Enser Communications Limited‘s IPO closed day one with a modest 1.15 times subscription, reflecting a cautious but definite interest from investors, hinting at a measured yet optimistic outlook for the company’s market entry.
Enser Communications IPO saw a tepid response from buyers as the issue was subscribed 0.32 per cent by 12:35 pm on Friday, March 15. The issue opened for subscription on March 15 and will close on March 19.
ABOUT COMPANY:
Enser Communications Ltd. (ECL) was incorporated with the main objects to carry on activities in the communications field with regards to call centers, outsourcing, database management, web services, information systems, software and hardware selling and maintenance & knowledge based projects in the communications field; and to carry on the activities in the field of trading, exporting, importing, processing, buying, selling, marketing of various types communication equipment's or instruments or products or to provide facilitate of networking, mobiles services, computer programming, data processing, business outsourcing, e-commerce facilities, web site, portal, internet service units, systems analyzing and to provide services of establishing Management Information Systems, maintenance and applications, customer contract development resources, training and certification of any products and design and to provide training and education facilities for employees or to customers and others.
Enser Communications was established and commenced its business in May 2008, Enser is in the business of the "Business Process Management Platform". It has also empaneled with National Health Authority a Government of India Entity in February, 2022 and State Health Authority, Gujrat, December 2023.
Recently the company has expanded the service providing capacity of business activity the company by setting up service facilitating offices: a) 31A, Udyog Vihar in August, 2022 with a workstation capacity of 701 seats. b) Arihant Aura, Navi Mumbai in September, 2022 with a workstation capacity of 216 seats. c) Set up New Office Space at Bangalore in November, 2022. d) EFC Tower, Navi Mumbai in May, 2023 with a workstation capacity of 221 seats.
Further, as a part of expansion of business activity the company is setting up a new service unit at 104, Udyog Vihar, Phase 4 Gurugram, Haryana with 500+ seats capacity, to provide and facilitate customer acquisition and other BPM services to clients. Enser's BPM technology enabled platform that integrates with voice, chat, email, IVRS, and other social media engagements for customer acquisition as well as customer service strategies, specializing in Client Interaction Management. Enser provides and facilitates to clients, thereby fostering mutual growth. Enser's comprehensive service offerings span across Business Analytics, Customer Relationship Management (CRM), Interactive Voice Response Systems (IVRS), and Customer Interaction Management solutions. ECL helps its clients manage their Customer Life cycle using its Business Process Management Platform. It facilitates rich consumer engagement and understanding by crafting end-to-end consumer interaction solutions that are flexible and customized to deliver for its client's business objectives. As of December 31, 2023, it had780 employees on its payroll.
Enser Communications Limited IPO – Fundamental Analysis:
Enser Communications’ IPO reflects strong revenue and profit growth, with revenues reaching ₹2,540.82 lakhs and profits nearly tripling, coupled with a tripled equity, signaling investor trust. However, discrepancies in RoNW and abnormally high EPS values need clarification. The NAV’s steady rise and improved current ratio to 1.55 point to better financial health and liquidity, but fluctuating debt-equity ratios indicate changing leverage levels, presenting a promising yet cautious investment opportunity after resolving data inconsistencies.
Enser Communications Limited IPO – Risks And Challenges:
Enser Communications’ IPO confronts risks from rapid technological changes and the need for significant investments, a potential decline in demand for its Business Process and Customer Interaction Management Services, and persistent negative cash flows from operating, investing, and financing activities, all of which could hinder the company’s operational and financial performance, as well as its capacity for growth.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden fixed price IPO of 2310000 equity shares of Rs. 10 each at a fixed price of Rs. 70 per share to mobilize Rs. 16.17 cr. The issue opens for subscription on March 15, 2024, and will close on March 19, 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 26.50% of post-IPO paid-up equity capital of the company. It is spending Rs. 0.70 cr. for this IPO process, and from the net proceeds, it will utilize Rs. 7.25 cr. for setting up of new service unit, Rs. 4.37 cr. for working capital, and Rs. 3.85 cr. for general corporate purposes.
The issue is solely lead managed by Fast Track Finsec Pvt. Ltd. Ltd., and Skyline Financial Services Pvt. Ltd. is the registrar of the issue. BN Rathi Securities Ltd. is the market maker for the company.
