What you must know about Inspire Films IPO?

Inspire Films Ltd was incorporated in the year 2012, and as the name suggests, the company is engaged in the creation, production, distribution, and exhibition of television and digital content. The company operates in 3 business verticals. It has a content stack for general entertainment channels (GEC) and here it caters to the content needs of TV channels like Star Plus, Colors TV, Zee TV, Sony, Dangal, etc. These are typically priced on an episode based contract basis. The second vertical is the content creation for the Over the Top (OTT) segment. This includes content creation for Netflix, Amazon, Sony Liv, Disney Hotstar, Voot, Zee5, etc. These contracts are also episode based. The third vertical of Inspire Films Ltd pertains to regional content and it currently produces content in regional languages like Telugu, Tamil, Malayalam, Bengali, Marathi, etc. It has produced over 10,000 episodes of popular content till date across the broadcast offering.

Key terms of the Inspire Films IPO (SME)

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

• The issue opens for subscription on 25th September 2023 and closes for subscription on 27th September 2023; both days inclusive.
   
• The company has a face value of ₹10 per share and it is a book built issue. The issue price band for the fresh issue IPO is yet to be fixed. However, being a book built issue, the eventual price would be determined by process of book building.
   
• The IPO of Inspire Films Ltd has only a fresh issue component. It must be remembered that the fresh issue portion is EPS dilutive and equity dilutive, but OFS is just a transfer of ownership and  hence it is not EPS or equity dilutive.
   
• As part of the fresh issue portion of the IPO, Inspire Films Ltd will issue a total of 35,91,000 shares (35.91 lakh shares). However, since the price of the IPO band is yet to be fixed, we would know the IPO size in value terms only after that.
   
• Since there is no offer for sale portion, the fresh issue will also be the total size of the issue. As a result, the total issue size of Inspire Films Ltd will entail the issue and sale of 35,91,000 shares (35.91 lakh shares). Here again, the value of the IPO size would only be known once the price is determined.
   
• Like every SME IPO, this issue also has a market making portion with a market maker portion allocation of 1,80,000 shares. The market maker for the issue is yet to be announced officially and they will provide two-way quotes to ensure liquidity on the counter post listing and low basis costs.
   
• The company has been promoted by Yash Arabinda Patnaik and Beyond Dreams Entertainment Private Ltd. The promoter holding in the company currently stands at 93.98%. However, post the fresh issue of shares and the OFS, the promoter equity holding share will get diluted to 69.17%.
   
• The fresh issue funds will be used by the company for meeting its working capital needs and for general corporate expenses. Part of the funds will also be applied towards the cost of the fund raising.
   
• While Narnolia Financial Services Ltd will be the lead manager to the issue, Maashitla Securities Private Ltd will be the registrar to the issue. The market maker for the issue is yet to be announced.

IPO allocation and minimum lot size for investment

Out of the total shares on offer, the company has allocated 1,80,000 shares for the market maker for providing liquidity post listing and reducing basis risk. The net offer (net of market maker allocation) will be distributed between the QIBs, retail investors and the non-retail investors. The table below captures the gist of the allocation to various categories

The minimum lot size for the IPO investment will be decided only after the pricing of the IPO is agreed upon. That will determine the amount of minimum investment applicable for retail investors and for the HNI investors. It may be noted that the upper limits only apply to the retail investors and the S-HNI investors. The B-HNI investors and QIB investors are not subjected to any investment caps in the IPO.

Key dates to be aware of in the Inspire Films Ltd IPO (SME)

The SME IPO of Inspire Films IPO opens on Monday, September 25th, 2023 and closes on Wednesday, September 27th, 2023. The Inspire Films Ltd IPO bid date is from September 25th, 2023 10.00 AM to September 27th, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is September 27th, 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 Inspire Films Ltd

The table below captures the key financials of Inspire Films Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

As of now the price band for the IPO of Inspire Films has not been announced and hence it is tough to take a valuation call on the stock. The company has shown sales growth and profits have really picked up only in the latest year. The business is scalable and it remains to be seen how many clients it can secure. One can take a valuation call based on latest year P/E ratio after the price band is announced.