TLDR;
The video provides a detailed analysis of five SME IPOs opening next week: Purple Wave Infocom, Logiciel Solutions, Invicta Diagnostics, Ravel Care, and Exato Technologies. The analysts discuss each company's business model, financials, growth prospects, risks, and IPO details, offering their perspectives on whether to apply for each IPO.
- Purple Wave Infocom: Audio-visual integration company, potentially undervalued but faces competition.
- Logiciel Solutions: Software development services, concerns about QIB participation and promoter dilution.
- Invicta Diagnostics: Diagnostic services focused on radiology, considered a good issue with downside protection.
- Ravel Care: Personalized beauty and personal care brand, growth potential but new product line is untested.
- Exato Technologies: Customer experience analytics, potential for disruption but short-term prospects look good.
Opening Remarks [0:00]
Manish welcomes everyone to the Primary Market Charter, focusing on the first week of December IPOs. They'll cover five SMEs in this part, including Exato, Ravel, Invicta Diagnostics, Purple Wave Infocom, and LogiCL. He reminds viewers that they are not registered research analysts and to do their own due diligence. He also mentions potential biases due to his fund's investments and encourages viewers to see their analysis as just one perspective. He highlights the value of these discussions for learning about upcoming IPOs and encourages viewers to follow Sunday Investing on YouTube and Instagram.
Purple Wave Infocom (SME) [2:59]
Sachin discusses Purple Wave Infocom, a Delhi-based company since 2007, specializing in audio, video, and communication system solutions for various clients. They focus on integration rather than manufacturing, providing project services like designing, installing, and maintaining systems. They are also developing new components and have a subsidiary for in-house assembly. Sachin notes that a significant portion of their revenue comes from integrating audio-video systems, with the rest from direct selling of components and after-sales services. He points out that while their financials show good revenue growth and improving margins, working capital management is a key risk. The IPO price is around 13 times FY25 earnings, potentially below 10 times on FY26 projections. Sachin also mentions a recent share transfer to an HNI at a much lower price, which raises concerns. He concludes that competition is intense, and success depends on winning more clients and managing working capital effectively, leaving his decision on whether to apply undecided.
Logiciel Solutions (SME) [13:28]
Saurabh covers Logiciel Solutions, an offshore software development and engineering services provider targeting startups and small-mid businesses in the US. Their strategy involves growing with early-stage funded startups, with one client now accounting for a significant portion of their business. They rely on referrals for sales and plan to use IPO proceeds to establish a sales and marketing effort. Saurabh notes their high customer and employee retention rates and recurring revenue model. He mentions that the company is trying to reduce dependency on its major client and aims for 25-30% year-on-year growth in FY26 with healthy margins. However, he expresses skepticism about sustaining these margins with increased expenses and questions the source of future growth. He also points out a receivable issue and promoter share dilution after the IPO. Saurabh concludes that he would probably not apply, citing concerns about the limited QIB participation.
Invicta Diagnostics (SME) [26:40]
Sachin discusses Invicta Diagnostics, a Mumbai-based diagnostic services company specializing in radiology. They operate on a hub and spoke model in the Mumbai region, focusing on radiology services and avoiding hyper-competition in pathology. Sachin highlights their high-quality machines and utilization rates, as well as their strategy of targeting less tapped geographies. He notes that while depreciation is high due to new acquisitions, they are avoiding low-margin B2B business. Sachin mentions that the IPO is priced at around 21 times FY25 earnings, potentially 14-15 times FY26. He also points out a pre-IPO round at a lower price. Sachin concludes that he would probably apply, finding it better than Purple Wave and LogiCL, but notes that the business needs time to scale up.
Ravel Care (SME) [37:46]
Manish covers Ravel Care, a digital BPC brand known for personalized hair care products. He highlights the high gross margin nature of the BPC segment but notes the intense competition. Ravel Care differentiates itself through customization and its appearance on Shark Tank. Manish explains that the company customizes shampoos based on individual needs, which limits scalability to their website. He mentions that repeat customers make up a significant portion of their orders, indicating customer loyalty. However, growth has been slow, and the company is now moving to a new product line, Ravel Pro, for quick commerce platforms. Manish notes that this new segment is untested, posing a challenge. He points out that the company is valued cheaply, but the reliance on one product is a risk. Manish would definitely be applying, anticipating it would be tough to get allotment.
Exato Technologies (SME) [48:26]
Sachin discusses Exato Technologies, a tech company providing AI-based solutions for customer interaction management. They analyze customer interactions and advise businesses on improving service and automating requests. Sachin highlights their partnerships with big tech firms and their own product, XytoIQ, for compliance and workflow automation. He notes that a significant portion of their revenue comes from recurring maintenance services. Sachin mentions that the promoter has extensive experience, and the company has a large order book. However, he points out risks related to working capital and talent acquisition. Sachin concludes that the IPO is priced at around 15 times FY25 earnings, potentially 10-11 times FY26. He draws parallels to a recent tech IPO and notes that the valuation is being factored by surrounding factors.
Closing Remarks [59:58]
Manish mentions that he doesn't like the industry much because it's ripe for disruption. He says that in the long term, it's very important how to see how they evolve out of this but yeah having said that in the short term there's absolutely no risk. He encourages viewers to listen to the Know Your Promoter series for more insights. He concludes by outlining plans for a mid-week space to cover additional companies like Misho, Equus, Vidya Vyas, and Neocam. He thanks the audience for attending and encourages them to follow Sunday Investing on Twitter.