Having converted initial equity capital at par, the company issued further equity shares at a fixed price of Rs. 6752.38 per share on September 2023, and has also issued bonus shares in the ratio of 600 for 1 in November 2023. The average cost of acquisition of shares by the promoters is Rs. 0.12, and Rs. 9.98 per share.
Post-IPO, company's current paid-up equity capital of Rs. 6.41 cr. will stand enhanced to Rs. 8.72 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 61.01 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue/net profit/ -(Loss) of Rs. 9.61 cr. / Rs. - (0.12) cr. (FY21), Rs. 16.87 cr. / Rs. 0.78 cr. (FY22), and Rs. 25.91 cr. / Rs. 1.60 cr. (FY23). For H1 of FY24 ended on September 30, 2023, it earned a net profit of Rs. 2.14 cr. on a total revenue of Rs. 18.16 cr. Thus the sudden boost in its bottom lines from FY23 onwards raise eyebrows as well as concern over the sustainability of such margins going forward.
For the last three fiscals, it has reported an average EPS of Rs. 1.73, and an average RONW of 0.30%. The issue is priced at a P/BV of 6.46 based on its NAV of Rs. 10.84 as of September 30, 2023, and at a P/BV of 2.79 based on its post-IPO NAV of Rs. 25.10 per share.
If we attribute annualized FY24 super earnings to its post-IPO fully diluted paid-p capital, then the asking price is at a P/E of 14.26. Based on FY23 earnings, the P/E stands at 38.04. Thus the issue appears fully priced.
For the reported periods, the company has posted PAT margins of - (1.22) % (FY21), 4.62% (FY22), 6.18% (FY23), It has not given RoCE data for the said periods and has also suppressed data for H1 of FY24 on PAT and RoCE margins.
Here are 10 key points to know about the SME IPO
Enser Communications IPO details: Enser Communications IPO is a fixed price issue totalling ₹16.17 crore, consisting solely of 23.1 lakh fresh shares of face value of ₹10 each.
Enser Communications IPO price band: The Enser Communications IPO is priced at ₹70 per share, with a minimum lot size requirement of 2000 shares for an application. Also Read: Popular Vehicles IPO: GMP, subscription status to allotment date. How to check status?
Enser Communications IPO investment requirement: For retail investors, the minimum amount required for investments is ₹1,40,000. High net worth individuals (HNIs) are required to invest in a minimum of 2 lots, totalling 4000 shares, amounting to ₹2,80,000.
Lead manager and registrar of the issue: Fast Track Finsec Private Ltd is the book-running lead manager for the issue while Skyline Financial Services Private Ltd is the registrar for the Enser Communications IPO. B.N. Rathi Securities Limited is the market maker for the issue, as per the RHP of the company.Also Read: Transrail Lighting files DRHP with SEBI to raise ₹450 crore via IPO; check details
Reservation for market maker: 1,18,000 shares at a price of ₹70, aggregating ₹82.60 lakh is reserved for the market maker in this issue. This means this is a net issue of 21,92,000 shares of ₹10 each of the issuer at ₹70, aggregating to ₹15.34 crore.
Use of proceeds: The company intends to utilise the net proceeds of the IPO for the setting up of a new service unit, meeting working capital requirements, general corporate purposes and issue-related expenses.Also Read: Krystal Integrated Services IPO: Issue subscribed 36% on day 1; check GMP, other key details
Promoters: Harihara Subramanian Iyer, Rajnish Omprakash Sarna, Gayatri Rajnish Sarna and Sindhu Saseedharan Nair are the promoters while Yash Rajnish Sarna is the promoter group of the company.
Promoters stake after the issue: After the issue, Harihara Subramanian Iyer's stake in the company will decrease from 33.81 per cent to 24.85 per cent, while Rajnish Omprakash Sarna's stake will reduce from 56.29 per cent to 41.37 per cent. All other stakeholders will maintain their stakes at 0.01 per cent in the company. This means the collective stakes of promoters and the promoter group will decrease significantly from 90.13 per cent to 66.24 per cent.
Enser Communications IPO allotment and listing: As per media reports, the allotment date of the issue is Wednesday, March 20, 2024, while the listing date is Friday, March 22, 2024.
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