wheel chairs, walkers etc)  with Brand name Dr Physio and other smaller segments like Mother and Child Products,Nutritionalsuppliments& Lifestyle products.

·         Companies valuation based on EPS of FY20 earnings seems costly but on TTM basis and  Extrapolated earnings  seems very attractive (But sustainability of 1HFY21 earnings is a major concern)

Particular	PE	PB
Based ON FY20	43.8	20.1
BASED ON 1HFY21 (TTM)	7.1	5.8
Extrapolated earnings of 1HFY21 to Full year	3.9	3.7

 

·         Companies 95% of revenue comes from online business which offers potential for the company to expand through offline channel and to expand its footprints offline company in Oct 2019 joined hands with Croma.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CON’s

·         Although companies revenue growth is outstanding i.e. from just 20cr in 2018 to around 100cr in 2020 the concern is in its bottom line which was 3.1cr in 2018 rose just to 6.4cr in FY20 thus pat margin reduced from 15.5% to 6.4%  ,However PAT margin rose to as high as around 30% in 1HFY21 which could be seen Total Expenses as % of Revenue reduced from as high as 91.4% in FY20 to just 60.8% in 1HFY21 mainly due to Purchase of Stock in Trade as % revenue reduced from 68% in FY20 to 52% in 1HFY21 and favourable changes in inventory.

(If changes in inventory effect is removed company has actually suffered loss in FY19 and has been in range of just 4% which shot up to 19.8% in 1HFY21)

BASIC FINANCIALS
(Amount in cr)	1HFY21	FY20	FY19	FY18
Revenue From Operation	122.2	99.4	61.9	20.0
Growth		60.6%	209%	-
PAT	36.2	6.4	6.2	3.1
PAT Margin	29.6%	6.4%	10.0%	15.5%
PAT –(Excluding changes in inventory)	24.2	4.2	-0.9	0.8
PAT Margin	19.8%	4.2%	-1.4%	3.7%
Purchase of stock in Trade	63.3	67.5	50.1	14.3
PST % of RFO	51.8%	67.9%	80.9%	71.4%
Changes in Inventory -Which reduced expenses	15.4	2.9	10.0	3.2
Inventory (BS item)	30.3	16.4	13.6	3.5
Total Expenses	74.3	90.9	53.1	15.8
Total Expenses % of RFO	60.8%	91.4%	85.8%	78.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·         Company was incorporated just in Nov 2016 and significant boom in its Revenue is due to Covid19 as its products like pulse oximeters,  thermometers, BP monitor seen a huge spike, So very small history with a significant hike in 1HFY21 due to covid19, so sustainability and reliability is a major concern.

·         Company does not manufacture its product itself has outsourced it hence you see purchase of stock in trade in book significantly, which becomes a major threat for long term make them highly depended on its suppliers also shifts bargaining power in suppliers hand.

·         Transaction form related party are very high, Of total expenses , expenses of related party accounts at higher end as can be seen in table , thus raises concerns which need clarifications.

Particulars	1HFY21	FY20	FY19	FY18
Related party Expenses	25.3	19.0	40.4	11.5
Total expenses	74.3	90.9	53.1	15.8
RPE as % of Total Expenses	34.1%	20.8%	76.1%	72.8%

 

·         The best use of fresh issue would have been for rapid expansion like Indigo paints but out of 100cr company will be using 75cr for managing its working capital needs and other 25cr for general corporate purpose thus use of money is not what should have been.

·         Company manufacturing/Assembling unit is in Chandigarh and that property is on lease from promoters Mothers and promoter SaurabhGoyal has on 10 September 2020 entered into family partition thus raises uncertainty (The magnitude of the Risk can only be understandable by talking to management)

·         Companies Book runner Lead manager is ITI Capital limited  who has handled just 1 IPO in its history in Feb 2019 of company Xelpmoc Design and Tech Limited which opened at 15% discount .