Droom Technology Limited IPO Review

0
10
Droom IPO
Droom IPO
Rate this post

Droom Technology Limited is engaged in an e-commerce platform for the sale of cars and automobiles. It is among India’s major platforms that use an innovative technology-based data science and analysis approach for their business. Droom Technology Limited operates on an asset-light ecosystem and working business model to provide service. The company initially started in 2014. It started its operation with the Android mobile application and later expanded to 11 different categories. The business of Droom Technology Limited is widespread in 1150 cities of the country and is now multiple platforms. Checkout Droom IPO date, price, GMP and more details.

Droom has become a one-stop solution firm with virtual catalogues to vehicle delivery and certification services. The auto dealers listed on their platform get an advantage compared to others by more visibility on the internet, reach to broader distribution and higher yields delivery. These services are provided at a very low transaction cost and a very fast trade velocity.

The revenue source of the company is divided into 4 major verticals:

Service Fee – Major sourceThe company charges 1.75-2.5% per transaction. Also, it depends on the performance of the clients and dealers of the company.
 Subscription PlanDroom Technology Limited offers this service to the big auto dealers. The company can generate around 16% of revenue from this category.
Premium ToolsOBV, credit discovery, economic history services and Droom credit are additional advanced data insight services that the company offers to its clients.
AdvertisingDroom is engaged in all B2C, B2B, C2B and C2C business. The company provides the service of advertising which helps them earn revenue of around 15% of their total revenue.

OBJECTS OF THE IPO ISSUE:

  • Prepayment of all the company’s loans is availed on a consolidated basis. 
  • To meet corporate targets. 
  • To fund the working capital requirement.  

BASIS OF THE OFFER:

  • Droom Technology is the market leader in the pure-play and vehicle e-commerce platform.
  • The company is pure technology and data analysis & scientific firm. It is engaged in providing services in the whole automotive value chain system.
  • Droom has established an inventive ecosystem for its business through the products, services and solutions it offers.
  • The company’s network effect is fully driven by its scale and operation.
  • Droom Technology has strong unit economics, solid financials, and a lot of operational leverage.
  • The company has an excellent team with many experts in management, technical and operational levels. The board of directors well monitors all the different horizons of the company.

DROOM IPO DETAILS:

Droom Technology Limited is a company with its headquarters in Gurugram. The company has submitted its DRHP to SEBI. The company is currently waiting for approval from SEBI to float its IPO in the market. The IPO of the company is of Rs. 3,000. The IPO offer of the company consists of Rs. 2000 crores of fresh equity issue along with an OFS of worth Rs. 1,000 crores. The promoters of the company bring forward the OFS. The company also stated that it would also carry out a pre-IPO offer of Rs. 400 crores inclusive of the IPO offer.

The company stated that the net proceeds from the IPO’s fresh equity issue would fund an organic growth strategy worth Rs.1150 crores. It will also use other Rs. 400 crores for inorganic growth, including general corporate purposes.

IPO Opening DateFebruary 2021
IPO Closing DateFebruary 2021
Issue TypeBook Building Type
Face ValueRs. 1/ Equity share
IPO Price 
Market Lot 
Min Amount 
Listing AtBSE, NSE
Issue SizeRs. 3,000 Crores
Fresh IssueRs. 2,000 Crores
Offer for SaleRs. 1,000 Crores
Basis of Allotment DateFebruary 2021
Initiation of RefundsFebruary 2021
The Credit of Shares to Demat AccountFebruary 2021
IPO Listing DateFebruary 2021
Basis of Allotment Type% Of the allotment from the IPO Offer
Qualified Institutional Buyer75
Non – Institutional Investor15
Retail10

WEAKNESS AND THREATS OF DROOM IPO:

  • The COVID-19 pandemic has badly impacted Droom Technology Limited. The company has been impacted on both terms financial and operational levels, which has negatively impacted the company.
  • The company relies heavily on unique technology for crucial business functions.
  • The company is well exposed to the cyber security threat, mismanagement of the database, demand for the services and platform-related problems.
  • Droom Technology Limited’s business is also subject to the risk of increasing competition in the e-commerce sector. The company faces stiff competition from both many organized and unorganized market players in the market. 
  • The company also faces macroeconomic risks, the market for automobiles and vehicle services.
  • Droom Technology Limited also relies on its auto dealers, agents and clients for the proper operation and execution of their business structure. 
  • Sandeep Aggarwal, the founder and CEO, is currently facing a trial under criminal insider trading. Any negative news regarding this aspect will lead to a detrimental impact on the company’s image.
  • Droom Technology Limited has stated that they intend to use the fund raised from the issue of fresh equity for purchasing goods without any specified target.
  • The company collaborates with many outsourced firms, outside service providers for various services. Any inefficiency on this front can lead to a detrimental impact on the company’s business.

