SecMark Consultancy IPO

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(i) Incorporated in 2011, SecMark Consultancy offering services in the areas of compliance, operations, risk management, outsourcing, software development, and legal matters to financial market participants and others. The clients primarily include stock and commodity brokers, depository participants, stock exchanges, wealth managers, research analysts, insurance companies, insurance brokers, corporate agents, portfolio managers, investment advisors, NBFCs, banks, etc.

The company has developed applications and capabilities around automation of workflow process to manage compliance, audit, workforce management, regulatory reporting processes, e-learning / online examination, etc. The company has also developed an application for online examination of students for the National Institute of Securities Markets (education arm of SEBI) called the National financial literacy assessment test (NFLAT), which, as per the NFLAT website, is “Globally, the largest free financial literacy test for school students”. A recent development was the roll-out of OIMS (Order Instruction and Management system) software which simplifies the process of placing orders with stockbroker while maintaining an audit trail of instructions.

(ii) They offer services to about 125 clients in the Financial Year 2015 which has increased to about 200 in the Financial Year 2019-20. The company has a registered office is situated at Mumbai, and the team executes assignments all over India. They have local representatives at various locations like New Delhi, Ahmedabad, Indore, Jaipur, Bangalore, Chandigarh, and Raipur, etc.

(iii) Strength of the Company:

(a) Qualified and Experienced Team –

The Company is managed by professionals having varied experience in financial services. The team comprises qualified professionals (Chartered Accountants, Cost and Managemen Accountants, Company Secretaries, Advocates, CISAs, DISAs, Engineers, Technology Experts, Management Professionals, etc.) as well as experienced personnel.

(b) Diversified Portfolio of Services offered

Offering cloud-based software for Order Management, Developing, deploying, and maintaining an online examination portal for the National Centre for Financial Education for conducting financial literacy tests, Setting up Businesses of Broking, DP, PMS, etc. for leading banks and business houses, Forensic Audits, etc.

Objects of the SecMark Consultancy IPO:

The company is raising 15.04 Crores from the IPO and will be used for the following purpose. 1. To finance development and/or procurement of technology, applications, software, infrastructure etc. including strategic acquisitions of Firms/Companies in the technology space to complement and enhance our Company’s value proposition. 2. To expand and retain our leadership team that will lead the Company into the next phase of growth. 3. To acquire certain fixed assets. 4. Repayment of bank facilities. 5. General corporate expenses.

SecMark Consultancy IPO Details:

Open Date: Sep 18 2020
Close Date: Sep 23 2020
Total Shares: 1114000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Issue
Issue Size: 15.04 Cr.
Lot Size: 1000 Shares
Issue Price: ₹ 135 Per Equity Share
Listing At: BSE SME
Listing Date: Oct 01 2020

Promoters And Management:

(i) Mr. Jignesh Brijendra Mehta, is the Managing Director and Chief Executive Officer of our Company. He is a qualified Chartered Accountant from the ICAI and also a qualified Cost and Works Accountant from the Institute of Cost and Works Accountants of India. He has work experience of more than 20 years particularly in the financial markets having served reputed organisations like National Stock Exchange of India Limited, J P Morgan Services (India) Private Limited, Bank of America Merrill Lynch, Newedge Broker (India) Private Limited, Societe Generale Securities India Private Limited, SG Securities Singapore Pte Ltd. (previously known as Newedge Financial Singapore Pte. Ltd). (ii) Mr. Sagar Mansukhbhai Thanki, is an Executive Director and Chief Financial Officer of our Company. He holds a bachelor’s degree in commerce and a master’s degree in finance from Saurashtra University. He is a qualified Company Secretary from the ICSI. He is a certified financial manager from the Center for Financial Management (Banglore).

Financials of SecMark Consultancy IPO:

Particulars(in Lakhs) Mar-18 Mar-19 Mar-20
Revenue 323 382 562
Employee Cost 161 176 259
Other Expense 38 67 127
EBITDA 124 139 176
OPM 38.39% 36.39% 31.32%
Other Income 5 7 12
Interest Cost 3 1 8
Depreciation 7 10 20
Profit before tax 119 135 160
Tax 32 38 42
Net Profit 87 97 118
NPM 26.93% 25.39% 21.00%
Shares 41.24 41.24 41.24
EPS in Rs 2.11 2.35 2.86
IZ View: 1. The Revenue growth is excellent from 3.23 Crores in FY18 to 5.62 Crores in FY20. 2. The EBITDA Margins and PAT margins are excellent as it is an asset-light company where the major expense is " Employee Benefits Expense". 3. EPS for FY19-20 is 2.89 per share. 4. Asking P/E is 47x. Very expensive. 5. Mcap = 55 Crores. A company with annual revenue of just ~5 Crores asking Mcap of 55 Crores is just insane. 6. In FY19-20, the company has negative cash flow from operations.

Comparison With Peers:

As per RHP, SCL has no listed peers to compare with.

Recommendation on SecMark Consultancy IPO:

Review and Recommendation of InvestorZone are 3/10. [ The company has experienced management and good clientele. However, the business in which company work is highly competitive. The company is asking a price of 135 per share at a P/E of 47, which is very high. The fair value of the company is Rs. 25 per share ]

Lead Manager of SecMark Consultancy IPO:

  1. Indorient Financial Services

Registrar of SecMark Consultancy IPO:

  1. Bigshare Services Private Limited

Discussion on SecMark Consultancy IPO:

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