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FONEBOX RETAIL LIMITED- IPO ANALYSIS
The ‘FoneBox Retail Limited’ officially issued its Prospectus on 17th January, 2024 mentioning the important details regarding its recent Initial Public Offering (hereinafter referred as IPO) which has started from January 24, 2024 and will close on 29th January, 2024. In this article we will look at some Important Financial Details of the company and the IPO, which investors need to consider before investing in a right company.
INITIAL PUBLIC OFFERNING | FONEBOX RETAIL LIMITED
The ‘FoneBox Retail Limited’ officially issued its Prospectus on 17th January, 2024 mentioning the important details regarding its recent Initial Public Offering (hereinafter referred as IPO) which has started from January 24, 2024 and will close on 29th January, 2024. In this article we will look at some Important Financial Details of the company and the IPO, which investors need to consider before investing in a right company.
ABOUT THE COMPANY
As per the details of the company present on its official website, the company was incorporated in the year 2021 as a private company with the name ‘Fonebox Retail Private Limited’. Subsequently, in the June 2023 the company decided to go public and changed its name to ‘Fonebox Retail Limited’.
BUSINESS OPERATIONS
In the multi-brand retail industry, Fonebox Retail Limited is a well-known business with a focus on selling cellphones and related accessories. The company offers a wide range of devices and represents well-known brands including Vivo, Apple, Samsung, Oppo, Realme, Nokia, Narzo, Redmi, Motorola, LG, and Micromax. Fonebox also deals in the multi-brand retail sale of consumer durable electronics, such as refrigerators, air conditioners, washing machines, laptops, and smart TVs. By forming partnerships with top companies in the consumer electronics industry, such as TCL, Haier, Lloyd, Daikin, Voltas, Mi, Realme, and OnePlus, the firm guarantees a wide range of products. The company, operates under the brand names "Fonebook" and "Fonebox," is responsible for managing a portfolio of retail locations strategically placed throughout Gujarat. Company-owned and franchise-operated business models are used in the retail industry. Of these, 39 shops run under the Company Owned and Company Operated (COCO) model, while 104 stores operate under the Franchise Owned and Company Operated (FOCO) model. As evidence of its strategic growth and dedication to provide a broad range of consumer electronics to clients in more than 20 Gujarati cities, Fonebox has acquired well-known mobile phone retail shop names like "Fonebook" and "My Mobile."
INDUSTRY RESEARCH
The dynamic telecommunications sector, which is undergoing substantial expansion and change in India, is where Fonebox Limited works. The firm works in a very promising environment, with the second-largest smartphone market in the world and a fast growing mobile subscriber base expected to reach 1,420 million by 2024. The industry is growing due to untapped rural markets, increased internet penetration spurred by government programmes like free Wi-Fi in gramme panchayats, and the expansion of telecom infrastructure.
Both organised and unorganised competitors compete with the firm, and the three main areas of competition are pricing, product quality, and technical innovation. Fonebox Limited prioritises modernising its facilities and implementing new technologies in order to remain competitive. It also places a strong emphasis on cost control in order to preserve profitability. India's growing mobile data consumption and demand for broadband services present opportunities for Fonebox Limited, as the country is expected to witness robust development in telecom advertising and mobile value-added services. Furthermore, the firm has extra development opportunities due to programmes like the Production Linked Incentive (PLI) plan, which aims to increase local manufacture of telecom equipment. Fonebox Limited is well-positioned to profit from this rising demand for telecom services, particularly in the mobile and internet segments.
COMPETITION
Within the consumer electronics retail industry, Fonebox Limited faces competition from both organised and unorganised businesses who possess more financial resources, market presence, and product offers. In this field, where larger rivals enjoy major advantages, branding and marketing play critical roles. In spite of this, Fonebox Limited actively pursues market share by introducing new goods in a variety of categories and geographical areas. Online retailers, on the other hand, are becoming a more formidable rival for the business as they use smart alliances and effective logistics to provide more products at lower prices. Traditional retail foot traffic and revenues are threatened by this development.
BOARD OF DIRECTOR AND PROMOTERS OF THE COMPANY
The company’s management includes the following members-
01. Mr. Manishbhai Girishbhai Patel as Chairman and Executive Director of the company.
02. Mr. Amitkumar Gopalbhai Patel as Managing Director of the company.
03. Mr. Jigneshkumar Dashrathlal Parekh acting as Whole-Time Director of the company.
04. Mr. Parth Lallubhai Desai acting as Executive Director of the company.
05. Mr. Jay Deepakbhai Khatnani, Mrs. Bhavisha Kunal Chauhan, Mr. Aayush Kamleshbhai Shah, Mr. Sumitkumar Hareshbhai Patel acting as Independent Directors of the company.
PROMOTER HOLDING
The five promoters of the company own 4832625 Equity Shares of the company whereas the other Promoter Group of the company holds 2517375 Equity Shares which makes the total holding of the promoter and promoter group to 7350000 Equity Shares. The shareholding of the promoters is mentioned in the given table.