STRENGTHS AND GROWTH ASPECTS OF DROOM IPO:

  • Droom Technology limited has recently completed its fundraising program before IPO. Many strong investors back the company, company, and PE firms, including Lightbox, BeenextSeven Train Ventures, Toyota, 57 Stars, etc.
  • The company benefits greatly from its asset-light and technology-influenced and driven ecosystem e-commerce platform. Due to their operational efficiency, the company is now an established Startup with a one-stop solution in an automobile. 
  • Droom has built up a strong trust between its dealing parties along with ease of verification and certification. It has helped the company teach the power of price factors and pricing.
  • The company has a market share worth more than 80% in its online presence. It has helped India’s largest platform for online automobile servicesDroom Technology limited holds the biggest auto and related service inventory among its major competitors. It has a wide network range of 1.15 million vehicles, including all category vehicles. It also holds for the largest dealer network.
  • Droom has recently expanded its business operation in Singapore, Thailand and Malaysia. Now the company has a huge global market reach in 38 countries. As per the DRHP, the company stated that it would further increase its market share on a global level to expand its business in Africa and South America region.
  • The company’s focus is to maintain its leadership status by secular adoption of automobiles, shifting focus on the online expansion of their network through innovative technology and community outreach methods.
  • One of the biggest strengths of the Droom is its focus on building a strong customer base support system. The company launched Droom Assist for consulting services for its platform. The company also provides security for their customer under the buyer protection service. The company is constantly improving its support system on its website, AI, data insights, IoT. It uses highly innovative tools such as Chatbots based on NLP, OBV, IoT based smart services.
  • Droom also stated that it would invest in new technology and a data science-based ecosystem. It will help them expand their business into new regions and new platforms with additional verticals to their high-margin operation.
 
ParticularsFor the year with the amount in Crore
30-Jun-2131-Mar-2131-Mar-2031-Mar-19
Total Assets170.41114.84136.48129.03
Total Revenue81.05135.52181.37146.11
Profit After Tax– 32.58– 68.88– 89.60– 105.37
   Earnings Per Share (Rs)-624.51-812.3623.12
   CEPS(Rs)-583.89-762.7523.45
   Book NAV/Share (Rs)-227.44396.29-157.39
   Core EBITDA Margin (%)-54.96-51.48-6.76
   EBIT Margin (%)-50.43-49.32-2.24
   Pre-Tax Margin (%)-54.95-52.00-5.66
   PAT Margin (%)-54.96-52.04-5.61
   Cash Profit Margin (%)-51.39-48.86-5.16
   ROA (%)-54.82-67.4918.78
   ROE (%)-739.72-167.02-342.89
   ROCE (%)-78.22-102.5923.75
   Asset Turnover(x)1.001.30-23.09
   Sales/Fixed Asset(x)3.473.90-10.83
   Working Capital/Sales(x)9.444.32118.71
   Fixed Capital/Sales(x)0.290.2612.15
   Receivable days44.8536.9421.43
   EV/Net Sales(x)0.410.15178.00
   EV/Core EBITDA(x)-0.88-0.32-173.90
   EV/EBIT(x)-0.82-0.30-171.92
   EV/CE(x)0.450.19140.52
   Net Sales Growth (%)-27.2126.63-202.17
   Core EBITDA Growth (%)26.1221.8719.43
   EBIT Growth (%)25.5818.4438.67
   PAT Growth (%)23.1214.9654.54
   EPS Growth (%)23.1233.08-30.10
   Total Debt/Equity(x)-2.070.72-386.26
   Current Ratio(x)1.181.89-37.62
   Quick Ratio(x)1.171.89-37.97
   Interest Cover(x)-11.15-18.3939.40

DROOM IPO PROMOTERS:

  • Sandeep Aggarwal
  • Droom Pte. Ltd.
Pre – Issue Share Holding100%
Post Issue Share Holding

CONTACT DETAILS:

Droom Limited
90/31B, First Floor,
Malviya Nagar, New Delhi
110017, Delhi
Tel: +91 11 4040 4501
E-mail: companysecretary@droom.in
Website: www.droom.in

REGISTRAR:

KFin Technologies Private Limited
Selenium Tower-B, Plot 31 & 32,
Gachibowli, Financial District,
Nanakramguda, Serilingampally,
Hyderabad – 500 032, Telangana, India
Tel: +91 22 4918 6200
E-mail: droom.ipo@kfintech.com
Website: www.kfintech.com

LEAD MANAGER(S) OF DROOM IPO:

  • ICICI Securities Limited
  • Axis Capital Limited
  • Edelweiss Financial Services Limited
  • HSBC Securities and Capital Markets (India) Pvt. Ltd.
  • Nomura Financial Advisory and Securities (India) Pvt. Ltd.

LEAVE A REPLY

Please enter your comment!
Please enter your name here