Sumit Woods IPO

Sumit Woods Background

 

Sumit Woods Limited, which is engaged in the construction and development activity for the last 21 years was incorporated as ‘Sumit Woods Private Limited’ in 1987.

It started its business with the object of acquiring land, carrying out construction work, developing and organizing of immovable properties etc. Its main business activities include the redevelopment of old Buildings, (CESS Building Redevelopment / MHADA Redevelopment), and residential projects in Mumbai and in the state of Goa during the years 2012-2017.

Till date, it has constructed more than 50 residential and commercial projects in Mumbai, Thane and Goa and handed over more than 4500 units since the beginning of operations. Also, it has won several awards in its field.

The company is coming up with a small IPO for different types of investors. Read further to know the details.

Sumit Woods IPO Management Information

Sumit Woods has 6 directors on Board out of which 3 are Executive  Directors, 1 is Non – Executive Directors and 2 are Independent Directors.

Mr Mitaram Jangid is the Managing Director, Subodh Nemlekar is the Joint Managing Director, Mr Bhushan Nemlekar is the Whole Time Director (Director – Finance), Mrs Kavita Nemlekar is the Chairperson & Director, Ms Pooja N Chogle and Mr Gurunath Narayan Malvankar are the Independent Directors of Sumit Woods Limited.

Mitaram Jangid, Promoter and Managing Director

He is a graduate in Commerce from Dalmia College, Malad, Mumbai. He co-founded the company along with Subodh Nemlekar in 1987 and has grown Sumit Woods to one of the most trusted real estate company in Mumbai and Goa.

He is currently heading Design Development activity of the company and also looks after the overall progress of all the projects of the company.

Subodh Nemlekar, Promoter and Joint Managing Director

He graduated with B.A from Shivaji  University, Kolhapur and took voluntary retirement to pursue his career in the Construction & Development Industry. He is currently involved in the Business development activities of Sumit Woods Limited.

Sumit Woods IPO Data Points

The Sumit Woods IPO will open on August 29, 2018 and close for subscription on August 31, 2018. The IPO size will be of 40.53 lakh Equity shares and the face value of each share will be ₹10.

Out of these 40.53 lakh shares, 2.19 lakh shares will be reserved for market makers and the rest 38.34 lakh shares (Net Issue) will be issued to investors. Out of the total net issue, the retail portion will not be less than 35% and will be available for allocation to investors up to ₹2 lakhs.

The Non Institutional portion will not be less than 15% of the net issue, which will be available for allocation to investors above ₹2 lakhs.

The price band range has been set at ₹43 – ₹45 per share. The IPO size is expected to be up to ₹18.23 Crore. The market lot size is of 3 thousand shares and the shares will be listed on the National Stock Exchange.

Sumit Woods IPO Financial Performance

Net Profit After Tax was ₹668.19 lakhs which convert to 25.17% of the total revenue for the period of ten months ended on January 31, 2018.

 

The operating income of Sumit Woods for the year ended March 31, 2017 is ₹4221.29 lakhs as compared to ₹2745.75 lakhs for the year ended March 31, 2016, showing an increase of 53.74%. This increase is due to an increase in the volume of operations.

The Net Worth of Sumit Woods as on January 31, 2018 on a standalone basis is ₹4475.06 lakhs and on a consolidated basis is ₹4848.74 lakhs.

The net profit for the period ended January 31, 2018 on a standalone basis is ₹412.92 lakhs and on a consolidated basis is ₹668.19 lakhs.

Let us examine the cash flows as well:

 

Cash flows from operating, financing and investment activities have been negative in the last few years.

Sumit Woods IPO Objectives

The main objectives of Sumit Woods IPO are as follows:

• To meet the fund requirements for execution of ongoing and forthcoming projects
• To meet working capital requirements
• To repay/prepay the secured loans
• To provide funds to meet the general corporate purpose
• To meet expenses related to Sumit Woods IPO

Besides these major objectives, the issue will also help Sumit Woods in increasing its visibility and enhancing their corporate image and brand name.

Sumit Woods IPO Events

Sumit Woods filed the Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on May 28, 2018 for the book building IPO.

The offer will open on August 29, 2018 and close on August 31, 2018. The finalisation of basis of allotment is expected to happen by September 5, 2018 and the initiation of refunds is expected to start by September 6, 2018.

The transfer of shares to demat accounts is expected to start on September 6, 2018 and the expected listing date will be September 10, 2018.

 

Sumit Woods IPO Recommendation

Now, let us discuss various competitive strengths and risks related to investing in Sumit Woods IPO one by one.

Their one of the biggest strengths is human capital which includes the experienced and qualified promoters and well-trained employees. The expertise of promoters and management will help the company find new opportunities, rapidly respond to market conditions and adapt to changing business landscape and competitive environment.

Since the brand name has a great value in this industry, Sumit Woods enjoys the benefit of being a reliable brand name in this industry in Mumbai and Goa. Their track record of 20 completed projects and 3 ongoing construction projects speak a lot about their performance.

Analysing it from the financial point of view, the Net Worth of Sumit Woods as on January 31, 2018 on a standalone basis is ₹4475.06 lakhs and on a consolidated basis is ₹4848.74 lakhs. A good net worth allows a company to take higher value projects.

Also, their current orders on hand are worth more than ₹300 crores.

But if we look at the cash flows, Sumit Woods had negative cash flow in the recent years, which raises concerns, especially if the situation does not improve fast.

Cash flows show the company’s ability to meet capital expenditure, payment of dividends to shareholders, repayment of loans and invest in the growth of business without taking further loans.

Furthermore, they have availed unsecured loans of ₹516.71 / 814.18 lakhs on a standalone basis and consolidated basis, which are repayable on demand. If the lenders demand the repayment of any loans, it will directly affect the cash flow and thus, the overall financial condition of the company.

The sudden rise in profit after tax for the period ended January 31, 2018 to ₹668.19 lakhs from ₹313.26 lakhs reported as of the year ended March 31, 2017 raises a little concern.

Other risk factors include certain legal proceedings that are pending at different levels of adjudication before various courts, tribunals and forums. Also, the company has 11 joint venture partners for the construction of residential and commercial buildings in Goa and Mumbai.

Therefore, the performance will also depend on a lot of other companies as well. The logo/trademark of the business is registered in the company’s name which is used by all the group companies for which no payment is actually received by them.

Moreover, the greater risk than losing on some revenues for using their logo is of any negative publicity that may arise due to the poor performance of any other group company, which may be associated with this company.

By analysing various strengths and risks relating to the business, it seems that the Sumit Woods IPO falls under the ‘risky’ category. 

If you are someone who is relatively risk-averse, you may choose to let the IPO go.

In case you are looking to apply to this IPO and invest – let us assist you in getting started:

 

 

Sumit Woods IPO Advisors Information

Mark Corporate Advisors Private is acting as the Book Running Lead Manager and Bigshare Services Private is acting as the Registrar to the Sumit Woods IPO. Juris Matrix Partners LLP is acting as Legal Counsel to the Sumit Woods IPO.