Navoday Enterprises coming with an IPO to raise upto Rs 4.60 crore

Navoday Enterprises

• Navoday Enterprises has come out with an initial public offering (IPO) of 2304000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 20 per equity share.
• The issue will open for subscription on June 14, 2021 and will close on June 17, 2021
• The shares will be listed on SME Platform of BSE.
• The share is priced 2 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Inventure Merchant Banker Services.
• Compliance Officer for the issue is Sonali Jain. 

Profile of the company

The company treat marketing and advertising fundamental to business strategy and revenue management. It provides Outdoor, Print, Ground events/activations and digital marketing. Its primary offering is in outdoor or out-of-home media company also known as OOH advertising. Its offering of outdoor media includes advertising on hoardings, billboards on road, highways, streets, lamp post boards, mobile sign trucks, kiosks, traffic booth etc. The company is also engaged in events management which includes planning, organizing and managing events. It manages commercial events, corporate events, cultural events and also small brand promotion events for its clients. It is also engaged in branding and designing through print and online & digital media. It also designs various publicity materials for its clients such as phamplates, brochures, flyers etc for their own consumption. It has in-house design capabilities for the same.

The company is also engaged in events management which includes planning, organizing and managing events. It manages commercial events, corporate events, cultural events and also small brand promotion events for clients. It is also engaged in branding and designing through print and online & digital media. It also designs various publicity materials for its clients such as phamplates, brochures, flyers etc for their own consumption. It has in-house design capabilities for the same. It supplies critical components to manufacturers of packaging and allied machines. It is also the service provider of Packaging Machine Consultancy Service to customers. It provides guidance to its clients about machinery and how to install it and how to use it. It provides the guidance regarding the management of the machines to its clients. These components include sealers, barring, gears, timing belts, cutter, ms cutter, brass gear, shut collars, carbide, sensors, and piston amongst others.

Proceed is being used for:

• Meeting additional working capital requirements.
• General corporate purpose.

Industry overview

India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The banking regulator has allowed new entities such as payment banks to be created recently, thereby adding to the type of entities operating in the sector. However, financial sector in India is predominantly a banking sector with commercial banks accounting for more than 64% of the total assets held by the financial system. The Government of India has introduced several reforms to liberalise, regulate and enhance this industry. The Government and Reserve Bank of India (RBI) have taken various measures to facilitate easy access to finance for Micro, Small and Medium Enterprises (MSMEs).

The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making significant strides. Proving its resilience to the world, Indian M&E industry is on the cusp of a strong phase of growth, backed by rising consumer demand and improving advertising revenue. India’s advertising revenue is projected to reach Rs. 672 billion ($9.29 billion) in FY22. Subscription revenue in India is projected to reach Rs. 698 billion ($9.65 billion) in FY22. The advertising-based video on demand (AVoD) segment is expected to rise at a CAGR of 24% to reach $2.6 billion by 2025. The Telecom Regulatory Authority of India (TRAI) is set to approach the Ministry of Information and Broadcasting, Government of India, with a request to Fastrack the recommendations on broadcasting, in an attempt to boost reforms in the broadcasting sector. The Government of India has agreed to set up National Centre of Excellence for Animation, Gaming, Visual Effects and Comics industry in Mumbai. The Indian and Canadian Government have signed an audio-visual co-production deal to enable producers from both the countries exchange and explore their culture and creativity, respectively.

Pros and strengths

Outdoor media: The company’s primary strength lies in outdoor media. Over the last few years it has strengthen its expertise in this domain. It saves its clients time, effort and money while handling their requirements for out of home advertising. In this segment, it works with both large and small corporates and ensure audience connection for its clients.

Bouquet of management consultancy services: The company provides integrated solutions to its clients which includes management consultancy including market research, strategy, operations and process. Its consultancy also includes crucial aspects like corporate finance, working capital finance, project finance and financial restructuring to corporate. Its presence in diverse lines of business enables it to reduce risks arising from service and client concentration.

Knowledge of multiple financing options: The knowledge and an independent view on the array of financing options available, provide the company an important competitive advantage. It assists its clients throughout the exercise by being there at every stage, identify the problems and recommend & implement solutions that deliver measurable results.

Risks and concerns

Rely on third parties for outdoor media required for OOH advertising business: The company’s offering of outdoor media includes advertising on hoardings, billboards on road, highways, streets, lamp post boards, mobile sign trucks, kiosks, traffic booth etc. It does not own any of the outdoor media. It does not keep inventory of any media on its own. It plans to buy media for its clients as per the timing of their requirements. It books or buy the media from its various vendors. If it is not able to obtain the media at all or obtain the media in cost effective manner could have an adverse effect on its income and profitability.

Operate in a highly competitive and fragmented industry: The media and advertising market is highly fragmented and competitive. It competes with both full-service and specialized media and advertising companies. It also faces competition from various regional players. Price competition in the media and advertising services industry is intense. It expects that the level of competition will remain high, which could directly impact the size of its workforce and therefore potentially limit its ability to maintain or increase its profitability. Its continued success depends on its ability to compete effectively against its existing and future competitors. With the potential influx of new competitors, its ability to retain its existing clients and to attract new clients is critical to its continued success.

Substantial portion of revenues depends upon few clients: For the financial year ended March 31, 2020 and 9 months period ended December 31, 2020 its top five largest clients accounted for approximately 80.91% and 94.02% respectively of its revenues from operations. The loss of a significant client or clients would have a material adverse effect on its financial results. It cannot assure you that it can maintain the historical levels of business from these clients or that it will be able to replace these clients in case it loses any of them. Furthermore, major events affecting its clients, such as bankruptcy, change of management, mergers and acquisitions could adversely impact its business. If any of its major clients becomes bankrupt or insolvent, it may lose some or all of its business from that client and its receivable from that client would increase and may have to be written off, adversely impacting its income and financial condition.

Outlook

Incorporated in 2007, Navoday Enterprises operates in 3 business verticals i.e Marketing support and Advertising; Management and Financial Consultancy services; and Component Supply and support services to manufacturers of packaging and allied machines. The company is dedicated towards quality of its services and it adhere to quality standards as prescribed by its clients. The knowledge and an independent view on the array of financing options available, provide company an important competitive advantage. On the concern side, it depends on Outdoor or out-of-home advertisement (OOH advertisement) as the major source of its revenue. Any decrease in ad-spend by its clients or a reduction in effective advertising rates, or the loss of clients due to its inability to attract new advertising customers could have a material adverse effect on its business, results of operations and financial condition. Besides, it does not have any long-term contracts with its clients and any change in the business pattern of its existing clients could adversely affect the business of company.

The company is coming out with an IPO of 2304000 equity shares of Rs 10 each at a fixed price of Rs 20 per equity share to mobilize Rs 4.60 crore. On the performance front, the operating revenue for the FY 2020 is Rs 4823.80 lakh as compared to Rs 1,651.70 lakh during the FY 2019 showing increase of 192.05%. Profit after Tax increased from Rs 35.07 lakh for the FY 2019 to Rs 112.77 lakh in FY 2020. The company is now planning to increase its client base and geographical presence to other cities to further strengthen its business. It is also in the process of increasing its management team to cater to large number of corporate and other clients.