Akiko Global NSE SME IPO review (May apply)

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Review By Dilip Davda on June 19, 2024

•    The company works as channel partner for banks and NBFCs.
•    The company marked growth in its top and bottom lines. 
•    The sudden boost in pre-IPO years for Top and Bottom lines raise eyebrows. 
•    Based on FY24 annualized super earnings, the issue appears aggressively priced. 
•    Well-informed investors may park moderate funds for the long term.

ABOUT COMPANY:
Akiko Global Services Ltd. (AGSL) is a channel partner for major banks and Non-Banking Financial Companies (NBFCs) in India, with six years of expertise and experience, working majorly in the distribution and sales of financial products such as credit cards and loans.

It has commenced its operations in 2018 and is currently working as a Channel Partner (DSA) for major Banks / NBFCs. AGSL's business model involves tele-calling, corporate activities, as well as a feet-on-street and digital marketing model to acquire customers digitally. Its proficiency lies in the field of credit cards and loans, empowering it to offer extensive guidance and assistance to individuals and businesses as they navigate the expansive landscape of financial products. Whether it's finding the right credit card for maximizing rewards and benefits, or securing the most suitable loan for personal or business needs, its team is dedicated to delivering informed and tailored recommendations.

The company is using a Customer Relationship Management ("CRM") system in its day-to-day operations. All leads undergo injection and monitoring within its CRM, developed by the Company. AGSL's CRM is developed with the features to protect customer information from any threat. As it continues to grow, the company is committed to continually evaluating and improving key activities to enhance customer satisfaction and optimize business processes. By combining the expertise of its team members, the power of digital marketing, the effectiveness of its telemarketing approach, and strong network of Feet-on-street, the company strives to provide an exceptional and seamless experience for customers.

The Company has earned a remarkable reputation in the industry, because of deliverance on commitment. Its business is completely compliance driven as the Company is ISO Certified by QFS Management Systems LLP, accredited by Standards Council of Canada and has inbuilt steps that are followed as per the guidelines issued by the respective banks. As of April 30, 2024, it had 418 employees on its payroll. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 3001600 equity shares of Rs. 10 each to mobilize Rs. 23.11 cr. at the upper cap. It has announced a price band of Rs. 73 - Rs. 77 per share. The issue opens for subscription on June 25, 2024, and will close on June 27, 2024. The minimum application to be made is for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.87% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 1.70 cr. for implementing ERP Solutions and TeleCRM, Rs. 2.80 cr. for mobile application, Rs. 11.39 cr. for working capital, Rs. 2.00 cr. for enhancing visibility for Akiko Global and Moneyfair, and the rest for general corporate purposes. 

The issue is solely lead managed by Fast Track Finsec Pvt. Ltd., and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Nikunj Stock Brokers Ltd. is the market maker for the company. 

Having issued initial equity capital at par value, the company issued further equity shares in the price range of Rs. 56.25 - Rs. 1450 per share between July 2023 and September 2023. It has also issued bonus shares in the ratio of 135 for 1 in July 2023. The average cost of acquisition of shares by the promoters is Rs. 0.92, Rs. 1.60, Rs. 3.33, Rs. 3.35, and Rs. 10.58 per share. 

Post-IPO, company's current paid-up equity capital of Rs. 7.77 cr. will stand enhanced to Rs. 10.77 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 82.93 cr.  

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 6.11 cr. / Rs. 0.23 cr. (FY21), Rs. 13.53 cr. / Rs. 0.78 cr. (FY22), and Rs. 39.59 cr. / Rs. 4.53 cr. (FY23). For 10M of FY24 ended on January 31, 2024, it earned a net profit of Rs. 3.22 cr. on a total income of Rs. 26.10 cr. 

For the last three fiscals, it has reported an average EPS of Rs. 7.40, and an average RoNW of 68.71%. The issue is priced at a P/BV of 3.75 based on its NAV of Rs. 20.52 as of January 31, 2024, but post-IPO NAV data is missing from its IPO price band ad.

If we attribute annualized FY24 earnings to its post-IPO fully diluted paid-up capital, then the asking price is at a P/E of 21.51. Thus the issue appears aggressively priced. 

For the reported periods, the company has posted PAT margins of 3.76% (FY21), 5.76% (FY22), 11.45% (FY23), 12.41% (10M-FY24), and RoCE margins of 21.79%, 63.39%, 109.99%, 29.23% 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 7th mandate from Fast Track Finsec in the last four fiscals (including the ongoing one), out of the last 6 listings, all listed with premiums ranging from 0.14% to 201.21% on the date of listing. 

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