KEY FINANCIAL DETAILS OF THE COMPANY
In the fiscal year 2022-23, the Company has achieved a noteworthy revenue from its operations of Rs. 19582.60 (in Lakhs), and generated a revenue of Rs. 13975.84 (in Lakhs) till 30th September, 2023. While securing a profit of Rs. 1913.16 (in Lakhs) for the year 2022-23. For the period ending 31 March, 2022 the company has earned a profit of Rs. 818.19 (in Lakhs). And till 30 September, 2023 the company has earned a profit of Rs. 1380.32 (in Lakhs).
To make a wise investment choice, we will delve into various financial ratios for a comprehensive assessment of the company's financial condition and performance.
|
RATIO NAME |
FY 2022-23 |
FY 2021-22 |
|
CURRENT RATIO |
1.34 |
0.97 |
|
RETURN ON EQUITY |
118.20% |
35.24% |
|
DEBT EQUITY RATIO |
5.03 |
9.70 |
|
NET PROFIT |
0.82% |
0.14% |
|
RETURN ON CAPITAL EMPLOYED |
34.55% |
17.02% |
DETAILS OF THE IPO
The present public offer of up to 2910000 Equity Shares includes a Fresh issue of 18,00,000 Equity shares and an offer for sale available for the public stands at 2764000 Equity shares are there to be subscribed at the price of ₹ 66 to ₹ 70.
Some Important details with respect to the Application Size for Qualified Institutional Bidder and Non-Institutional Investor has been Summarised in the following table:
|
Particulars |
Net Issue to Public |
|
Application Size |
For Market Makers: Up to 146000 Equity Shares. For QIB’s: Up to 552000 Equity Shares. For Retail Investors: Minimum- A minimum lot of 1 i.e., 2000 Equity Shares. |
OBJECTIVES OF THE IPO
The objective of the issue of the IPO is for (i) Meeting the working capital expenses; (ii) General corporate purposes; (iii) Meeting Public Issue Expenses.
RISKS INVOLVED
Several risks could potentially have an effect on Fonebox Retail Limited's capacity to do business and maintain its financial stability. The business is now embroiled in ongoing legal actions, and the outcome of these lawsuits might have a significant negative impact on its operations, financial situation, and business operations.
In addition, the company uses rented space to do business, and in the past, certain lease agreements have not been properly updated. If relocation is required, this lack of renewal may cause operations to be disrupted or result in increased costs. The firm rents out its 143 retail locations, and the lease agreements' irregular renewal dates might be problematic. Furthermore, Fonebox Retail Limited is now seeking authorization to register 18 outlets as a shop and institution. Business operations may suffer if required registrations, licences, and permits are not obtained and renewed on time. Moreover, some permits must be moved to "Fonebox Retail Limited," which increases the difficulty of complying with regulations.
The firm has signed franchise agreements; nevertheless, it still does business with franchisees even though most of these agreements are not updated or are not properly completed or stamped. Any termination of these agreements, nevertheless, can have a negative impact on business operations, financial stability, and profitability.
Furthermore, the business model used by Fonebox Retail Limited is high volume/low margin. To make up for the poor margins, it must produce larger volumes in order to be profitable. Lower profitability might have an effect on operational results, debt service capacity, and financial circumstances if it is impossible to continuously increase turnover and carry out essential company operations, such as timely sales, cost management, and procurement. In general, the business is subject to risks related to law, operations, regulations, and finances. To maintain success in the cutthroat retail industry, these risks must be effectively managed and strategic decisions made.
ANALYSIS AND RECOMMENDATION
The recent change in FoneBox Retail Limited's status from private to public company highlights the company's dedication to the multi-brand retail industry. The firm, which specialises in gadgets and cellphones, has 143 retail locations throughout Gujarat thanks to its strategic alliances with well-known companies. With its wide choice of products, which includes consumer electronics and cellphones, FoneBox Retail is positioned to be a major player in the area.
The financial performance is strong under the direction of Chairman Mr. Manishbhai Girishbhai Patel and Managing Director Mr. Amitkumar Gopalbhai Patel, as demonstrated by the notable revenues of Rs. 19,582.60 Lakhs in FY 2022–2023. Financial figures show a sound financial picture, such as a Return on Equity of 118.20% and a Current Ratio of 1.34.
The current IPO, which is selling 2,910,000 Equity Shares for ₹66 to ₹70 a share, is intended to finance operating capital as well as general corporate objectives and public offering costs. In the competitive retail industry, FoneBox Retail Limited presents an enticing investment opportunity due to its strategic positioning and strong financial position, even in the face of ongoing legal procedures and potential issues with leasing agreements, regulatory clearances, and franchise renewals.
IMPORTANT DATES
|
EVENTS |
DATES |
|
Bid/Issue Opening |
January 24, 2024 |
|
Bid/Issue Closing |
January 29, 2024 |
|
Finalization of Basis of Allotment with the Designated Stock Exchange |
January 30, 2024 |
|
Initiation of Allotment / Refunds / Unblocking of Funds from ASBA Account or UPI ID linked bank account |
January 31, 2024 |
|
Credit of Equity Shares to Demat accounts of Allottees |
January 31, 2024 |
|
Commencement of trading of the Equity Shares on the Stock Exchange |
February 01, 2024 |
I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.
I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.
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