Blue Pebble coming with IPO to raise upto Rs 18.14 crore

Blue Pebble

• Blue Pebble is coming out with initial public offering (IPO) of 10,80,000 shares of Rs 10 each in a price band Rs 159-168 per equity share.  
• The issue will open for subscription on March 26, 2024 and will close on March 28, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 15.90 times of its face value on the lower side and 16.80 times on the higher side.
• Book running lead manager to the issue is Hem Securities.
• Compliance Officer for the issue is Rupal Samdani.

Profile of the company

Established in 2017, the company provides spatial design and bespoke environmental branding solutions. It provides a comprehensive range of services encompassing conceptualization, design, printing, furnishing and installation of Vinyl graphics, signage, and different furnishing products, including but not limited to 3D walls, frost/clear glass films, artifacts, wall panels, wall murals, sculptures for corporate interiors and exterior workplace environments. Its solutions are customtailored to meet the unique requirements of each client. Its clientele spans across diverse industry sectors, including banks, multinational corporations (MNCs), IT etc. 

Over the years, the company has successfully executed design, printing, furnishing, installation, and related projects at various locations throughout India, serving notable clients such as Infosys, HDFC Bank, American Express, Bank of America, Nestle, British Petroleum, Moody's etc. It prioritizes building long-term client relationships by delivering quality products and services. It offers comprehensive solutions, catering to its clients' design, printing, and fabrication needs. It manages the entire process, from conceptualization to the final product delivery. Its capabilities are supported by a dedicated design studio and printing facility. 

It provides a wide range of printing and designing services, including theme-based designs, large format printing, vinyl printing, fabric printing, canvas printing, signage manufacturing, and 3D art installation. It also deals in sourcing and installation of curios, sculpture and artisanal hand paintings. Its expertise extends to designing and printing signage components aimed at enhancing workspace functionality, efficiency, and aesthetics. This includes wayfinding signage, digital signage, outdoor signage, indoor signage, safety signage, and more. Through its graphics and signage solutions, it transforms workspaces into inviting and functional environments that align with its clients' corporate culture and values.

Proceed is being used for:

• Funding capital expenditure towards installation of additional machinery.
• Meeting working capital requirements.
• General corporate purpose. 

Industry overview

The services sector is not only the dominant sector in India’s GDP, but has also attracted significant foreign investment, has contributed significantly to export and has provided large-scale employment. India’s services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction. In order to enhance India's commercial services exports, share in the global services market from 3.3% and permit a multi-fold expansion in the GDP, the government is also making significant efforts in this direction.

The service sector has over 50% contribution to India’s GDP, and it has witnessed a growth of 10.8% during the first half of 2021-22. The service sector has emerged as the highest employment generator with a 5-7% y-o-y growth in 2022. India is a unique emerging market in the globe due to its unique skills and competitive advantage created by knowledge-based services. The Indian services industry, which is supported by numerous government initiatives like smart Cities, clean India, digital India are fostering an environment that is strengthening the services sector. The sector has the potential to open up a multi-trillion-dollar opportunity that might stimulate symbiotic growth for all nations.

The services sector of India remains the engine of growth for India’s economy and contributed 53% to India’s Gross Value Added at current prices in FY22 (as per advance estimates). The services sector's GVA increased by 6.5% in the third quarter (2022-23), and it was the main driver of aggregate GVA growth (accounting for approximately 84% of total GVA growth). The services industry performed well in H2:2022-23, boosted by contact-intensive services and building activities. India’s services sector GVA increased at a CAGR of 11.43% to Rs. 101.47 trillion in FY20, from Rs 68.81 trillion in FY16. Between FY16 and FY20, financial, real estate and professional services augmented at a CAGR of 11.68% (in Rs. terms), while trade, hotels, transport, communication and services related to Blue Pebble Limited broadcasting rose at a CAGR of 10.98% (in Rs. terms).

Pros and strengths

Established relationship with its customers: The company specializes in providing services related to the conceptualization, design, printing, furnishing, and installation of a wide range of interior and workplace elements, including wallpaper, graphics, signage, and various furnishing products. Over the years, it has successfully developed enduring relationships with a diverse client base, which includes entities such as banks, IT companies, multinational corporations (MNCs) etc. Based on its work, it has developed an established relationship with them which has helped in getting repeated business. Its business and growth are significantly dependent on its ability to maintain the client relationship and offering better & innovative design solution to its customers within their budgets.

