What you must know about Cell Point IPO

Cell Point (India) Ltd is one of the largest retail outlets for mobile phones and other electronic accessories in South India. The company was incorporated in 2001, and offers a physical and virtual platform for multi-brand retail selling of Smart Phones, tablets, mobile accessories, and mobile-related products. It sells products manufactured by most of the top names in this space including  Apple, Samsung, Oppo, Realme, Nokia, Vivo, Xiaomi, Redmi, and Oneplus.

While mobile phones are the main driving product for the company, it is also engaged in multi-brand retailing of other consumer durable electronics goods like Smart TVs of various brands such as Xiaomi, Realme, and One Plus. The company has over 75 stores across the state of Andhra Pradesh and is headquartered in the port city of Vizag. Out of the 75 stores, 2 stores are owned properties and 73 stores are on leased properties. The company has positioned its retail outlets as a one-stop shop for all your mobile needs.

Key terms of the SME IPO of Cell Point (India) Ltd

Here are some of the highlights of the Cell Point IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 15th June 2023 and closes for subscription on 20th June 2023; both days inclusive.
   
• The stock of the company has a face value of ₹10 per share and the issue price for the fresh issue portion has a fixed price of ₹1000 per share.
   
• The issue is entirely a fresh issue and Cell Point (India) Ltd will issue a total of 50.34 lakh shares at the price of ₹100 per share aggregating to a total fund raising of ₹50.34 crore by way of fresh issue of shares to the public.
   
• The issue has no offer for sale (OFS) component, so the fresh issue of ₹50.34 will also be the total size of the IPO. The fresh issue of shares will infuse fresh funds into the company but it is also equity and EPS dilutive for the shareholders of the company.
   
• The ₹50.34 crore fresh issue will result in net infusion of ₹49.54 crore net of issue expenses. The utilization of this amount will be towards: Repayment of borrowings (₹16.86 crore), repairs / renovations of stores (₹12.00 crore), Working Capital expenses (₹10.00 crore) and General Corporate expenses (₹10.68 crore).
   
• The minimum lot size for the IPO investment will be 1,200 shares. Thus, retail investors can invest a minimum of ₹120,000 (1,200 x ₹100 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO.
   
• HNI / NII investors can invest a minimum of 2 lots comprising of 2,400 shares and having a minimum lot value of ₹240,000. There is no upper limit on what the HNI / NII investors can apply for.
   
• Like every SME IPO, this issue also has a marketing making portion with a market maker portion allocation of 252,000 shares. NNM Securities Ltd will act as the market maker to the issue providing two-way quotes to ensure liquidity on the counter.
   
• The company has been promoted by Mohan Prasad Panday and Bala Balaji Panday. While the former holds 88.35% of the share capital, the latter holds 11.64% of the share capital. Together they hold 99.99% of the share capital of the company. However, post the IPO completion, the combined promoter stake will get diluted from 99.99% to 73.05%.

While First Overseas Capital Ltd will be the lead manager to the issue, Bigshare Services Private Limited will be the registrar to the issue.

Key dates to be aware of in the Cell Point (India) Ltd IPO (SME)

The SME IPO of Cell Point (India) Ltd IPO opens on Thursday, June 15th, 2023 and closes on Tuesday June 20th, 2023. The IPO of Cell Point (India) Ltd bid date is from June 15th, 2023 10.00 AM to June 20th, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is the 20th of June 2023.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account.

Financial highlights of Cell Point (India) Ltd

The table below captures the key financials of Cell Point (India) Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

The profit margins have been fairly low but that is the nature of the retail business and the sales growth has been quite erratic. However, this erratic sales growth can be attributed to the COVID pandemic and the aftermath. However, the company has fairly dominant market share in the Southern region of India. However, investors must remember that this is a traditionally low margin business. That could be an overhang on valuations. Also, these brick and mortar store are consistently facing a challenge from the more aggressive approach adopted by the online sales platforms.