What you must know about Winny Immigration and Education Services IPO?

About Winny Immigration and Education Services Ltd 

Winny immigration and Education Services Ltd was incorporated in the year 2008 to offer visa consultancy services to Indians. The company assists persons through the entire procs chain for people looking to migrate abroad for higher studies, work, business etc. The company offers guidance, consultancy and also offers the complete execution of these immigration related services end to end. Till date, Winny immigration and Education Services Ltd has helped thousands of clients with their immigration and visa processes, as well as in providing visa consultancy. It currently has a network of 12 strategically located offices, to help guide the people through these complex processes. Under the overall gamut of immigration services, Winny immigration and Education Services Ltd offers visa guidance, immigration assistance, and documentation services. This includes consultancy services for training for Language Proficiency Examinations like IELTS, process & execution of temporary visa, planning, as well as working towards permanent residency plans. Its twelve offices are spread across Gujarat, Maharashtra, and Delhi. While some of the these are branches, others are franchises; and the company also has a virtual office in Canada, one of the most preferred destinations for Indian immigrants. Winny immigration and Education Services Ltd employs over 145 personnel on its rolls across various levels. 

Highlights of the Winny Immigration and Education Services IPO

Here are some of the highlights of the Winny immigration and Education Services IPO on the SME segment of the National Stock Exchange (NSE). 

•    The issue opens for subscription on 20th June 2024 and closes for subscription on 24th June 2024; both days inclusive.

•    The stock of the company has a face value of ₹10 per share and it is a fixed price issue. The fixed price for the IPO has been set at ₹140 per share. Being a fixed price issue, the question of price discovery does not arise.

•    The IPO of Winny immigration and Education Services 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, Winny immigration and Education Services Ltd will issue a total of 6,52,000 shares (6.52 lakh shares), which at the fixed IPO price of ₹140 per share aggregates to fresh fund raising of ₹9.13 crore.

•    Since there is no OFS, the fresh issue size will also double as the overall issue. Therefore, the overall IPO size will also comprise of the issue of 6,52,000 shares (6.52 lakh shares) which at the fixed IPO price of ₹140 per share aggregates to overall IPO size of ₹9.13 crore.

•    Like every SME IPO, this issue also has a market making portion. The company has set aside a total of 34,000 shares as quota for market inventory. Beeline Broking 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 Jignesh Patel. The promoter holding in the company currently stands at 83.63%. However, post the fresh issue of shares, promoter equity holding share will get diluted to 58.50%.

•    The fresh issue funds will be used by the company for opening new offices in India, enhancing the programming stack, repayment of debt, and branding and advertising. A small part of the IPO proceeds has also be set aside for general corporate purposes.

•    Interactive Financial Services 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 Beeline Broking Ltd.
The IPO of Winny immigration and Education Services Ltd will be listed on the SME IPO segment of the NSE.

Winny Immigration and Education Services IPO – Key Dates

Winny immigration and Education Services IPO opens on Thursday, 20th June 2024 and closes on Monday, 24th June 2024. Winny immigration and Education Services IPO bid date is from 20th June 2024 at 10.00 AM to 24th June 2024 at 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is 24th June 2024.

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 June 26th 2024, will be visible to investors under the ISIN Code – (INE0S9101013). 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

Winny immigration and Education Services Ltd has announced a market maker allocation of 34,000 shares, which will be used as inventory for market making. Beeline Broking Ltd will be the market maker for the IPO. The net offer (net of market maker allocation) will be divided between the retail investors and the HNI / NII investors. The breakdown of the overall IPO of Winny immigration and Education Services 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 1,000 shares. Thus, retail investors can invest a minimum of ₹1,40,000 (1,000 x ₹140 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 2,000 shares and having a minimum lot value of ₹2,80,000. 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 Winny immigration and Education Services IPO.

Financial Highlights: Winny Immigration and Education Services Ltd

The table below captures the key financials of Winny immigration and Education Services IPO 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 been fairly static, with hardly any growth in the last 3 years in the top line revenues. However, due to higher costs and flat revenues, the net profits and the EPS for the latest year are down, which also resulted in the net profit margins falling from 12.29% in FY23 to 6.41% in FY24. 

•    While net margins of the company have fallen in the latest year to 6.41%, the margins were steady at above 12% in the two years prior to that. The return on equity (ROE) stands at 30.02% in FY23, while the return on assets (ROA) is strong at 12.76% in FY24. Both are down sharply from the year ago period.

•    The asset turnover ratio or the sweating ratio has been healthy in the latest year at 1.99X and that may not be too relevant considering that this is purely a service industry in which the company is operating. However, low capital base, small business size and volatile sales and profits will be a concern.

The company has latest year EPS of ₹2.59. However, since the EPS has fallen in the latest year, we have considered the weighted average EPS of last 3 years, which comes to ₹5.87 per share. The FY24 earnings are being discounted by the IPO price of ₹140 per share at 54-55 times P/E ratio. That looks very much on the higher, especially if you consider the sharp fall in the net margins and ROE on the stock. Even if you consider the weighted average EPS of ₹5.87, the presumed P/E ratio at the IPO price of ₹140 is still expensive at 23-24 times weighted average earnings. The data is up to FY24 so there is no scope for any extrapolation. That limits any valuation related upsides for the stock.

To be fair, Winny immigration and Education Services Ltd some bring some intangible advantages to the table. It has established relationships, it understands the complex visa and immigration game, although its ability to persistently generate profits from the business is not too clear. Given a choice, investors should give this IPO a skip and wait for more clarity on the financial performance. For now, the pricing of the IPO looks too steep, with little on the table for investors. Any investor putting money in the IPO, would have to do it with the uncertainty on future earnings traction. Investors must tread cautiously on the IPO.