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On Door Concepts IPO is a book built issue of Rs 31.18 crore entirely as a fresh issue. On Door Concepts is a fast-upcoming regional omni-channel retailer of groceries and household essentials in the state of Madhya Pradesh.

About

• On Door Concepts Ltd. opened first store in Bhopal, Madhya Pradesh in January 2015.
• As of March 31, 2023, the company operates 55 stores in the cities of Madhya Pradesh. Out of 55 stores, the company owned and company operated (COCO) stores are 17 and the rest are operated through franchisee model.
• The company offers the convenience of both the colony stores as well as hyperlocal home delivery through online orders, most of its stores in the respective areas also fulfil the on-line orders from their respective shelves.
• Company classifies its products under the following categories:
• Foods: This category includes staples, groceries, fruits & vegetables, snacks & processed foods, dairy & frozen products, beverages and confectionery.
• Non-Foods (FMCG): This category includes home care products, personal care and toiletries and other over the counter products.
• General Merchandise: This category includes crockery, utensils, plastic goods, pooja items etc.
• It had 123 employees on its payroll.
• NSB BPO Solutions Private Limited, Mr. Narendra Singh Bapna, Mr. Pramod Ramdas Ingle, Mrs. Swati Bapna and Mrs. Vaishali Ingle are the Promoters of the Company.

Financials: On Door Concepts Ltd.

FY23 profits are not taken for EPS /PE as there is extra element due to debt waiver of ₹13 Cr

On Door Concepts IPO: Salient Points

• Promoters shareholding will drop from 51.92% to 38.14% post the IPO.
• India’s retail industry is projected to grow at 9% over 2019-2030
• With the IPO funding, it plans to open 100 franchise stores in the coming two years. This will help in increasing the top line and bottom line.
• It opens new stores using a cluster approach on the basis of adjacencies and focusing on an efficient supply chain, targeting densely-populated residential areas with a majority of middle and aspiring upper-middle class consumers.
• the company expects contribution from smaller cities to grow rapidly as Company is focusing on smaller cities with Franchise Model.
• Additionally, while opening new franchise stores, we consciously targeting Tier -3 and Tier -4 category towns of Madhya Pradesh to create a deep routed strong presence and network of Ondoor Stores and Ondoor online home delivery
• It also provide facilities of online order to customers through website (www.ondoor.com) and mobile app (Ondoor – Online Grocery Shoppi)
• Revenue included 73.54% offline mode and 26.46% online mode contributions.
• Company’s operations are limited to state of Madhya Pradesh.
• The company plans to use the net proceeds from the offering for augmenting additional working capital requirements and General Corporate Purposes.
• It has stated competition from organized retails are national brands like D’Mart, Reliance Retail, Spencer’s, Local/ Regional Chains, and in online retail market players like Big Basket, Blinket, and lots of new entrants.
• It will be a debt free company due to conversion of debentures.
• It has done allotment to Mr. Vallabh Roopchand Bhanshali of 2,07,200 Equity Shares on conversion of convertible debentures. He holds 5% stake in the company.
• It has completed a Pre-IPO Placement of 2,85,200 equity shares at the Issue Price of ₹ 259/- per share aggregating to ₹ 738.67 lakhs.
• Now the IPO is coming at a price lower than the pre-IPO price and difference is significant.
• The profit margins are low and sales has been stagnant in last 3 years.
• On Door Concepts IPO is coming at a PE 87x PE based on FY24 earning annualized from first 5 months results. FY23 profits are not taken for EPS /PE as there is extra element due to debt waiver of ₹13 Cr
• I am not comfortable with pricing of this IPO. Due to stake of Mr. Vallabh Bhanshali, I will keep it in watch and may still apply in On Door Concepts IPO subject to response on Day 3 and overall sentiments.
• GMP as reported on social media has been around Rs. 20 .
• SME IPO are quite illiquid and volatile and exit options sometimes is delayed.
• First Overseas Capital Limited is the Lead Manager and has a mixed record of hits and miss. Past issues handled by them include Pyramid Technoplast Limited, Synoptics Technologies Limited, Cell Point (India) Limited, Kore Digital Limited, Nirman Agri Genetics Limited, SVJ Enterprises Limited, Amanaya Ventures Limited, Ducol Organics And Colours Limited, SVS Ventures Limited, QMS Medical Allied Services Ltd, Varanium Cloud Limited etc.
• The market maker, Bhh Securities earlier acted as SME IPO Market Maker in SME IPO Ducol Organics And Colours.
• SME IPO are quite illiquid and volatile and exit options sometimes is delayed. Also there appears to be considerable speculation element in current SME new issues.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.