Fone4 Communications (India) Limited was incorporated in 2014. The Company is engaged in the business activity of an online Electronic E-Commerce company. Through its E-Commerce Segment, the Company retails a wide range of products. It carries out retailing via online and offline mediums of various electronic gadgets and accessories used for Smart Phones. It also distributes the same for Laptops, Smart Television and other electronic equipment. In this article, we take a closer look at the Fone4 Communications IPO Review and its possible future prospects.
The Company has a strong ally with major manufacturers such as Apple, Xiaomi, Samsung, Redmi, Oppo, Vivo, Karbonn, Lenovo, One Plus, Dell, Asus, HP, LG, Acer, TCL and Sansui. The headquarters of the Company, Fone4 Communications, is located in Kerela. The Company operates 25 Showrooms under the brand name of ‘FONE4’ where most of the showrooms are in major cities of Kerala. The warehouse of the Company is located in Kochi, Kerela.
Some of the Competitive Strengths of the Company are as follows:
- The Company operates strategically, and its warehouse facilities are also located in such a place. As a result, the Company has been highly benefitted from it.
- Fone4 Communications (India) Limited has a wide distribution and marketing network that boosts its profitability.
- The Company has a very diversified product portfolio and is constantly thriving for innovation.
Though there are some loopholes also related to the Company, these are as follows:
- The Company in recent years has posted inconsistency on both operational and financial upfront in its top-line margins with losses in the last three financial years.
- The Company has also earned a minuscule profit till now, which is negligible regarding its carrying losses.
- The Company’s valuations look a bit ambiguous as based on FY21 earnings, the PE ratio of the Company is negative, while based on FY22 earnings, its PE Value comes out to 143.
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the earlier outstanding loans of the Company, which be availed on a consolidated basis.
- To meet the general corporate targets.
- To fund the working capital requirement along with the expenditures.
FONE4 COMMUNICATIONS IPO DETAILS:
After getting approval from SEBI, Fone4 Communications (India) Limited is coming up with its IPO offer. The Company stated that its IPO offer would be a Fixed Price Issue type IPO offer of Rs. 10 per equity share. The Company will issue fresh equity of around 6800000 equity shares to raise funds of Rs. 6.80 Crores. The Company also stated that it would utilize Rs from the funds raised by the IPO offer. 6.50 Crores for funding their working capital and repayment of the loans and the remaining Rs 30 lakhs for general corporate purposes. Post allotment, the Company’s shares will be listed on the BSE – SME platform.
The IPO issue offer of the Company constitutes around 39.88% of the post issue fully paid-up capital of the Company. The Company also stated that the current fully paid-up equity capital base would enhance Rs post-IPO. 17.05 crores. The Company also stated that it would be looking to raise its market capitalization to enhance the current paid-up equity capital of the Company. Check Day by Day IPO Subscription Details (Live Status)
|IPO Opening Date||April 25, 2022|
|IPO Closing Date||April 27, 2022|
|Issue Type||Fixed Price Issue type IPO|
|Face Value||Rs. 10 per equity share|
|IPO Price||Rs. 10 per equity share|
|Market Lot||One lot of 10000 Equity Shares|
|Minimum Order Quantity||10000 Equity Shares|
|Minimum Order Price||Rs. 100,000|
|Maximum Order Quantity||20000 Equity Shares|
|Maximum Order Price||Rs. 200,000|
|Listing At||BSE SME|
|Issue Size||6,800,000 Equity Shares of the company that corresponds to Rs. 6.80 Crores.|
|Fresh Issue||6,800,000 Equity Shares of the company that corresponds to Rs. 6.80 Crores.|
|Retail Shares Offered||50% of the net offer|
|NII (HNI) Shares Offered||50% of the net offer|
|Basis of Allotment Date||May 2, 2022|
|Initiation of Refunds||May 4, 2022|
|Credit of Shares to Demat Account||May 5, 2022|
|IPO Listing Date||May 6, 2022|
STRENGTHS AND OPPORTUNITIES OF FONE4 COMMUNICATIONS IPO:
- The retail stores of the Company are located at prominent locations. It helps the Company attract a very high and a great footfall, though the Company has shifted their focus to the online platform as its mainstream revenue mode in recent years.
