Service Care Limited IPO

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i. Service Care was incorporated with the objective to providing services as Workspace Administration Services & Workforce Administration Services across all the business domains. With the overall experience and Market presence of more than 23 years of the promoters, company have establish its creditability with its customers and partners across the country. Primarily Workspace Administration services covers all the Integrated Facility Management and Business Services, on the other hand Workforce Administration services covers all kind staffing solutions, outsourced recruitment processes and payroll management

ii. The Company currently 5,800+ associate team (including contractual employees). Company currently service clients from the Manufacturing, Engineering, Infrastructure, Information Technology, Government & Banking, healthcare, Staffing & Recruitment, Food, Education, FMCG verticals

iii. Integrated Business Services

a. Workspace Administration Services

Workspace Administration Services vertical focus on delivering professional services towards facility management. Be it Hard Services, Soft services, Guest House management or any Business administrative Services. They cater to about 200+ different client site for the day-to-day up keep and maintenance across different verticals. They have effective combination of trained team, environmentally friendly & best in class cleaning materials, latest machinery with professionally defined process controls.

b. Workforce Administration Services

They are a popular workforce management services provider, they offer end-to-end HRMS & HROS services that is designed solving complex HR challenges. Build to consume staffing services, Contract Staffing, talent acquisition, search and recruitment, payroll management & compliance, training and skill development, to manpower management, they provide all the support to ensure our clients business workflow is exponential.

Competitive Strengths

Enduring Values of the company & Management Team
ii. Integrity
iii. Customer Focus
iv. Innovation

Objects of the Service Care Limited IPO:

The Issue Proceeds from the Fresh Issue will be utilized towards the following objects: i. To Meet Incremental Working Capital Requirements ii. General Corporate Purpose iii. To meet Public Issue Expenses

Service Care Limited IPO Details:

Open Date: Jul 14 2023
Close Date: Jul 18 2023
Total Shares: 3,086,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 20.68 Cr.
Lot Size: 2000 Shares
Issue Price: ₹ 67 Per Equity Share
Listing At: NSE Emerge
Listing Date: Jul 26 2023

Promoters And Management:

Mrs. Shany Jalal is a Graduate in Hotel Management from AlAmeen College of Management – Bangalore. Her determination, hard work and sheer business sense are the essential ingredients for a successful business venture is her tag line as a Managing Director, Service care Limited, Shany Jalal has been an entrepreneur since 1997. Soon after bachelor’s academics, not the one to sit by and wait for things to happen, with an infectious energy and passion started Service care, providing soft services to corporates. Self-spear headed the development and growth of the standalone startup Service care and in 13 years incorporated to Service care Private Limited. Mr. Anil Kumar M is Self-motivated professional successful in seizing viable opportunities for expansion and innovation in business. Background in increasing profits, reducing costs and transforming customer service standards. Experienced in leading and supervising operational and sales teams. Passionate about turning innovative ideas into tangible results. Experienced formulating and executing strategic plans, creating new products and services, and developing business opportunities. Mr. Amit Kumar Rakhecha is an MBA (PGD) in Finance and marketing from MDU, Rohtak. He is an accomplished and well-versed Businessman with rounded experience from establishing new business units from ground zero, leading business units, driving revenue and P&L. He has done extensive experience in structuring large and complex deals at CXX level.

Financials of Service Care Limited IPO:

A. Balance Sheet
Particular (In Lakhs) Mar-20 Mar-21 Mar-22 10MFY23
Equity Share Capital 1.00 1.00 1.00 1.25
Reserves 433 457 631 1,133
Borrowings 306 315 341 0
Trade Payables 16 13 12 9
Other Liabilities 1,165 1,234 1,445 2,038
Total Liabilities 1,487 1,562 1,799 2,047
Net Block 22 16 33 22
Other Assets 85 60 82 94
Total NC Assets 108 76 114 116
Receivables 1,545 1,317 1,700 2,792
Cash & Bank 18 298 306 175
Other Assets 251 328 310 99
Face value 10 10 10 10
B. Profit & Loss Statement
Particular (In Lakhs) Mar-20 Mar-21 Mar-22 Mar-23
Sales 10,807 8,926 11,495 15,850
Raw Material Cost 82 73 127 136
Employee Cost 10,347 8,716 10,996 15,092
Other Expenses 108 76 130 127
Other Income 5 7 6 11
EBITDA 275 69 248 506
EBITDA Margin 2.54% 0.77% 2.15% 3.19%
Depreciation 10 7 4 4
Interest 42 16 11 18
Profit before tax 223 46 233 483
Tax 87 23 59 120
Net profit 136 23 174 363
NPM (%) 1.26% 0.26% 1.51% 2.28%
C. Cash Flow Statement
Particular (In Lakhs) Mar-20 Mar-21 Mar-22 10MFY23
Cash From Operating Activity
Profit From Operation 287 67 251 425
Receivable -212 227 -388 -1092
Payable 8 -3 -1 -3
Loans And Advances -94 -201 40 258
Other WC Items 137 210 176 536
Working Capital Changes -161 233 -173 -301
Direct Taxes -91 -13 -68 -102
Net Cash Inflow from Operating Activity 35 287 9 22
Cash from Investing Activity
Fixed assets purchased -2 -1 -21 -15
Fixed assets sold 6 0 0 17
Other investing items 1 0.7 2 1
Net cash inflow from investing activities 6 0 -19 3
Cash from Financing Activity
Proceeds from shares 0 0 0 200
Proceeds from borrowings 0 9 27 0
Repayment of borrowings -82 0 0 -341
Intrest paid fin -35 -15 -10 -15
Net Cash Flow -76 281 8 -131

