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14 November 2023

Digikore Studios IPO: Transforming VFX, Elevating Investments

Introduction:

Digikore Studios IPO, a book-built issue valued at Rs 30.48 crores, has marked its presence in the market with a blend of a fresh issue of 12.61 lakh shares (Rs 21.56 crores) and an offer for sale of 5.22 lakh shares (Rs 8.92 crores). The IPO, which opened for bidding on September 25, 2023, and concluded on September 27, 2023, received an overwhelming response with subscription figures soaring to 281.58 times.

Key Offering:

The IPO price band was set at ₹168 to ₹171 per share, with a minimum lot size of 800 shares, requiring a minimum investment of ₹136,800 for retail investors. The bidding concluded on September 27, 2023, and the allotment was finalized on September 29, 2023. The shares were subsequently listed on NSE SME on October 4, 2023.

Market Performance:

As of November 9, 2023, Digikore Studios Limited's stock was quoted at ₹308.65, reflecting a robust surge of 13.45%. The stock opened at ₹317.00, reached a daily high of ₹324.00, and recorded a low of ₹304.00. The previous closing stood at ₹272.05, with a total traded value of 2,68,800 shares.

IPO Details:

The IPO comprised a total issue size of 1,782,400 shares, aggregating up to ₹30.48 crores. This included a fresh issue of 1,260,800 shares (₹21.56 crores) and an offer for sale of 521,600 shares (₹8.92 crores). The face value per share was ₹10.

Ownership Landscape:

Before the issue, Digikore Studios had a pre-issue shareholding of 5,072,000 shares, which adjusted to 6,332,800 shares post-issue. The market maker portion accounted for 178,400 shares, facilitated by Gretex Share Broking.

IPO Reservation:

The IPO distribution included 26.97% to Anchor investors, 10.01% to the market maker, 18.00% to QIBs, 13.51% to HNIs, and 31.51% to Retail Individual Investors (RIIs).

Subscription Dynamics:

Digikore Studios IPO witnessed robust subscription figures, reaching 281.58 times as of September 27, 2023. Notably, the retail category was oversubscribed at 370.17 times, QIBs at 65.63 times, and HNIs at 362.65 times. The total number of applications stood at 259,857.

Financial Highlights:

As of June 30, 2023, Digikore Studios reported total assets of ₹2,518.83 lakhs, revenue of ₹1,186.49 lakhs, and a net profit of ₹270.89 lakhs. The net worth was ₹813.30 lakhs, with reserves and surplus at ₹694.30 lakhs. The total borrowing was reported at ₹912.25 lakhs.

Key Metrics:

The market cap of Digikore Studios IPO stood at ₹108.29 crores, with a P/E (x) of 4.63. The post P/E was at 9.99, and the company demonstrated a Return on Equity (ROE) of 74.03%, Return on Capital Employed (ROCE) of 92.23%, Debt/Equity ratio of 1.03, Earnings per Share (EPS) of ₹36.95, and Return on Net Worth (RoNW) of 74.03%.

IPO's Objectives:

The net proceeds from the IPO are allocated for funding working capital requirements, general corporate purposes, and covering offer expenses.

Expert Analysis:

Digikore Studios Limited stands as a prominent player in the VFX segment, serving both international and domestic markets. With a track record of steady growth, the IPO appears reasonably priced based on annualized FY24 earnings. Investors are encouraged to consider this IPO for short to long-term rewards.

Conclusion:

Digikore Studios IPO emerges as a lucrative investment opportunity, evident from its overwhelming subscription rates. The company's notable works in the visual effects domain further enhance its market appeal. As always, investors are advised to conduct thorough due diligence and assess their risk appetite before participating in IPOs.

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