- Fone4 Communications (India) Limited is one of the most trusted brands operating in Kerala. The Company is considered to be well reliable regarding the quality of the products and the accessories it sells.
- The Company has also drafted their plans to strengthen its Technological platform with the upgradation and introduction of innovative tools at affordable and competitive pricing.
- The Company has a plan to expand its market reach and presence up to the entire Southern Region through its online platform and Retail Stores via a franchise model. The Company aims to be a One-Stop Techno Hub for electronic gadgets and accessories.
- Fone4 Communications (India) Limited has a strong association with many reputable brands to showcase their products under the sub-dealership arrangement for Retail Outlets and E-Commerce portal.
- The Company is also looking forward to carrying out some strategic acquisitions in similar fields and acquisitions for logistic and network support to improve its operational and financial performance with increased margins on both top and bottom lines.
|Particulars||For the year ending with the amount as in Rs in Lakhs|
|30 Sep 21||31 Mar 21||31 Mar 20||31 Mar 19|
|Profit After Tax||-2.24||-10.00||-97.78||-155.34|
|Earnings Per Share (Rs)||-0.57||-5.59||89.77|
|Book NAV/Share (Rs)||-0.10||0.47||-120.99|
|Tax Rate (%)||55.55||18.17||205.69|
|Core EBITDA Margin (%)||3.25||2.38||36.64|
|EBIT Margin (%)||2.60||0.08||3031.36|
|Pre – Tax Margin (%)||-0.36||-2.08||82.87|
|PAT Margin (%)||-0.16||-1.70||90.70|
|Cash Profit Margin (%)||1.54||0.77||100.90|
|Asset Turnover (x)||0.59||0.37||57.86|
|Sales/Fixed Asset (x)||7.91||7.16||10.54|
|Working Capital/Sales (x)||15.83||20.04||-21.00|
|Fixed Capital/Sales (x)||0.13||0.14||-9.54|
|EV/Net Sales (x)||0.35||0.77||-54.26|
|EV/Core EBITDA (x)||8.24||30.33||-72.84|
|Net Sales Growth (%)||9.96||-60.91||116.35|
|Core EBITDA Growth (%)||85.20||-37.26||328.65|
|EBIT Growth (%)||3343.16||-90.71||3785.49|
|PAT Growth (%)||89.77||37.06||142.23|
|EPS Growth (%)||89.77||37.06||142.23|
|Total Debt/Equity (x)||-1203.28||518.10||-332.25|
|Current Ratio (x)||1.11||1.02||9.09|
|Quick Ratio (x)||0.56||0.92||-39.53|
|Interest Cover (x)||0.88||0.04||2191.79|
|Particulars (in Lakhs)||Dec 21||Mar 21||Mar 20||Mar 19|
|Cost of Materials Consumed||3,646||5,505||5,210||13,821|
|Changes in Inventories||0||0||0||0|
|Employee Benefits Expense||124||142||92||245|
|Profit before tax||4||-23||-119||-174|
|Total Tax Exps||-5||-13||-22||-18|
|No. of shares||170.50||170.50||170.50||170.50|
VALUATIONS OF THE FONE4 COMMUNICATIONS (INDIA) COMPANY:
- The average EPS of the Company is Rs. – 3.63
- RoNW of the Company is – 837.23%.
- The Company has priced the IPO issue is at a P/B value of 1.41
- NAV of the Company is Rs. 7.08
- Post-IPO, the NAV of the Company is Rs. 8.95 per share.
- The asking price P/E of the Company is 142.86.
COMPARISON WITH PEERS:
As per the data present for the listed Company on the BSE – SME platform, there are no listed companies in the sector with the same business operation.
The promoters of the Company are as follows:
- Mr Sayyed Hamid
- Mrs Roudha Zerlina
|Pre – Issue Share Holding||95.12%|
|Post Issue Share Holding||57.18%|
COMPANY CONTACT INFORMATION:
Fone4 Communications (India) Limited
1st Floor, 45/692-B,
Ashna Arcade, Vylopilly Road,
Thammanam Ernakulam 682032,
Phone: +91 8606 777 777
FONE4 COMMUNICATIONS IPO REGISTRAR:
Cameo Corporate Services Limited