What you must know about Interiors and More IPO?

Interiors and More Ltd was incorporated in the year 2012 and are into the business of trading, importing, and selling artificial flowers. Interiors and More Ltd manufactures and trades high quality artificial flowers, plants, and decor items for homes and offices. The manufacturing facility of Interiors and More Ltd is fully equipped with all necessary tools to manufacture, test and handle quality control. It also handles its entire logistics internally.

It has a 57,000 SFT manufacture facility and Umargam and another 7,000 SFT facility in Umbergaon; both located in the state of Gujarat. Artificial flowers offered by Interiors and More Ltd include rose, yellow marigold, green grass in mats, green Leaves, carnations, hydrangea, and hanging orchids. The company also trades in other accessories like fountains, battery-operated candles, chandeliers, vases, artificial trees, and furniture. The company has 93 employees on its rolls.

Key terms of the Interiors and More IPO

Here are some of the highlights of the Interiors and More IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 15th February 2024 and closes for subscription on 20th February 2024; both days inclusive.
   
• The stock of the company has a face value of ₹10 per share and it is a book building issue. The price for the book building issue is set in the price band of ₹216 to ₹227 per share. Being a book built issue, the price will be discovered in the above band.
   
• The IPO of Interiors and More Ltd has only a fresh issue component and no offer for sale (OFS) portion. It must be remembered that 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, Interiors and More Ltd will issue a total of 18,50,400 shares (18.504 lakh shares), which at the upper band of IPO price of ₹227 per share aggregates to fresh fund raising of ₹42.00 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 18,50,400 shares (18.504 lakh shares) which at the upper band IPO price of ₹227 per share will aggregate to overall IPO size of ₹42.00 crore.
   
• Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 93,000 shares. Gretex Share Broking Private 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 Manish Mohan Tibrewal, Rahul Jhunjhunwala, Ekta Tibrewal, Puja Jhunjhunwala and Reena Jhunjhunwala. The promoter holding in the company currently stands at 95.08%. However, post the fresh issue of shares in the IPO, the promoter equity holding share will get diluted to 69.93%.
   
• The fresh issue funds will be used by the company towards working capital funding at its plants and for repayment and prepayment of higher cost loans. Part of the funds will also be applied towards general corporate purposes.
   
• Gretex Corporate Services Ltd will be the lead manager to the issue, and Bigshare Services Private Ltd will be the registrar to the issue. The market maker for the issue is Gretex Share Broking Private Ltd.

IPO allocation and minimum lot size for investment

Interiors and More Ltd has already announced the market maker allocation at 93,000 shares as inventory for market making. Gretex Share Broking Private Ltd will be the market maker for the IPO. The net offer (net of market maker allocation) will be divided between the retail investors and the HNI / NII investors. The breakdown of the overall IPO of Interiors and More Ltd in terms of the allocation to various categories are captured in the table below.

The minimum lot size for the IPO investment will be 600 shares. Thus, retail investors can invest a minimum of ₹1,36,200 (600 x ₹227 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 1,200 shares and having a minimum lot value of ₹2,72,400. 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.

Key dates to be aware of in the Interiors and More IPO (SME)

The SME IPO of Interiors and More Ltd IPO opens on Thursday, 15th February 2024 and closes on Tuesday, 20th February 2024. The Interiors and More Ltd IPO bid date is from 15th February 2024 at 10.00 AM to 20th February 2024 at 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is 20th February 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 February 22nd 2024, will be visible to investors under the ISIN Code – (INE0OPC01015).

Financial highlights of Interiors and More Ltd

The table below captures the key financials of Interiors and More Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

Here are some of the key takeaways from the financials of the company for the last 3 years.

• The revenues have grown at a rapid pace in the last 2 years and hence the latest year revenue data shows a secular growth trend, which is a positive signal. The top line sales are up nearly 4 times in the last 2 fiscal years. The PAT margins are very strong in the latest year at 23.85% and the dilution could reduce this number.
   
• While net margins of the company have been relatively volatile yet robust, it is more because the company has built its margins in this business. In addition, the ROE at 59.57% and the return on assets or ROA at 19.16% in the latest year are very attractive and stable.
   
• The asset turnover ratio or the sweating ratio has been under 0.80, but with robust return on assets, that is not a problem. Also, as the sales picks up in the coming quarters, this ratio of asset turnover should only get better.

The company has latest year EPS of ₹11.52 and even through previous data may not really be comparable, the weighted average EPS of last 3 years stand at ₹6.67. The latest year earnings are being discounted by the IPO price of ₹227 per share at 19-20 times P/E ratio. However, that would be largely dependent on how the company maintains its EPS growth. With its established market demand and a tried and tested manufacturing value chain, the stock is in a business where the investors can take a long term bet on the stock.  Décor is a growing business and only likely to grow manifold in coming years. Investors with a higher risk appetite and a longer time frame can take a serious hard look at the IPO.