WOL 3D NSE SME IPO review (May apply)

• IPO Details
• Docs
  • RHP
  • DRHP
  • Anchor Investor Link
• Reviews
• Subscription
• Calculator
• News
• GMP
• Allotment
• BoA
• Messages

Review By Dilip Davda on September 19, 2024

•    The company is engaged in the business of providing 3D printing solutions and related hardware/products.
•    It marked surge in its top and bottom lines for FY23 and FY24. But boosted profits for FY24 raise eyebrows and concern over its sustainability.
•    It is operating in a highly competitive and fragmented segment.
•    Based on FY24 earnings, the issue appears fully priced.
•    Well-informed Investors may park moderate funds for long term. 

ABOUT COMPANY:
WOL 3D India Ltd. (WOL3D) is engaged in the business of providing 3D Printing solutions enabling easier prototyping finding its application in various sectors like manufacturing, education, engineering, architecture, interior designing, fashion designing, product designing, medical, dental etc. 3D Printing Solutions Company aiming at bridging gap between ideation and manufacturing by providing high quality and cost-effective 3D Printing solutions with cutting edge technology. 

Its portfolio of offerings includes (i) Hardware like: 3D printers, 3D Scanners, Laser Engravers and 3D pens (ii) Consumables like: 3D Filaments, 3D Resins, (iii) 3D Prototyping services and (iv) Other services. 3D Printing is used for additive manufacturing (AM) which is a computer-controlled process that creates three dimensional objects by depositing materials, usually in layers. 3D-printing allows materials to be created without joints and with minimal post-processing. Multiple
materials can be used during this process, which makes it easy to create new products with minimal waste and lower materials costs.

Its product portfolio includes wide range of 3D Printers offering various solutions comprising of: Desktop 3D Printer, Industrial 3D Printer, Resin 3D Printer, DIY 3D Printer, Multi Colour 3D Printer, etc. Furthermore, its product portfolio includes 3D Pens which are used to draw three-dimensional objects. These 3D Pens are available in safe, multi-colour, easy to operate, plug & play, LED Screen in 8 designs out of which three are patented by the company. This was a new milestone in 2023 when our company received Patent registration for the design of its 3D Pens. 

Currently, it is the distributors for International 3D Printer brands like Flashforge, Creality, Bambu lab, Phrozen and Elegoo. The company largely imports these printers and has got trademark registrations in India for some of the popular 3D Printer brands like: Flashforge, Fila-tech, Wol3D, Qidi Technology, X-smart 4.0s, I Tech 4.0s, itouch3D, Hismart4.0s, Creality 3D, Creality and Pixel 3D. Expanding its operations towards back integration, it also manufactures 3D filaments used in additive manufacturing process. Its range of products are offered at different pricing points to meet diverse customer requirements. Additionally, it designs, develops, manufactures, and sells a wide range of aesthetic products made out of 3D Printing technology. It also provides Prototyping services using FDM, SLA and SLS technology. As of August 31, 2024, it had 77 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden combo book building route IPO of 1704000 equity shares of Rs. 10 each to mobilize Rs. 25.56 cr. The company has announced a price band of Rs. 142 - Rs. 150 per share. The issue consists of 1452000 fresh equity shares worth Rs. 21.78 cr., and 252000 shares by way of Offer for Sale (OFS) worth Rs. 3.78 cr. (at the upper cap). The issue opens for subscription on September 23, 2024, and will close on September 25, 2024. The minimum application to be made is for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.41% of the post-IPO paid-up capital of the company. From the net proceeds of the fresh equity issue, the company will utilize Rs. 3.00 cr. repayment in part or full certain borrowings, Rs. 14.50 cr. for working capital, and the rest for general corporate purposes.

The issue is solely lead managed by Hem Securities Ltd., Bigshare Services Pvt. Ltd. Is the registrar to the issue, while HEM group's Hem Finlease Pvt. Ltd. Is the market maker for the company. 

The company has issued its entire equity capital at par value so far.  It also issued bonus shares in the ratio of 2 for 1 in November 2022, and 2 for 3 in April 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. NIL, Rs. 1.05, and Rs. 1.74 per share. 

Post-IPO, company's current paid-up equity capital of Rs. 5.00 cr. will stand enhanced to Rs. 6.45 cr. Based on the upper cap of IPO price band, the company is looking for a market cap of Rs. 96.78 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs.  20.37 cr. / Rs. 0.84 cr.  (FY22), Rs. 23.71 cr. / Rs. 2.41 cr. (FY23), and Rs. 40.01 cr. / Rs. 5.03 cr. (FY24).  

For the last three fiscals, it has reported an average EPS of Rs. 6.92 and an average RoNW of 42.17%. The issue is priced at a P/BV of 7.07 based on its NAV of Rs. 21.22 as of March 31, 2024, and at a P/BV of 2.68 based on its post-IPO NAV of Rs. 56.06 per share.

If we attribute FY24 super earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 19.23. Based on FY23 earnings, the P/E stands at 40.21. Thus the issue relatively appears fully priced. As the company is operating in a highly competitive and fragmented segment, super performance in a pre-IPO year raises eyebrows and concern over its sustainability. 

The company reported PAT margins of 4.29% (FY22), 10.32% (FY23), 12.71% (FY24), and RoCE margins of 13.55%, 28.54%, 42.50% for the referred periods, respectively.

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.

COMPARISION 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 55th mandate from Hem Securities in the last three fiscals (including the ongoing one). Out of the last 10 listings, all listed with a premium ranging from 18.18% to 90% on the date of listing.

WOL 3D IPO FAQs