Alkosign Limited IPO (Alkosign IPO)

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(i) The Company, Alkosign Limited is engaged in manufacturing of visual presentation systems namely writing boards/display boards/notice boards of different types along with its associated accessories and stands used for these boards, school benches, desks and their accessories. ALKOSIGN is the biggest dedicated manufacturing unit with a production space of more than 5,00,000 sq. feet, for writing boards and display boards in India. The company ALKOSIGN PRIVATE LIMITED is an ISO 9001-20015; ISO 18001;2007 (OHSAS); ISO 45001-2018, BIFMA (Level – 3) COMPLIANCE AND GREEN GAURD certified fastest growing company in India. They are an MSME registered with GEM (Government E market). ALKOSIGN is the only company in India to manufacture WORLD CLASS INNOVATIVE UPDOWN (VERTICAL) & HORIZONTAL SLIDDING BOARDS in 3 types MANNUAL, DEPENDANT & INDEPENDENT.

(ii) The manufacturing facility is well equipped with required facilities including machinery, other handling equipments to facilitate smooth manufacturing process and easy logistics. They endeavour to maintain safety in its premises by adhering to key safety norms.

(iii) As on date, they have several designs in our product basket, which are marketed under various trademarks such as “Alkosign”, “Sit and Study”, “Brainee”, “Glassy-BO”, “Ultra- EX”, “Ultra”.

(iv) Company focus its research and development efforts on developing products that they believe are innovative and in line with the trends. They have introduced a new product, Glass White Boards, under the brand name, “Glassy-BO”. Some of the key features of this product include:
a) Compatible with any marker pen
b) Wipes away easily without staining or ghosting.
c) Lasts as much as life span of the wall.

Competitive Strengths
(a)
Widespread sales and dealers’ network
(b)
 Quality Certifications
(c)
Recognised Products

Objects of the Alkosign Limited IPO (Alkosign IPO):

The Issue comprises Fresh Issue of Equity Share by the Company. The Company proposes to utilise the Net Proceeds from the Fresh Issue towards funding the following objects: 1. Prepayment/repayment of certain secured borrowings availed by the Company 2. Funding working capital requirements; and 3. General corporate purposes.

Alkosign Limited IPO (Alkosign IPO) Details:

Open Date: Jan 18 2022
Close Date: Jan 21 2022
Total Shares: 2,700,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue IPO
Issue Size: 12.15 Cr.
Lot Size: 3000 Shares
Issue Price: ₹ 45 Per Equity Share
Listing At: NSE,BSE

Promoters And Management:

(i) Samir Narendra Shah, aged around 47 years is the Promoter, Chairman and Managing Director of the Company, He has been on the Board of Directors of the Company since incorporation. He has been appointed as the Chairman and Managing Director of the Company for a period of five years with effect from December 22, 2021. He has cleared second year BCom from Lala Lajpatrai College of Commerce and Economics. He possesses more than 20 years of experience in the distribution industry. He looks after the overall business operations of the Company including technical operations, strategy and marketing plans of the Company. (ii) Akshay Narendra Shah, aged around 43 years is Executive Director of the Company. He was originally appointed as Additional director on October 01, 2020 and re-designated as Executive Director on December 22, 2021. He has completed Bachelors of Commerce from University of Mumbai. He possesses more than 20 years of experience in the distribution industry. He is responsible for procurement and marketing operations of the Company. (iii) Shrenik Kamlesh Shah, aged 42 years is Executive Director. He has been on the Board of Directors of the Company since incorporation. He has completed Bachelors of Commerce from the University of Mumbai.

Financials of Alkosign Limited IPO (Alkosign IPO):

Particulars (in Lakhs) June-21 March-21
Revenue 202 1,324
Cost of Material Consumed 55 812
Changes in inventories 6 -96
Employee benefit expenses 38.92 245.01
Other Expenses 27.4 224.22
Operating profit 75 138
OPM % 37% 10%
Finance Cost 15.85 30.6
Depriciation 20.3 19.78
Other Income 1.5 3.46
Profit Before tax 40.19 91.47
Profit After Tax 29.96 66.07
EPS 4.99 11.01

Comparison With Peers:

Company believe that there are no listed Companies in India which are engaged in manufacturing of white boards and its components. Further there are no listed entities which are focused exclusively on the segment in which it operates.

Recommendation on Alkosign Limited IPO (Alkosign IPO):

Review and Recommendation of Alkosign by InvestorZone is 3/10 [ Alkosign SME IPO has given only 1 year of financial and by seeing that it is next to impossible to judge the company. Atleast 3 years financials would have been handy. They have done Capex of ~16 Crores in FY21, but how much ROCE they will able to generate from this investment is very difficult to ascertain at this point. Moreover, the asking P/E is ~37x which looks very stretched ]

Lead Manager of Alkosign Limited IPO (Alkosign IPO):

  1. SHRENI SHARES PRIVATE LIMITED

Registrar of Alkosign Limited IPO (Alkosign IPO):

  1. Skyline Financial Services Private Ltd

Company Address:

Alkosign Limited S NO : 12A, MIDC, NR Mother Dairy, Saravli, Bhiwandi Thane 421 311, Maharashtra, India Phone: +91-7391040250 Email: investor@alkosign.com Websitehttps://alkosign.com/

Discussion on Alkosign Limited IPO (Alkosign IPO):

4 Comments

    Balance Sheet look very weak in FY21 due to Short term loan of ~11 Crores taken…. However, good thing is Loan is taken from Directors and Relatives…And, some of the debt will be reduced via IPO funding.

    Cash-Flow Statement Analysis of FY21….

    a) Cash-flow from operations

    Profit Before Tax after adjusting non-cash items = 1.42 Crores———-This is the amount they have earned from Operations…..

    Changes in Working Capital = -5.35 Crores

    Inventory has been increased by 2.26 Crores, Trade Receivables increased by ~5 Crores, Trade Payable increased by 1.93 Crores……

    So, overall, the total cash outflow in Working Capital was 5.35 Crores……

    Total Cash generated from operations = 1.42 Crores -5.35 Crores = -3.93 Crores….So, they are unable to generated cash from operations…..

    b) Cash Flow from Investment…..

    In FY21, they have done Capex of ~16 Crores…..

    Now you will wonder, if they are not able to generate any cash from operations, how they will get 16 crores to do capex…..The answer is below….

    c) Cash generated from Financing…

    They have raised ~9 Crores of long term debt and ~11 Crores of Small term debt….So, they have raised 20 Crores to fuel the capex…..

    Total debt on books as on 30.06.2021 is Rs.20.50 Crores……

    Total Equity as on 30.06.2021 = ~1 Crores…

    D/E = 20x ( very high)

    In Nov-21, company has raised 2.362 Crores by issuing 35,000 Equity Shares at Rs.675 per share….

    After that 60:1, bonus was issued….So, per share value comes out to be 11.25 per share….

    So, after this fund raising, the Equity becomes ~3.3 Crores…

    Still D/E is ~6x….which is very high…..

    1. Issue Price is Rs.45 per share
    2. Total Shares Outstanding before IPO = 27,45,000
    3. Total New Shares to be issued = 27,00,000
    4. Total Outstanding Shares after IPO = 54.45 Lakh
    5. Mcap = 24.50 Crores
    6. PAT of FY21 = 66 Lakh
    7. EPS(FY21) = 1.21 per share
    8. P/E = 45/1.21 = 37x….

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