•    IPSL is engaged in delivering integrated human resource solutions.
•    Due to the pandemic, it suffered a minor setback for FY21.
•    The company operates in a highly competitive and fragmented segment. 
•    Based on its performance, the issue is fully priced. 
•    Cash surplus/risk seekers may consider parking funds for the long term. 

ABOUT COMPANY:
Integrated Personnel Services Ltd. (IPSL) is engaged in delivering integrated Human Resource solutions under the three broad categories of Raising, Leasing, and Management for various industries and diverse functional roles for both, Information Technology (IT) and non-IT companies.

Under these broad categories, IPSL has bifurcated its services in such a way as to enable its clients to select services as per their requirements. Our employment services broadly include temporary staffing solutions (Flexi- staffing), permanent recruitment (executive search) services, specialized staff recruitment, outsourced recruitment processes, and payroll management.

It has over 11 branch offices for sourcing and recruitment in 128 cities with more than 6,000 Associates deployed as on June 30, 2022. As of June 30, 2022, March 31, 2022, March 31, 2021, and March 31, 2020, IPSL had 143, 169, 132, and 139 core employees, respectively, and 6522, 6810, 5503, and 6298 Associates, respectively. It operates in a highly competitive and fragmented segment.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its needs of funds for working capital (Rs. 8.40 cr.), and general corporate purpose (Rs. 2.22 cr.), IPSL is coming out with a maiden IPO of 2160000 equity shares of Rs. 10 each at a fixed price of Rs. 59 per share to mobilize Rs. 12.74 cr. The issue opens for subscription on October 31, 2022, and will close on November 02, 2022. A minimum application is to be made is for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on the NSE SME Emerge platform. The issue constitutes 29.97% of the post-IPO paid-up capital of the company. IPSL is spending Rs. 2.12 cr. for this IPO process. Higher IPO expenses indicate the structuring of the IPO with arranged funds. 

The issue is solely lead managed by Unistone Capital Pvt. Ltd., and Bigshare Services Pvt. Ltd. is the registrar to the issue.  Nikunj Stock Brokers Ltd. is the market maker for this company.

Having issued initial equity at par, the company issued further equity shares in the price range of Rs. 100 to Rs. 637 per share between May 2009, and February 2018. It also issued bonus shares in the ratio of 97 for 1 in June 2018. The average cost of acquisition of shares by the promoters is Rs. 3.24, and Rs. 3.40 per share.

Post the issue, IPSL’s current paid-up equity capital of Rs. 5.05 cr. will stand enhanced to Rs. 7.21 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 42.52 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, IPSL has (on a consolidated basis) reported a total income/net profit of Rs. 169.30 cr. / Rs. 3.11 cr. (FY20), Rs. 138.64 cr. / Rs. 1.91 cr. (FY21), and Rs. 169.92 cr. / Rs. 4.01 cr. (FY22). For Q1 of FY23, it earned a net profit of Rs. 0.83 cr. on a total income of Rs. 45.14 cr.

For the last three fiscals, IPSL has posted an average EPS of Rs. 6.26 and an average RoNW of 21.11%. The issue is priced at a P/BV of 1.65 based on its NAV of Rs. 35.68 as of June 30, 2022, and at a P/BV of 1.42 based on its post-IPO NAV of Rs. 41.51.

If we annualize FY23 earnings and attribute it to post-IPO fully diluted equity capital, then the asking price is at a P/E of around 12.77, and based on FY22 earnings P/E stands at 10.61. Thus, the issue appears fully priced.

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, IPSL has shown Aarvi Encon and ANI Integrated as their listed peer. They are currently trading at a P/E of 16.31 and 13.53 (as of October 25, 2022). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
This is the 6th mandate from Unistone Capital in the last three fiscals (including the ongoing one). Out of the last five listings, 1 opened at a discount and the rest with premiums ranging from 10.97% to 270.40% on the day of listing.