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Review By Dilip Davda on March 18, 2021
• NIKS is engaged in IT solution services and mobile app developments.
• The company has fared on an average with minuscule financial data.
• The issue is exorbitantly priced based on all financial parameters.
• Lead Manager has an average track record so far.
• There is no harm in staying away from this costly issue.
ABOUT COMPANY:
NIKS Technologies Ltd. (NIKS) is an IT solution services enabling company to implement standard practices and maintaining quality services across all verticals; it is committed to delivering high-quality services like Digital Marketing, Software development, mobile app development, website development, moreover NIKS provides classroom training and certification courses to students during their summer and winter breaks. This training is being provided through online and offline mode.
NIKS combines a data-driven approach with knowledge gained from years in digital marketing to deliver outstanding results to clients. The company with its foundation pillars as Innovation, Information and Intelligence is exploring indefinitely as a Technology Service Provider and as a Training
Organization. Innovator of Technologies.
The company has been steadily diversifying as well as adding new products to its portfolio, besides adding additional infrastructure.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its needs for working capital (₹0.50 cr.) and general corpus funds (₹0.04 cr.), the company is coming out with a maiden IPO of 100200 equity shares of ₹10 each with a fixed price of ₹201 per share to mobilize ₹2.01 cr. The issue opens for subscription on March 19, 2021, and will close on March 23, 2021. Minimum application is to be made for 600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on the BSE Startup SME platform. The issue consists of 33200 as a fresh equity issue and 67000 as an offer for sale. It constitutes xx% of the post issue paid-up equity capital of NIKS. The issue constitutes 27.59% of the post issue paid-up capital of NIKS.
The issue is solely lead managed by Gretex Corporate Services Pvt. Ltd., Bigshare Services Pvt. Ltd. Is the registrar to the issue. Gretex Share Broking Pvt. Ltd. is acting as a Market Maker for this issue. The company will be spending ₹0.38 cr., as overall issue expenses. This is indicative that the issue is pre-sold and fully structured.
Having issued initial equity at par, the company raised further equity at ₹13 per share in February 2021. It has also issued bonus shares in the ratio of 4 for 1 in December 2020 and 1 for 1 in February 2021. The average cost of acquisition of shares by the promoters is ₹3.82 per share.
Post issue NIKS's current paid-up equity capital of ₹0.33 cr. Will stand enhanced to ₹0.36 cr. Based on IPO pricing, the company is looking for a market cap of ₹7.30 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, NIKS has posted turnover/net profits - (loss) of ₹0.19 cr. / ₹- (0.001) cr. (FY18), ₹0.20 cr. / ₹- (0.001) cr. (FY19) and ₹0.20 cr. / ₹0.08 cr. (FY20). For the ten months period ended on January 31, 2021, of the FY21, it has earned a net profit of ₹0.14 cr. On a turnover of ₹0.28 cr. Thus the company is in a nascent stage with minuscule working.
For the last three fiscals, NIKS has reported an average EPS of ₹1.95 and an average RoNW of 30.87%. The issue is priced at a P/BV of 18.94 based on its NAV of ₹10.61 as of January 31, 2021, and at a P/BV of 6.10 based on post issue NAV of ₹32.94 per share.
Based on FY20 financial data, the issue is priced at a P/E of 90.54 and if we annualize FY21 working and attribute it on fully diluted equity post issue, then the asking price is at a P/E of 119.64. Thus, this issue is exorbitantly priced. A major portion is by way of OFS and thus promoters are making hay at the cost of new investors.
COMPARISON WITH LISTED PEERS:
As per offer documents, NIKS has no listed peers to compare with.
DIVIDEND POLICY:
NIKS has not paid any dividend so far. It may devise a prudent dividend policy going forward on the basis of its performance and future prospects.
MERCHANT BANKER'S TRACK RECORDS:
This is the 12th mandate from its stable in the last three fiscals (including the ongoing one). Out of the last 10 listings, 1 opened at a discount and the rest at premiums ranging from 0.06% to 4.75% on the day of listings. Thus it has an average track record.
Review By Dilip Davda on March 18, 2021
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 NIKS Technology Limited offers an early investment opportunity in NIKS Technology Limited. A stock market investor can buy NIKS Technology IPO shares by applying in IPO before NIKS Technology Limited shares get listed at the stock exchanges. An investor could invest in NIKS Technology IPO for short term listing gain or a long term.
Read the NIKS Technology IPO recommendations by the leading analyst and leading stock brokers.
NIKS Technology IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the NIKS Technology IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for NIKS Technology IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the NIKS Technology IPO.
The NIKS Technology IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit NIKS Technology IPO allotment status to check.
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