- May 6, 2021
- Posted by: Umesh Paliwal
- Category: IPO
In this video, we have explained why companies do IPO, How loss making companies can bring IPO, What is the Process of IPO, How investors can get confirm allotment and how to use IPO as business.
TimeLine of Video:
00:00 – Start
00:25 – Ecosystem of IPO?
02:24 – What is Mainboard and SME IPO?
03:49 – What is the Process to file IPO?
05:57 – Two paths of IPOs and how loss making company bring IPO?
09:11 – How to increase the chances of allotment?
10:54 – How to start IPO as business?
Link of Video:
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Hereby I present my thesis on Touchwood Entertainment.
First of all let’s understand a bit about the company :
Stock Exchange: NSE
Industry: Event Management
Market Cap: Small Cap
Looking into the past shows that investors have not liked the company because of various factors such as the cash business of the company, the cyclic nature of the business etc.
But hereby I list a few points describing my opinion on how the company can grow multifolds from here even after already having 10 times market cap as compared to its IPO.
1. Company has used its cash reserves in a very efficient way in building new businesses on its own.
2. The losses shown in quarterly income statements are mostly of operational costs which includes expenditures such as salary, depreciation etc.
3. Despite having such a low business in COVID due to various restrictions, the company has not only retained the old staff but also recruited more people.
4. Company has built Make Me Up which is an online marketplace for makeup and cosmetics. This clearly shows the company’s intent to do something big in the market.
5. The venture was launched 2 years back but it was a bit slow due to covid. However, the company utilised that time very efficiently to develop all technology. Master classes conducted during lock down which ultimately generated a huge audience of 3000-4000 candidates paying more than Rs. 1000 per person online.
6. Nykaa, a leader in the makeup industry, has been valued at Rs. 40,000 Crore. It has a revenue of Rs. 2500 Cr from operations with a profit of approx Rs. 62 Crore . It is valued at Rs 40,000 Crores at a 645 P/E multiple.
It has 1500 Plus Brands on board with them along with 70 plus offline stores. It is a 9 year old venture and has raised close to Rs. 2600 Cr till now. The platform has more than 30 Lakh Active users.
7. Another Player My Glamm has been valued at approximately Rs. 2250 Crore on revenue of Rs. 250 Crore and having a network of more than 200 Offline stores. The Company has raised approx Rs. 1000 Crore so far.
8. Another player Purplle has also been valued at Rs. 2250 Crore on revenue of Rs. 86 Crore and loss of Rs. 25 Crore and funding of Rs. 700 Crore
9. Taking the above parameters into consideration Touchwood stands tall as they have just raised Rs. 22 Crore recently for promotion and scaling up of tech platforms. The strength is mainly coming from the cash business of event management and the digital platform was built through internal accruals and has not been burning cash. Instead Master classes are a source of earning for the company.
10. The Company has very strong hold over the makeup celebrity artists who have a huge fan following among millions of girls and beauty artists all over the country
11. The Prospects seem high as the brand song of Make Me Up has been viewed by more than 1 Million viewers within a week. Also a web series has been shot for Make Me Up which is ready to be launched as a brand building exercise in the coming days.
12. The strength of the Company in offline promotion and BTL activities will be efficiently used in scaling up of the tech platforms. If the company remains at no profit no loss for 1- 2 years and is able to scale up operations then we can expect a revenue of approx 100 Crore on the platform in next financial year only.
13. The second strength comes from the investor who happens to be the Vice President at Times Bridge which is a well known International fund based in the USA. The investor has been recognised to invest in big digital platforms like Uber, Air BNB, Coursera, Houzz, MUBI, Smule, Headspace among others. He has brought a world class experience, network and vision with him.
14. Founder of Wizcraft International has also invested in Touchwood thereby increasing the probability of a lot of big ticket business events coming into the company. This will seriously bring up the topline and cash revenues for company to grow fast
15. Seeing the kind of valuation that peers have in the industry, we believe that the company with the kind of impeccable record it has, will be valued more than Rs. 1000 Crore in the coming 2 years.
All this development denotes a good future of Touchwood in upcoming days.