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Service Care Limited 158 3.6 3.15 21.23 67 77
ITCons E-Solution Limited 28 1.7 3.44 12.6 43.5 22
Integrated Personnel Services Limited 198 5 6.29 14.5 90.9 66
Quess Corp Limited 17,158 223 15.14 35 435 6,449
* All the data is as per FY23.

Recommendation on Service Care Limited IPO:

Review and Recommendation of Service Care IPO by IZ team is 4/10

A) Business Model of the Service Care IPO

  1. Workspace Administration: They manage office facilities and business services for other companies, so those businesses can focus on their core work. 2. Workforce Administration: They serve as an outsourced Human Resources department, helping with staffing, recruitment, and payroll management for their clients. 3. Their clients are businesses from various sectors, and they likely earn revenue through contracts or retainer agreements for these services. Their pricing could be based on the type of service, the size of the operation, or the number of employees managed.

B) Strengths in the Business

  1. Established Business: The company has been operational for more than a decade (since 2011), which means it has likely built solid relationships with clients and partners, and has a proven track record of performance. 2. Broad Client Base: The company services clients from various sectors including Manufacturing, Engineering, Infrastructure, IT, Government & Banking, Healthcare, Staffing & Recruitment, Food, Education, and FMCG. This diversity could potentially insulate the business from sector-specific downturns. 3. Strong Leadership: The company was initially promoted by Mrs. Shany Jalal and Mr. Anil Kumar M, who have a vision for the company and have led it successfully from a private company to a public one. 4. Comprehensive Services: The company's services cover both Workspace Administration Services and Workforce Administration Services. This breadth of offerings can make it a one-stop shop for businesses. 5. Impressive Employee Strength: With over 5,800 employees, the company has a strong workforce to meet its operational demands.

C) Weaknesses in the Business

  1. Dependence on Key Personnel: If the company relies heavily on the founders or a few key individuals for its success, it could be at risk should those individuals leave or become unable to fulfill their roles. 2. Scale of Operations: As the company grows in size (employees, clients), managing such a large operation may become challenging, especially if processes and systems aren't scaled effectively. 3. Potential Staff Turnover: Given the nature of the business, there might be a higher turnover rate, especially among contractual employees, leading to recurring training and hiring costs.

D) Risk in the Business

  1. Revenue from Manpower Services Contract Receipts: The company's revenue heavily relies on manpower services contracts. Any loss of business in this segment, due to declining quality standards, competition, or changing demand, could adversely affect revenue and profitability. 2. Intense Competition and Low Barriers to Entry: The industry in which the company operates is highly competitive and fragmented, with low barriers to entry. Competing against existing and new competitors, especially in the unorganized segment, may pose challenges and potentially impact the company's business, operations, and financial condition.

E) Financial Performance

  1. The company's revenue has experienced a modest growth rate of 19% from INR 38 Cr in 2016 to INR 132 Cr in FY23, which is considered low given the small scale of the company's operations. 2.The business operates with narrow EBITDA margins ranging from 1-2%, indicating a need for significant volume in order to drive profitability. 3. The Avg. PAT of FY20, FY21 and FY22 is ~1.1 Crores. However, in the first 10MFY23, the profit rises suddenly to ~3.02 Cr. With this PAT, the EPS is 2.62x and P/E is 26x which looks very high. 4.In the first 10 months of FY23, the company achieved a total PBT of approximately INR 4 Cr. However, the cash generated from operations amounted to only INR 0.22 Cr, indicating a low conversion efficiency of 5%. This suggests that a significant amount of money is tied up in working capital, as the ideal ratio for cash conversion is typically expected to be over 70%. 5. ROE is 10% post IPO.

F) Valuation and Peer Analysis

  1. Asking P/E is 67x based on last 3 years i.e. FY20, FY21 and FY22 average PAT. 2. Asking P/E is 25x based on 10MFY23 numbers. 3. Asking Mcap = 77 Cr. The nearest peer in terms of business and size is Integrated Personnel Services. Integrated is available at P/E of 14 with better Revenue, EBITDA Margins and Profitability Ratios.

Lead Manager of Service Care Limited IPO:

  1. Swastika Investmart Limited

Registrar of Service Care Limited IPO:

  1. Integrated Registry Management Services Private Limited

Company Address:

Service Care Limited No. 653, 1st Floor, 2nd Main Road Domlur Layout, Bangalore – 560071 Phone: +91-80-25354728 / 2535472 Email: Website:

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