What you must know about Prizor Viztech IPO: Price Band ₹82 to ₹87 per Share

About Prizor Viztech Ltd

Prizor Viztech Ltd was incorporated in the year 2017 to engage in the business of offering security systems to institutions. The company provides security and surveillance solutions with a wide range of CCTV cameras appropriately positioned and with follow-up intelligence. Prizor Viztech Ltd  caters to the security needs of households, societies, corporates, government bodies, educational institutions, and infrastructure set-ups. Prizor Viztech Ltd  had recently expanded its product line to include televisions, touch panels, and monitors. While these products are manufactured by third parties, it is sold under the Prizor brand. Additionally, the company also offers its clients, video management software that provides surveillance features to customers on a single monitor and location. It has a product vertical and a solutions vertical. The solutions vertical includes security and Surveillance Solutions, encompassing network cameras, high-definition analogue cameras, network video recorders, and digital video recorders. Its products business, is to brand and market products like LED televisions, Monitors and Touch Panels sourced through third party manufacture. Prizor Viztech Ltd supplies its products across 17 states and 2 UTs. The company has 29 employees on its rolls across various functions.

Highlights of the Prizor Viztech IPO

Here are some of the highlights of the Prizor Viztech Ltd IPO on the SME segment of the National Stock Exchange (NSE):

•    The issue opens for subscription on 12th July 2024 and closes for subscription on 16th July 2024; both days inclusive.

•    The stock of the company has a face value of ₹10 per share and it is a book built issue. The book building price band for the IPO has been set in the range of ₹82 to ₹87 per share. The final price discovery will happen in the above price band only.

•    The IPO of Prizor Viztech Ltd has only a fresh issue component and no offer for sale (OFS) portion. While the fresh issue portion is EPS dilutive and equity dilutive, the OFS is just a transfer of ownership and  hence is not EPS or equity dilutive.

•    As part of the fresh issue portion of the IPO, Prizor Viztech Ltd will issue a total of 28,91,200 shares (28.91 lakh shares approximately), which at the upper band IPO price of ₹87 per share aggregates to fresh fund raising of ₹25.15 crore.

•    Since there is no offer for sale, the fresh issue will also double up as the overall size of the IPO. Therefore, the overall IPO size will also comprise of the issue of 28,91,200 shares (28.91 lakh shares approximately) which at the upper band IPO price of ₹87 per share aggregates to overall IPO size of ₹25.15 crore.

•    Like every SME IPO, this issue also has a market making portion. The company has set aside a total of 1,60,000 shares as quota for market inventory. Rikhav Securities Ltd has already been appointed as the market makers to the issue. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs.

•    The company has been promoted by Mitali Dasharathbharthi Gauswami and Dasharathbharthi Gopalbharthi Gauswami. The promoter holding in the company currently stands at 93.59%. However, post the fresh issue of shares, promoter equity holding share will get diluted to 68.28%.

•    The fresh issue funds will be used by the company for funding capex for setting up display centre and inventory storage point in Ahmedabad and for funding working capital. A small part of the IPO proceeds has also be set aside for general corporate purposes. 

•    Shreni Shares Ltd will be the lead manager to the issue, and Bigshare Services Private Ltd will be the registrar to the issue. The market maker for the issue is Rikhav Securities Ltd.
 

Prizor Viztech Ltd IPO – Key Dates

The SME IPO of Prizor Viztech Ltd IPO opens on Friday, 12th July 2024 and closes on Tuesday, 16th July 2024. The Prizor Viztech Ltd IPO bid date is from 12th July 2024 at 10.00 AM to 16th July 2024 at 5.00 PM. The Cut-off time for UPI Mandate confirmation is 7.00 PM on the issue closing day; which is 16th July 2024.

Data Source: Company RHP

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. The credit of shares to the demat account on July 19th 2024, will be visible to investors under the ISIN Code – (INE0V9N01017). This allocation to the demat account is only applicable to the extent of the allocation of shares and if no allocations are made in the IPO, then no credit would be visible in the demat account.

IPO Allocation and Minimum Investment Lot Size

Prizor Viztech Ltd has announced a market maker allocation of 1,60,000 shares, which will be used as inventory for market making. Rikhav Securities Ltd will be the market maker for the IPO. The net offer (net of market maker allocation) will be divided between the QIB investors, retail investors and the HNI / NII investors. The breakdown of the overall IPO of Prizor Viztech Ltd in terms of allocation to various categories are captured below.

Data Source: Company RHP

The minimum lot size for the IPO investment will be 1,600 shares. Thus, retail investors can invest a minimum of ₹1,39,200 (1,600 x ₹87 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 3,200 shares and having a minimum lot value of ₹2,78,400. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

There are no upper limits for investments by HNIs / NIIs in the IPO of Prizor Viztech Ltd.

Financial Highlights: Prizor Viztech Ltd

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

Data Source: Company RHP filed with SEBI

Here are some of the key takeaways from the financials of the company for the last 3 years; i.e., from FY22 to FY24, being the latest year. 

•    The revenues over the last 3 years have growth at a healthy clip, with FY24 revenues about 311% above the revenues of FY22. However, it must be remembered that is on a fairly low base. As net profit traction has picked up in the latest year, the net margins have also improved sharply to 15.63% in the latest year.

•    While net margins of the company have been relatively strong at 15.63%, the other return margins have also shown growth traction in latest year. The return on equity (ROE) stands robust at 83.67% in FY24, while the return on assets (ROA) is also strong at 22.64% in FY24. Both are up sharply from the previous years.

•    The asset turnover ratio or the sweating ratio has been healthy in the latest year at 1.45X and that only gets further accentuated when you look at the healthy levels of the ROA. It remains to be seen how the additional capital base is handled by sales growth.

The company has latest year EPS of ₹7.53, after adjusting for capital actions. The FY24 earnings are being discounted by the IPO price of ₹87 per share at 11-12 times P/E ratio. That is not too expensive if you factor in the robust growth in the ROE, net margins, and the return on assets. Also, if this growth continues into FY25, then justifying the valuations should be a lot simpler.

To be fair, Prizor Viztech Ltd some bring some intangible advantages to the table. It has established relationships and strategic partnerships to provide high quality solutions to its customers. It has also built a product line and a solutions line that makes its business model less cyclical. The investors can look at the IPO as a small stock with potential. Numbers have only risen sharply in the latest year, so a few more quarters should give better confirmation of the trend. Ideally, investors must be prepared for the higher risk implicit in such IPO stocks; but the business model does look promising. It also is de-risked, although confirmation on sustaining margins may be needed.