Cineom Broadcast India IPO Review

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Cineom Broadcast India IPO

7

Company Background

6.0/10

Price Band

7.0/10

Financial Health

7.5/10

Industry Situation

7.0/10

IPO Proceeds Usage

7.5/10

Pros

  • Experienced Team
  • Decent Financial Growth
  • Positive Supplier Relations

Cons

  • Various Open Legal Proceedings
  • Impact of Foreign Exchange

Cineom Broadcast India Background

Cineom Broadcast India was founded on January 24, 2000, in Mumbai as “Cineom Broadcast India Private Limited”. The company is in the business of delivering Supply, Installation, Testing and Commissioning (SITC) services in the Broadcast and Film domain.

Looking at the overall industry space, Cineom Broadcast is relatively not that old a company.

Their specialization is in shooting floors, recording Studio Design, movie image Capture solution, Video Audio Processing, VFX,  Restorations, Media asset management, Playout and Uplink solution, AV and surveillance into the business of Broadcast and Video post system integration.

They try to differentiate from their competitors by giving their customers a benefit of providing customized, cost-effective and complete solutions. They provide solutions in different industries like Audio, Video, Film Post and Broadcast, Pro AV, Amusement park & Surveillance market.

Cineom is engaged in providing sales and support of different types of equipment and also provide planning, designing, consulting, supplying, installing, commissioning services. Besides these, they also provide training and after sales services to their customers.

To meet different requirements of their clients, they integrate various technologies. They have started fulfilling all the software needs of their projects. Cineom also provides content tagging services, QC and analysis and reporting for International clients.

The business is now coming up with its IPO to raise funds from the public domain.

Also Read: Why Companies Go Public?


Cineom Broadcast India Management Information

Currently, there are 6 Directors on the Board of Cineom Broadcast India Limited.

Vinayak Deo is the Managing Director, Mr Shailesh Parab is the Joint Managing Director, Manjiri Deo and Mansi Satam are the Non – Executive Director, Jaideep Shirali and Sushil Pawaskar are the Independent Directors of the company.

Vinayak Deo, Promoter and Managing Director

He has a Degree in Electronics and Radio Engineering from Board of Technical Examinations from Maharashtra. He possesses an experience of more than 26 years in the field.

He is currently taking care of sales and marketing for services of Cineom. Furthermore, he plays a key role in building a powerful sales force and pricing strategies for the different projects taken by the company and providing marketing solutions in both India and outside India.


Cineom Broadcast IPO Data Points

Cineom Broadcast IPO will open on (undisclosed) and close for subscription on (undisclosed). The IPO size will be of 61.4 lakhs Equity shares and the face value of each share will be ₹10.

The offer consists of a fresh issue of up to 48.9 lakhs equity shares aggregating up to ₹(undisclosed) and an offer for sale of up to 12.5 lakh equity shares by selling shareholders.

Up to 6.25 lakh equity shares are being offered by Vinayak Deo and the rest 6.25 lakh shares by Shailesh Parab. (undisclosed) shares will be reserved for subscription by employees. (undisclosed) equity shares will be reserved for market makers and (undisclosed) shares will be issued to investors. The price band range has been set at ₹(undisclosed) – ₹(undisclosed) per share.

The IPO size is expected to be up to ₹(undisclosed). The market lot size is of (undisclosed) equity shares and the shares will be listed on the Bombay Stock Exchange or BSE.

Pursuant to the resolution passed on May 19, 2018, the offer has been authorised by the Board of Directors and pursuant to a special resolution of the shareholders on May 24, 2018, the offer has been approved by them too.


Cineom Broadcast India Financial Performance

The total revenues figure showed a high increase of 22.24% from ₹6425.37 lakhs in the financial year ended March 31, 2017, to ₹7854.45 lakhs in the financial year ended March 31, 2018, due to a significant increase in the rendering of services and an increase in sales of trading goods.

 

The increase in profit is huge in percentage term which is 97.36% from ₹495.52 lakhs to ₹977.95 lakhs during the same period. It has to be seen whether the company is able to sustain such a high growth rate in future years.

The numbers of return on Net Worth for the company for the fiscal years ended March 31, 2016, 2017 and 2018 are 13.26%, 23.52% and 31.7% respectively.

Cineom Broadcast IPO Objectives

The Cineom Broadcast IPO consists of two parts:

The proceeds from the offer for sale of up to 48.9 lakh equity shares will be given to the selling shareholders. Any proceeds from the offer for sale will not be received by the company for its operations.

The main objectives of the fresh issue of shares are as follows –

  • For the creation of setups to be used for the purpose of providing outsourced Broadcasting services
  • For the development of a Cloud-based Playout
  • For meeting the working capital needs of the company
  • For meeting expenses related to general corporate purposes

Other than the above-mentioned objectives, Cineom Broadcast India will also benefit from the IPO is the enhanced brand image and better visibility of the company across India.


Cineom Broadcast IPO Events

Cineom Broadcast India filed the Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on June 21, 2018, for the Book building IPO.

The offer will open on (undisclosed) and close on (undisclosed). The finalisation of basis of allotment is expected to happen by (undisclosed) and the initiation of refunds is expected to start by (undisclosed).

The transfer of shares to demat accounts is expected to start on (undisclosed) and the expected listing date will be (undisclosed).


Cineom Broadcast IPO Recommendation

Let us now discuss various strengths of Cineom Broadcast India as well as risks related to its business.

One of the most important parts of a company is its people. Cineom has a strong team of skilled consultants and sales professionals who contribute to collecting, analyzing and processing information to make conversions of enquiries to prospective orders.

The management of the company is also well qualified and experienced in the industry. They organize specific training programs to improve the skills of their employees regularly.

They share good long-standing relationships with product and solution providers in media and broadcast industry to complete their projects with the best and most advanced technology available in the market.

They are good at multi-tasking and taking care of the specific needs of their clients belonging to different industries.

One of their best strengths is that they act as a one-stop solution provider for their clients. They also share long-term relationships with their clients and try their best to maintain those relationships by giving them a good experience through continuous feedback and regular surveys.

The business has strong plans in place for further growth and expansion of their business.

Financially also, the company has shown decent growth. Although the sudden increase in PAT in fiscal 2018 from the year 2017 raises some concerns and it will be interesting to note whether the company is able to maintain high rates of growth in profitability in the years to come.

Now, let us come to the risks section.

There are legal proceedings involving the company and its promoters / Directors and any adverse ruling may have a negative effect on the company.

The operations of the company are dependent on the performance of different types of equipment and devices. Any defects in them may cause adverse effects on the credibility of the company. Any slowdown in Media and Entertainment industry or inability to add more clients pose major threats to Cineom.

Inability to provide services in a timely manner may negatively affect the business.

The company is also exposed to foreign exchange fluctuations because they depend on some equipment that needs to b imported from foreign countries.

Any potential threats to the relationships of the company with their different equipment suppliers are also a threat to the overall profitability of the company.

If their new technology is not received well by the clients, it may have many severe effects on the company’s financial health.

The company has shown negative cash flows in the previous years and if it continues to be like this in future years as well, it may have negative consequences for the company.

There is also a risk of competitors in the same industry.

Looking at the current position of the company and strong growth and expansion plans, it may be said that investors may choose to invest in the Cineom Broadcast IPO. However, if you have a reasonable risk appetite, you may try your hand in this upcoming IPO.

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Cineom Broadcast IPO Advisors Information

Pantomath Capital Advisors Private is acting as Book Running Lead Manager to the issue. Link Intime India Private is acting as the Registrar for the Cineom Broadcast IPO.

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Cineom Broadcast India IPO
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