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Review By Dilip Davda on May 23, 2024
• The company is primarily in the business of debenture trusteeship.
• It provides many security markets related services under one roof.
• The company posted growth in its top and bottom lines for the reported periods.
• Based on FY24 earnings, the issue appears fully priced.
• Investors may park funds for the medium to long term rewards.
ABOUT COMPANY:
Beacon Trusteeship Ltd. (BTL) is a SEBI registered Debenture Trustee vide Registration No. IND000000569, which provides wide range of trusteeship service across various sectors such as Debenture Trustee Services, Security Trustee Services, Trustee to ices at large.
BTL provides trusteeship services by acting as intermediary between the issuer company or entity and investors. The company as a Debenture Trustee plays a pivotal role in its Scope of work under trusteeship services includes Due diligence, Custodial services, monitoring compliance, Documentation, Disclosures, Record keeping etc. As a trustee, the company plays a crucial role in maintaining investor confidence by safeguarding their interests and promoting transparency and accountability. With the help of a technology, a dedicated legal and compliance team for each of its products viz. Debenture Trusteeship, Security Trustee for Loans, ified company w.r.t. Information Security Management System, showing execution capabilities and efficiency in its operations.
It has recently expanded locational presence by opening Business office at Gujarat International Finance Tec-City (GIFT) which is an International Financial Services Centre (IFSC) in order to increase its reach and to obtain various regulatory advantages. The company has locational presence in more than 15 cities in India including major cities such as Mumbai, Delhi, Chennai, Hyderabad, Jaipur, Bangalore, Chandigarh, Indore, Kolkata, Lucknow and Gandhinagar whether through regional offices or signatories.
BTL has proposed to invest in technological infrastructure, expand service operations domestically and internationally from the Net offer proceeds. The company has acquired Beacon Investor Holdings Private Limited (Formerly known as Beacon RTA Services Private Limited) as a Wholly Owned Subsidiary as of April 05, 2024 and will Make Investment through Equity for the License of Depository Participant and Registrar & Share Transfer Agent.
The company also provides service as an Escrow and Monitoring agent, whereby the client appoints it as the monitoring agent to ensure outward remittance from the Escrow Account are credited only to the Special Purpose Collection Account or any other account as specified in the formal agreement. Its scope of work includes Drafting & Vetting of Escrow Agreement, Set up of Escrow Mechanism, Documentation and timely monitoring services. As of March 31, 2024, it had 76 employees on its payroll and has completed 589 assignments.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combined IPO of 5420000 equity shares of Rs. 10 each to mobilize Rs. 32.52 cr. at the upper cap. The IPO consists of 3872000 fresh equity shares worth Rs. 23.23 cr., and an Offer for Sale (OFS) of 1548000 equity shares worth Rs. 9.29 cr. at the upper cap. It has announced a price band of Rs. 57 - Rs. 60 per share. The issue opens for subscription on May 28, 2024, and will close on May 30, 2024. The minimum application to be made is for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge.
The issue constitutes 30% of the post-IPO paid-up capital of the company. From the net proceeds of the fresh equity shares issue, it will utilize Rs. 7.00 cr. for upgrading technology infrastructure for its existing business, Rs. 6.99 cr. for investment in wholly owned subsidiary Beacon Investor Holding Pvt. Ltd., Rs. 3.25 cr. for purchase of new office premises, and the rest for general corporate purposes.
The company has allocated not more than 50% for QIBs, not less than 35% for Retail investors and not less than 15% for HNIs.
The issue is solely lead managed by Beeline Capital Advisors Pvt. Ltd., and KFin Technologies Ltd., is the registrar to the issue. BEELINE Group's Spread X Securities Pvt. Ltd. is the market maker for the company.
Having issued the initial equity shares at par, the company issued further equity capital in the price range of Rs. 11.50 - Rs. 84 (based on Rs. 10 FV), between February 2017 and February 2022. It has also issued bonus shares in the ratio of 37 for 10 in February 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. Negative, Rs. 0.75, and Rs. 4.37 per share.
Post-IPO, company's current paid-up equity capital of Rs. 14.19 cr. will stand enhanced to Rs. 18.07 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 108.39 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total revenue/net profit of Rs. 5.60 cr. / Rs. 0.95 cr. (FY21), Rs. 10.49 cr. / Rs. 3.62 cr. (FY22), Rs. 15.72 cr. / Rs. 3.85 cr. (FY23), and Rs. 20.91 cr. / Rs. 5.16 cr. (FY24).
For the last three fiscals, it has reported an average EPS of Rs. 3.03 (simple average), and an average RoNW of 28.56%. The issue is priced at a P/BV of 4.44 based on its NAV of Rs. 13.50 as of March 31, 2024, and at a P/BV of 2.56 based on its post-IPO NAV of Rs. 23.47 per share (at the upper cap).
If we attribute FY24 earnings to its post-IPO fully diluted paid-up capital, then the asking price is at a P/E of 20.98. Thus the IPO appears fully priced.
For the reported periods, the company has posted PAT margins of 36.05% (FY22), 25.98% (FY23), 25.93% (FY24), and RoE margins of 50.52%, 31.82%, 31.12% respectively for the referred periods.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.
MERCHANT BANKER'S TRACK RECORD:
This is the 40th mandate from Beeline Capital in the last three fiscals (including the ongoing one, out of the last 10 listings, all listed with premiums ranging from 5.88% to 386.67% on the date of listing.
Review By Dilip Davda on May 23, 2024
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Beacon Trusteeship Limited offers an early investment opportunity in Beacon Trusteeship Limited. A stock market investor can buy Beacon Trusteeship IPO shares by applying in IPO before Beacon Trusteeship Limited shares get listed at the stock exchanges. An investor could invest in Beacon Trusteeship IPO for short term listing gain or a long term.
Read the Beacon Trusteeship IPO recommendations by the leading analyst and leading stock brokers.
Beacon Trusteeship IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Beacon Trusteeship IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Beacon Trusteeship IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Beacon Trusteeship IPO.
The Beacon Trusteeship IPO allotment status will be available on or around May 31, 2024. The allotted shares will be credited in demat account by June 3, 2024. Visit Beacon Trusteeship IPO allotment status to check.
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