What you must know about Finelistings Technologies IPO?

About Finelistings Technologies Ltd

Finelistings Technologies Ltd  was incorporated in the year 2018 with two primary business lines viz., Retailing of used luxury cars and software development services. In the luxury used cars segment, Finelistings Technologies Ltd  typically offers a platform to buy and sell high-end cars with an average selling price of around ͅ₹40 lakhs. These include high-end sedans, SUVs, and convertibles. In addition, the company also offers after-sales services, repairs and other allied services through its affiliated service centres. In addition, the company also syndicates finance and insurance cover for the eligible buyers. The software development business includes a cloud based IT consulting service comprising of big data analytics, cloud architecture, data engineering, and IOT solutions.

Highlights of the Finelistings Technologies (BSE SME IPO)

Here are some of the highlights of the Finelistings Technologies IPO on the SME segment of the Bombay Stock Exchange (BSE).

• The issue opens for subscription on 07th May 2024 and closes for subscription on 09th May 2024; both days inclusive.
   
• The stock of the company has a face value of ₹10 per share and it is a fixed price issue. The price for the fixed price issue is set at ₹123 per share. Being a fixed price issue, the question of price discovery does not arise.
   
• Finelistings Technologies IPO has only a fresh issue component and no offer for sale (OFS) portion. While the fresh issue portion is EPS dilutive and equity dilutive, but OFS is just a transfer of ownership and  hence it is not EPS or equity dilutive.
   
• As part of the fresh issue portion of the IPO, Finelistings Technologies Ltd will issue a total of 11,00,000 shares (11.00 lakh shares), which at the fixed IPO price of ₹123 per share aggregates to fresh fund raising of ₹13.53 crore.
   
• Since there is no offer for sale (OFS) portion, the fresh issue size will also double up as the overall IPO size. Therefore, the overall IPO size will also comprise of the issue of 11,00,000 shares (11.00 lakh shares approximately) which at the fixed IPO price of ₹123 per share will aggregate to overall IPO size of ₹13.53 crore.
   
• Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 58,000 shares. Rikhav Securities Ltd will be the market maker to the issue. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs, post listing.
   
• The company has been promoted by Aneesh Mathur and Arvind Singh Rajput. The promoter holding in the company currently stands at 71.65%. However, post the fresh issue of shares in the IPO, the promoter equity holding share will get diluted to 49.98%.
   
• The fresh issue funds will be used by the company towards the purchase of necessary software and for working capital requirement. Part of the funds will also be used for general corporate purposes.
   
• Fedex Securities Private Ltd will be the lead manager to the issue, and Skyline Financial Services Private Ltd will be the registrar to the issue. The market maker for the issue is Rikhav Securities Ltd.

The IPO of Finelistings Technologies Ltd will be listed on the SME IPO segment of the BSE.

Finelistings Technologies IPO – Key Dates

The BSE SME IPO of Finelistings Technologies Ltd IPO opens on Tuesday, 07th May 2024 and closes on Thursday, 09th May 2024. The Finelistings Technologies Ltd IPO bid date is from 07th May 2024 at 10.00 AM to 09th May 2024 at 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is 09th May 2024.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account. The credit of shares to the demat account on May 13th 2024, will be visible to investors under the ISIN Code – (INE0QOQ01013). This allocation to the demat account is only applicable to the extent of the allocation of shares and if no allocations are made in the IPO, then no credit would be visible in the demat account.

IPO allocation and minimum investment lot size

Finelistings Technologies Ltd has already announced the market maker allocation at 58,000 shares as inventory for market making. Rikhav Securities Ltd will be the market maker for the IPO. The breakdown of the overall IPO of Finelistings Technologies Ltd in terms of allocation to various categories are captured in the table below.

The minimum lot size for the IPO investment will be 1,000 shares. Thus, retail investors can invest a minimum of ₹123,000 (1,000 x ₹123 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 2,000 shares and having a minimum lot value of ₹246,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

Financial highlights: Finelistings Technologies Ltd

The table below captures the key financials of Finelistings Technologies Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

The previous years data is not comparable as the company was making losses and only the latest year data can be taken for analysis. For the latest year, Finelistings Technologies Ltd has reported very strong numbers. The PAT margins stand at 12.88%, while the ROE at 50.85% and the ROA at 17.61% are also fairly attractive. However, the revenues are yet to catch up with the growth in assets in the latest year. Sustaining this profits will be the key to valuations.

The company has latest year EPS of ₹8.76 and we have not included the weighted  average EPS, since the previous year data is not exactly comparable. The latest year earnings are being discounted by the IPO price of ₹123 per share at 14-15 times P/E ratio. However, if one looks at the 11-months EPS for FY24 at ₹10.92, it translates into full year extrapolated EPS of ₹11.91 per share. That now makes the valuation relatively better at around 10-11 times P/E ratio. However, this company has turned around from losses in FY23 and its ability to sustain these levels of profits and margins in the coming years would be crucial. Investors must take a calculated and calibrated exposure to the IPO.