Crayons Advertising files for NSE Emerge IPO

The IPO segment is finally starting to see some action after almost a month of quiescence. The latest company to file the draft red herring prospectus (DRHP) with SEBI for its proposed NSE Emerge IPO is Crayons Advertising. Incidentally, the company has been in the news recently for all the right reasons. It had recently announced that it had received major advertisement mandates from marquee names like Tata Sons, National Skill Development Corporation (NSDC), Indian Oil, Tata Croma and Bank of Baroda. In several cases, the mandate is to help them improve the brand positioning of the product and make it more appealing to the youth and also in sync with the aspirations of the youth.

What is the Crayons Advertising IPO all about?

What we know from the draft prospectus is that the company, Crayons Advertising, plans to sell a total of 64.3 lakh equity shares having face value of Rs10 each. Like most of the NSE Emerge IPOs, this is also expected to be a fixed price issue with allocation reserved for retail and for HNI investors. The company has appointed Corporate Capital Ventures as the lead manager to the issue while Skyline Financial Services will be the registrar to the issue.

While the issue size is now known, the DRHP has revealed that the company would look to allocate Rs15.28 crore for building infrastructure and for cutting edge technology for expansion of the business. Another Rs14.60 crore will be allocated to the working capital requirements of the company. The company essentially operates in the digital media spaces and focuses on brand strategy, innovative solutions, customer activations and staging of events. In addition, Crayons Advertising also does digital media planning, digital media buying as well as conventional media planning and buying on behalf of the clients. Crayons Advertising was founded and promoted by Kunal Lalani.

For the financial year 2022, ending in March, Crayons Advertising reported top line revenues of Rs194 crore and net profits of Rs1 crore. While the FY23 numbers are yet to be announced, one can surmise it would be better, since for the first six months of FY23 ending in September 2022, Crayons Advertising had reported net profits of Rs6.6 crore on revenues of Rs118 crore.

Advertising sector potential in India

Let us also focus on the overall advertisement sector in India and the potential for growth that it offers to Crayon Advertising. The size of the Indian advertising industry was estimated at Rs67,000 crore annually in the last study made by the Expert Market Research group. However, the group had then projected this industry to grow at a compounded annual growth rate (CAGR) of 11% over the next 7 years. Between now and 2026, the size of the advertising industry is expected to expand to around Rs125,000 crore to Rs130,000 crore on an approximate basis. That is the business potential matrix that Crayons Advertising will be working under.

Among the prestigious projects undertaken by Advertising are Tata Mumbai Marathon campaign publicity as well as on the Air India transition campaign titled, “Winds of Change”.