Amidst the season of IPOs, one company is coming up with its follow-on public offer (FPO). DJ Mediaprints and Logistics Limited has come up with its FPO. So in this article, let’s discuss about this event in detail.
What is an FPO?
A follow-on public offer or FPO is the issuance of shares to investors by a company already listed on the stock exchange. It is an issuance of additional shares made by a company after its IPO. They are also known as secondary offerings.
DJ Mediaprint and Logistics Limited FPO details
The following are the details about the company’s IPO:
- The company’s FPO will open for subscription on January 18, 2022 and will close on January 20, 2022.
- The company has fixed an IPO price of ₹125 per equity share, and one market lot consists of 1000 shares.
- The company will list on the BSE SME Platform.
- The company will issue 12 lakh equity shares.
- Post the FPO, the promoter’s holding will come down to 55.35% from the current 71.11%.
- Mr. Dinesh Kotian and Mr. Santhosh Kotian are the company promoters.
- After issuing shares at a PE ratio of around 8.5 times, the company is raising money at a higher PE of 32 through its FPO.
About DJ Mediaprint and Logistics Limited
DJ Mediaprint and Logistics Limited is a provider of integrated printing, logistics, and courier solutions in India and overseas with a well networked transport operation. It also provides bulk mailing, speed post, records management, manpower supply, return of post management, bulk scanning, moving, newspaper print advertising services and other related services.
The company caters to a wide customer base across various industry segments such as banking, airlines, shipping, logistics, education, and finance among others. The company was started as a sole proprietary business in 1999. Its clientele includes LIC, Citi Bank, Bank of India, Federal Bank, and State Bank of India, Infosys, Wipro, Philips, and NSDL among others.
The company can process over 40 to 50 lakh articles per month. Its current infrastructure consists of more than 30 types of machines for offset and digital printing.
Objectives of DJ Mediaprint and Logistics Limited FPO
The following are the objectives for the company to come up with an FPO:
- According to the prospectus, the company believes that listing its shares will enable it to build its image and brand name.
- It will deploy ₹1.9 crore for funding the working capital requirement of the company.
- It will use ₹0.15 crore for funding general corporate expenses.
- It will deploy ₹0.35 crore for issue related expenses.
The key risks that the company faces in its business are:
- The promoters and the group companies are parts of certain legal proceedings. Any adverse decision regarding these events can lead to disruptions in the business.
- The company operates in a highly-competitive and fragmented industry.
- The company’s printing process is prone to losses in the form of wastage of materials like ink or manpower hours.
- The company’s business is subject to certain government regulations and it is required to obtain certain statutory and regulatory permits for the same.
- The company relies on third-party logistic providers, with whom they have no formal arrangements.
- The company had negative cashflows in recent years.
- The government’s initiative of going digital and paperless might negatively impact the company’s business.
The following are the key strengths in the company’s business:
- The company’s track record of 11 years indicates it ability to weather stormy business conditions. The promoters have over 2 decades of relevant experience.
- The company has a long standing relationship with several of its major customers.
- The company is accredited with several quality and ISO certifications.
- The company enjoys a good relationship with its suppliers in terms of supply and pricing of the products.
DJ Mediaprint and Logistics Limited Fundamentals
The company’s revenue from operations increased from ₹126 million in 2019 to ₹213 million in 2021. The company’s revenues for the period ended September 2021 was ₹248.9 million. The company’s profit after tax grew from ₹9.23 million in FY19 to ₹12.64 million in FY21. For the period ended September 2021, the company’s profit after tax was ₹10.51 million. As of March 2021, the company had assets worth ₹213.81 million. For the period ended September 2021, this metric stood at ₹249 million.
So these were the details about the company’s follow-on public offer. On the valuations front, the company’s offer is pricier than its IPO. The valuations at which it will currently raise money have shot up in multiples. Also, the company is listed on the BSE SME platform. Thus, investors hoping to profit from the price arbitrage opportunity by investing in the FPO can face the risk of lower liquidity. But investors should definitely conduct their due diligence before deciding to invest.