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SaleBhai To Launch IPO On July 27, Looking To Raise INR 23.73 Cr

SaleBhai To Launch IPO On July 27, Looking To Raise INR 23.73 Cr

SaleBhai's IPO will launch on July 27 and close on August 2

The ecommerce startup will list on the BSE and is looking to raise INR 23.73 Cr

Analysts consider it a high-risk IPO

Early-stage B2C ecommerce startup SaleBhai will open its initial public offering (IPO) to the public on July 27 and will close the issue on August 2.

SaleBhai was launched in September 2015 by Vishwavijay Singh and Purba Kalita. The startup aims to be a discovery platform for migrant communities to source authentic products from their native places.

The company offers a range of products including sweets, bakery, beverages, spices, dry fruits, namkeens (savouries), chocolates, and pickles. Customers can also purchase handicrafts, handloom goods, paintings, puja items, and herbal and wellness items on its website.

With this IPO, SaleBhai is looking to raise INR 23.73 Cr through the BSE’s SME platform. Also, it is the first startup to raise money through public route by getting listed on BSE at such an early stage.

It will use the funds raised through the IPO towards growing the company through increased customer acquisition, improved IT platform, the addition of more authentic sellers as well as product categories, and make the customer experience even smoother and effortless. It further plans to add 400 sellers by end of 2018.

The reports of SaleBhai IPO surfaced in May 2018 when it filed a draft prospectus with the SME platform of BSE Ltd. The development was confirmed once it received in-principle approval from BSE to launch its IPO.

SaleBhai & Its IPO: A Brief Overview

SaleBhai says it is focused “on the requirements of over 17 diaspora communities living in big Indian cities as well as those who live abroad.”

With 8,500 products sourced from over 100 cities and 300 select vendors, the company provides people with an opportunity to buy products in various categories from sellers across India as well as discover new items from different communities and cultures.

As on March 2017, the company has 22% buyers who have ordered at least twice from the website and 19% buyers with more than five orders.

The company has 31 permanent employees on its payroll.

Here is what the company is looking forward to with its IPO.

  • issuing 22, 59,600 equity shares against 26.58% of the company’s equity
  • Monarch Networth Capital Limited (Monarch) is acting as the issue’s Lead Manager
  • Skyline Financial Services Private Limited will act as the Registrar to the issue.
  • already received funding and support from 71 high net worth individuals
  • Minimum application is to be made for 1200 shares and in multiples thereon

Vishwavijay Singh, Co-founder, SaleBhai.com, said, “SaleBhai is at the cusp of an unforgettable transformation. Taking our products offer as a business model into the market, we expect a positive reaction.”

Is SaleBhai’s IPO Worth Investing In?

SaleBhai has raised more than $1.5 Mn capital from investors such as Times Group’s Brand Capital and 71 HNIs, among other investors.

As mentioned in the company’s draft prospectus, having raised initial equity at par, it raised further equity in the price range of INR 950 to INR 1500 per share between April 2016 and February 2018. It has also issued bonus shares in the ratio of 9 shares for every 1 share held in March 2018.

As on 31.03.18 it’s paid-up equity capital was INR 6.24 Cr. Post issue, its current paid up equity capital of Rs. 6.24 crore will stand enhanced to INR 8.50 Cr.

Here is a summary of the company’s financial performance in the last three years:

“As per offer document, it is showing Infibeam Incorporation as its listed peers. Infibeam is trading at a price/earnings ratio (P/E) of around 672 (standalone) as on 20.07.18. (as per March 31, 2018 earnings). Peer is not comparable in stricter norms,’ said analyst Dilip Davda, a veteran journalist associated with stock market since 1978.

He further added, “For last two years it has posted average negative earnings per share (EPS) of INR (416.14) and an average return on net-worth (RoNW) of (148.31%). Hectic premiums collected for further equity helped the company to have a net asset value (NAV) of Rs. 97.93 as on 31.01.18. However, as on March 31, 2018, its NAV is around INR 18.88 and on the basis of it, asking price at a price to book value (P/BV) of 5.56. Due to negative earnings, its P/E remains negative. ”

The financials indicate a negative picture for the company. According to Davda, “only risk-savvy cash surplus investors may consider investments at their own risk” in this IPO.

As SaleBhai ventures into brave new territory with its IPO at such an early stage, the eyes of the entire Indian startup ecosystem will be on the company.

Author

Meha Agarwal

Inc42 Staff

Meha has engineering and MBA degrees, but she has always been a writer at heart. It was the perfect combination of utilising her research and analytical skills and her enthusiasm for writing that sparked her interest in writing about the Indian startup ecosystem – the latest tech and gadgets and the startups that create them. She is always on the lookout for industry-specific stories in niche areas of interest such as ecommerce, fintech, greentech and more.

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