Royal Sense Limited

Royal Sense Limited is suppliers of high quality goods that meet international standards required for hospitals, laboratories, institutions and clinics to provide health services. They trade and offer a wide range of surgical accessories, tools, equipment and other things. The supplied assortment can be modified according to the requirements of the clients and is offered in a wide range of parameters. They work relentlessly with the right strategy, forward thinking and progressive ethos to position themselves as the one-stop solution for customers looking to meet their complete needs for medical equipment, surgical instruments, surgical consumables, laboratory equipment, laboratory reagents, medical consumables, diagnostic equipment, sanitary napkins, pharmaceuticals, medicine and cosmetics. They supply the products to the Ministry of Health of Various states like Uttar Pradesh, Himachal Pradesh, Rajasthan, Jammu & Kashmir and in domestic by the self or through distributors/ sub-distributors. They also supply to both to Govt. Institutions and private hospitals in all over India. As per financial performance, Royal Sense Limited has posted total income / net profits of Rs 7.14 Cr / Rs 0.21 Cr (FY21), Rs 6.75 Cr / Rs 0.22 Cr (FY22), Rs 12.27 Cr / Rs 1.32 Cr (FY23) and Rs 8.04 Cr / Rs 0.70 Cr (upto Q2 [06.04.23 to 30.09.23] FY24). So as per previous financials data, company has shown zigzag results, and sudden increase in net profit, just before IPO generates doubts. Trade receivable is around 40% of FY23 total sales and debt is also high. Issue is priced at a P/BV of 2.78 as per NAV of 24.45 as on post issue. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 152.85, 25.28 and 23.70 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Expert Global Consultants Private Limited is associated with this SME IPO and handled 5 SME IPOs in last 2 year. From last 5 SME IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing. As of now from last 5 SME IPOs, two are trading below issue price and remaining are trading above or at par issue price. ( As on 11.03.24 ) As per financials, Royal Sense Limited has shown zig-zag results, RoNW is 17.00% and P/E is respectively 152.85, 25.28 and 23.70 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced and sudden rise in net-profit is very surprising. Company is in business of trading of a wide range of surgical accessories, tools, equipment and other things, which is highly competitive and fragmented segment. Performance of BRLM is average. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Mr. Rishabh Arora