What you must know about Service Care IPO

Service Care Ltd, is an SME IPO on the NSE which is opening for subscription on 14th July 2023. The company was incorporated in the year 2011, and it is engaged in offering a plethora of support services such as workspace administration services and workforce administration services across a wide range of business domains. Essentially, the workspace administration service delivers professional services towards facility management; which is largely into managing the administration and the logistics flow of routine activities in any organization. The workforce management services segment offers end-to-end HRMS & HROS services, designed to solve complex HR challenges.

Service Care Ltd has developed deep insights into this side of the business and has overall market presence for over 23 years in this particular field. The company has established its creditability with its customers and partners over the last few years. Service Care Ltd currently operates through a team of over 5,800 associates (which includes contractual employees). Its clients are spread across various verticals like engineering, education, manufacturing, infrastructure, banking, IT, healthcare, FMCG etc. it also caters to the government sector for its administration and human resource needs. The company will be using the proceeds from the fresh issue to help meet its working capital expenses.

Key terms of the Service Care IPO SME

Here are some of the highlights of the Service Care IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 14th July 2023 and closes for subscription on 18th July 2023; both days inclusive.
   
• The company has a face value of ₹10 per share and it is a book built issue priced in the band of ₹63 to ₹67 per share and the IPO price will be discovered via book building.
   
• The company will issue a total of 30.86 lakh fresh shares which at the upper price band of ₹67 per share aggregates to a total fund raising of ₹20.68 crore.
   
• Since there is no offer for sale (OFS) component in the IPO, the total fresh issue size of Rs20.68 crore will also be the size of the total IPO issue of Service Care Ltd.
   
• Like every SME IPO, this issue also has a marketing making portion with a market maker allocation of 156,000 shares. Swastika Investmart Ltd will act as the market maker to the issue providing two-way quotes to ensure liquidity on the counter.
   
• The company has been promoted by Shany Jalal, Anil Kumar and Amit Kumar Rakhecha and the promoter stake in the company stands currently at 100%. Post the IPO, being a fresh issue of shares, the promoter stake will be get diluted proportionately.
   
• The fresh funds will be applied by the company for working capital and for meeting regular corporate expenses of a routine nature.

The company has assigned maximum allocation limit for qualified institutional buyers (QIBs) and the minimum allocation limits for retail investors and HNI / NII investors. The table below captures the allocation plan for the company.

The minimum lot size for the IPO investment will be 2,000 shares. Thus, retail investors can invest a minimum of ₹134,000 (2,000 x ₹67 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 4,000 shares and having a minimum lot value of ₹268,000. There is no upper limit on what the HNI / NII investors can apply for. Here are the investment limits for various categories of investors in the IPO of Service Care Ltd.

While Swastika Investmart Ltd will also be the lead manager to the issue, Integrated Registry Management Services Private Ltd will be the registrar to the issue.

Key dates to be aware of the Service Care IPO (SME)

The SME IPO of Service Care Ltd IPO opens on Friday, July 14th, 2023 and closes on Tuesday July 18th, 2023. The Service Care Ltd IPO bid date is from July 14th, 2023 10.00 AM to July 18th, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is the 18th of July 2023.

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.

Financial highlights of Service Care Ltd

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

Data Source: Company DRHP filed with SEBI

The profit margins have been fairly low and the sales growth has been quite erratic. However, the company a model that is generally asset light which is evident from the much better return on net worth in the latest year FY22. We do not have the full date for FY23 and it is only available up to January 2023 and hence not cyclically comparable.

However, the business model is based on a very unique core expertise and that would ensure that the advantage the company enjoys is sustained over time. The Indian facilities management opportunity is quite huge and that is likely to keep the investor interest in the stock at an elevated level. It is a high risk bet, but ideal for investors with a longer frame.