SJS Enterprises IPO Review – Should you invest or Avoid

SJS Enterprises IPO Review – Should you invest or Avoid?

SJS Enterprises IPO Review – Should you invest or AvoidSJS Enterprises IPO (S.J.S. Enterprises Limited IPO) Details

Bengaluru based S.J.S. Enterprises is coming up with IPO that would open for subscription on 1st November 2021. SJS is one of the leading players in the Indian decorative aesthetics industry. Should you invest in SJS Enterprises IPO? What are the risk factors in this IPO?  Let me do IPO review and indicate whether investors should buy or not.

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About SJS Enterprises Limited

Company is one of the leading players in the Indian decorative aesthetics industry in terms of revenue in for 2020 and 2021.

It offers the widest range of aesthetics products in India. They are a “design-to-delivery” aesthetics solutions provider with the ability to design, develop and manufacture a diverse product portfolio for a wide range of customers primarily in the automotive and consumer appliance industries.

Company supplied over 115 Mn parts with more than 6,000 SKUs in Fiscal 2021 to around 170 customers in approximately 90 cities across 20 countries.

They differentiate on the basis of the wide range of its product portfolio, quality of its product offerings, its product design and development capabilities and the strength of relationships with customers located across various industries globally.

SJS Enterprises IPO details

IPO Opening Date 01-Nov-21
IPO Closing Date 03-Nov-21
Issue Type Book Built Issue IPO
Face Value Rs 10 per equity share
IPO Price band Rs 531 to Rs 542 per equity share
Lot Size 27 Shares
Min Order Quantity 27 Shares
Listing at BSE and NSE
Issue Size Rs 800 Crores
Book Running Lead Managers Axis Capital, Edelweiss Financial Services and IIFL Securities

SJS Enterprises IPO RHP Prospectus

What are SJS Enterprises strengths?

1) Company is a leading decorative aesthetics supplier with a wide portfolio of premium products

2) It has strong manufacturing capabilities and established supply chain network

3) Company has Innovative product designing capabilities

4) A strong relationship with global Tier-1 companies

5) Experienced and qualified management team

What are the Objects of the Offer?

SJS Enterprises IPO Size is Rs 800 Crores and entire proceeds are offered through Offer for Sale (OFS) by selling shares holders. Company would not get any money from this IPO proceeds.

Who is the promoter of SJS Enterprises Limited?

Evergraph Holdings Pte. Ltd. and K.A. Joseph are the promoters of the company.

How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 3 years.

Financial Year ending / Period ending (Amt in Mns)
Particulars FY19 FY20 FY21 Qtr ending 30-Jun-21
Total Assets 3,040.5 3,322.6 3,835.4 4,162.4
Revenues 2,407.6 2,212.7 2,551.5 752.9
Profit After Tax 376.0 412.9 477.7 95.0
Profit % 15.62% 18.66% 18.72% 12.61%

Also Check: Hyderabad based Sigachi Industries IPO Opens on 1st November, 2021

Why to invest in SJS Enterprises IPO?

Here are the positive factors in this company.

1) Company is one of the leading players in the Indian decorative aesthetics industry. It has strong manufacturing capabilities and established supply chain network.

2) Company has stable revenue growth. It generated Rs 240.7 Crores in FY19 Vs Rs 255.1 Crores in FY21. Its FY20 revenues are low at Rs 221.2 Crores and this could be attributed due to covid pandemic.

3) Company is generating consistent margins. The margins are growing year on year. It generated profits of Rs 37.6 Crores (15.6%) for FY19 Vs Rs 47.7 Crores (18.7%).

Risk Factors in SJS Enterprises IPO

1) If company is unable to successfully integrate and manage Exotech and other strategic alliances and acquisitions they may undertake in future, it can expose to business and financial risks.

2) There are other interests of its promoters, directors of the company other than normal remuneration or benefits or reimbursement of expenses incurred.

3) Covid-19 pandemic and the extent it would impact the business in future cannot be predicted and can impact in its business.

4) Loss of any of its key customers or significant reduction in production and sales or demand of its products from significant customers may materially and adversely affect its business.

5) Company depend significantly on customers in the automotive industry and consumer appliance industry and a decline in their performance in India or globally, could adversely affect its business.

6) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.

SJS Enterprises IPO dates for subscription, Allotment and Listing

Offer Open 01-Nov-21
Offer close 03-Nov-21
Finalization of Allotment 10-Nov-21
Initiation of Refunds 11-Nov-21
Credit to Demat Account 12-Nov-21
IPO Shares Listing Date 15-Nov-21

Is SJS Enterprises IPO Price is underpriced or overpriced?

SJS Enterprises share price band is Rs 531 to Rs 542 per share.

1) If we take last 3 years weighted average EPS of Rs 14.42 and upper price band of Rs 542, the P/E ratio works out to 37.6x.

2) If we take FY21 EPS of Rs 15.69 and upper price band of Rs 542, the P/E ratio works out to 34.5x.

3) If we take Q1 FY22 EPS of Rs 3.12 and annualize for FY22, the P/E works out to be 43.4x.

4) Means company is asking IPO price in the P/E range of 34.5x to 43.4x.

5) There are no listed peers who are doing similar business, hence cannot ascertain whether the issue price is overpriced or underpriced.

However, if we consider 34x to 43x P/E in general, it is reasonably priced.

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What is SJS Enterprises IPO Grey Market Premium?

GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about IPO price as it is unorganized market.

Currently SJS Enterprises IPO GMP is not available as there are no trading’s happening as of the day of writing the article.

SJS Enterprises Limited IPO – Review and Conclusion

You might be wondering, should I buy SJS Enterprises IPO or not?

SJS Enterprises Limited is one of the leading players in the Indian decorative aesthetics industry. It has innovative product designing capabilities and established supply chain network.

Company has generated stable revenues during 2019 to 2021. However, its FY2020 revenues are lower which can be attributed due to covid. It has generated strong margin growth in the last 3 years.

The issue price looks to be reasonably priced.

Considering all these factors, investors can invest in this IPO for medium to long term perspective. Investors may or may not get listing gains.

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Suresh KP

2 thoughts on “SJS Enterprises IPO Review – Should you invest or Avoid?”

  1. The analysis you are providing are very helpful. I am a new Investor and I don’t know where to Invest my money, though your posts helps a lot.

  2. Thank you Sir. It will be very helpful if you can mention debt or d/e ratio of profit making ipos as it helps in valuation as debt free companies PE comfortably goes to 50+

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