CKP Leisure Limited

Started in 2013, CKP Leisure Limited is a Company that is focused on the leisure market in India comprising of night clubs, fine dining restaurants, banquet halls, etc. Currently company operates one of the well known night club's in Mumbai in the iconic Hotel Sahara Star, named as 'SIRKUS'. Company focuses on providing guests a premium night club experience with quality food and beverages and service in a modern ambience. Company launched a nightclub in the Mumbai, in 2016, by the name 'SIRKUS'. Being located at the iconic Hotel Sahara Star (Mumbai), the space spans 5,000 square feet and offers a dance floor, high-energy lighting, VIP bottle service and some of the best beats and entertainment. The club requires its guests to follow a dress code which adds on to the glamour and nightlife experience. Further Company has recently acquired 14,542 sq. feet of property on lease from M/s. Atal Buildcon Pvt. Ltd at Pinnacle mall in Nashik. Company plans to setup and operate a banquet hall having a guest capacity of approx 500 persons at this place. On financial performance front, CKPLL has posted turnover/net profits of Rs. 1.16 cr. / Rs. 1.07 cr. (FY16) and Rs. 10.83 cr. / Rs. 1.65 cr. (FY17). For the period upto 30.11.17 of current fiscal, it has reported net profit of Rs. 0.94 cr. on a turnover of Rs. 6.87 cr. So financials for very small period is available and it makes difficult to make any conclusion for future of company. For last three fiscals it has posted an average EPS of Rs. 2.54 and an average RoNW of 12.31% on an equity base of Rs. 7.59 crore. Asking price is at a P/BV of 1.47 based on its NAV of Rs. 20.34 as on 30.11.17 and P/BV of 1.35 on the basis of post issue NAV of Rs. 22.26. If we annualise latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 20. As per offer documents, company has no listed peers to compare with, but in general Hospitality industry composite P/E is around 28. So issue looks fully priced. On merchant banker's front, this is the 27th mandate and out of last 10 listings (as per offer documents) 3 opened at discount, 2 at par and the rest with a premium ranging from 2% to 73%. (73% premium was given by the only recent main board IPO of Apollo Micro and that also now trading around 12% premium). As per financials, company's growth is good, RoNW is 12.31% for last three fiscals and issue looks fully priced as per latest earnings. Company is focused on leisure market in India, which is very fast growing space. So future of company looks good, but financials data for small period is available. Thus, we give NEUTRAL rating to this SME IPO.

• 1 Mr. Prafulla Bhat
• 2 Mr. Chanakya Dhanda