Established relationship with material suppliers: It is engaged in the business of providing services encompassing conceptualization, design, printing, furnishing, and installation of Vinyl graphics, signage, and various furnishing products, including but not limited to 3D walls, frost/clear glass films, artifacts, wall panels, wall murals, sculptures for corporate interiors and exterior workplace environments. For undertaking these activities, it requires various materials including raw material at different stages of project execution like Vinyl Sheet, Signage, Artifacts, wall paper, wall panels, wall murals, decals etc. It has over the years established strong relationship with different vendors from whom it sources these material as per the specifications and timeline provided by the company.

Designing and execution capability: It is recognized for its capability to translate innovative designs & concepts in practical solutions, feasible in both technical and economic terms. Its success in the field is the result of constant improvement of the end user experience. It’s designing and execution capability has enabled it to handle complex projects. It’s designing and execution capability gives it a competitive edge over the peers.

Risks and concerns

Dependent on certain key customer: Its clientele comprises major entities including Banks, IT Companies, MNCs, Hotel chains, Fashion Retail chains, NBFCs, and large government companies. Notably, its top ten customers have consistently accounted for significant percentages of its revenue from operations approximately 80.42%, 87.81%, 85.23%, and 84.96% for the periods ending on September 30, 2023, and the financial years ending on March 31, 2023, March 31, 2022, and March 31, 2021, respectively. It's crucial to highlight that it haven't formalized long-term agreements with these customers, emphasizing the pivotal role of maintaining positive relationships in sustaining its business. The potential loss of one or more of these major customers or a reduction in the volume of business derived from them could have adverse effects on its overall business, financial condition and cash flows.

Working capital requirements: Its business is working capital intensive as the majorly for investment in trade receivables, inventories and payment to trade payables and funding day to day operations. Any changes in its assumptions or project sizes could impact its working capital requirements. It may needs to secure additional debt in such cases. Additionally, its projects involve performance guarantees and/or retention money with held by clients upon project completion. While it aims to maintain good relationships with financial institutions, changes in lending practices or credit conditions could affect its financing terms, potentially leading to delays and increased costs. Managing trade receivables from clients, including progress payments and retention money, carries the risk of potential delays and bad debt. Government authorities' payment certification timelines also influence its working capital. These factors collectively pose challenges to its financial stability and operational results.

Dependence upon third party transportation services: It does not have an in-house transportation facility and it relies on third party transportation and other logistic facilities at every stage of its business activity including for procurement of products from its suppliers and for transportation of products to its customers. For this purpose, it hires services of transportation companies. However, it has not entered into any definitive agreements with any third-party transport service providers and engages them on a needs basis. Additionally, availability of transportation solutions in the markets it operates in is typically fragmented. The cost of its goods carried by such third-party transporters is typically much higher than the consideration paid for transportation, due to which it may be difficult for it to recover compensation for damaged, delayed or lost goods.

Outlook

Blue Pebble is engaged in providing Desiging and Printing Services. It provides a comprehensive range of services encompassing conceptualization, design, printing, furnishing and installation of Vinyl graphics, signage, and different furnishing products, including but not limited to 3D walls, frost/clear glass films, artifacts, wall panels, wall murals, sculptures for corporate interiors and exterior workplace environments. On the concern side, it faces fair competition from both organized and unorganized players in the market. It experiences in this business and quality assurance will be key to overcome competition posed by such organized and unorganized players. Further being no entry barriers in the industry and growing Industry is attracting people towards it which direct that there may be stiff competition in future. 

The company is coming out with an IPO of 10,80,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 159-168 per equity share. The aggregate size of the offer is around Rs 17.17 crore to Rs 18.14 crore based on lower and upper price band respectively. On performance front, total income has increased significantly by 190.98% to Rs 1594.96 lakh in Fiscal 2023 from Rs 548.14 lakh in Fiscal 2022. The main reason of increase was increase in the volume of business operations of the company as the company is acquiring new customer across the different sectors. It recorded significant increase of 426.49% in profit after tax from Rs 38.05 lakh in Fiscal 2022 as compared to Rs.200.33 lakh in Fiscal 2023. Meanwhile, the company aims to expand and diversify the services offered by way of developing new business vertical called Digital and Immersive Solutions that offers immersive experiences to create a unique and unforgettable brand experience for employees and visitors. This includes interactive digital installations, virtual and augmented reality experiences, and other experiential design solutions.