On Door Concepts IPO Review: On Door concepts is coming up with its Initial public offering. This is an SME (small and medium-sized enterprise) which is going to be listed on NSE SME. The IPO will be open for subscription on 23rd October 2023 and closes on 27th October 2023.
This article about On Door Concepts IPO Review, including an in-depth analysis of the company’s financials and the strengths and weaknesses of On Door concepts. Keep reading for more details!
Table of Contents
On Door Concepts IPO Review – About The Company
Established in 2014, On Door Concepts is a digital marketplace that provides a wide range of groceries and home essentials. It combines the convenience of local stores with the benefits of online shopping, offering home delivery services through its website. The company operates 55 stores across various cities in Madhya Pradesh, with 17 being company-owned and operated, while the rest function under a franchise model.
On Door Concepts’ product portfolio is divided into three main categories: Foods, which contribute to 73.09% of the revenue and include staples, groceries, fruits & vegetables, snacks & processed foods, dairy & frozen products, beverages and confectionery;
Non-Foods (FMCG), accounting for 22.18% of the revenue and comprising home care products, personal care items, toiletries and other over-the-counter products; and General Merchandise, making up 4.73% of the revenue and encompassing items like crockery, utensils, plastic goods, and pooja items.
In terms of revenue generation, 73.26% comes from offline sales while the remaining 26.74% is derived from online transactions.
On Door Concepts IPO – Industry Overview
India, the world’s fifth-largest retail destination, is an attractive market for international retailers due to its large middle class and untapped retail potential. The retail industry, one of the most dynamic sectors in India, contributes over 10% to the GDP and provides employment to around 8% of the workforce.
The increasing purchasing power of urban consumers has led to a surge in demand for branded goods across various categories. The industry is projected to grow at a rate of 9% from 2019 to 2030, reaching over US$ 1.8 trillion by 2030.
The Government of India has implemented several initiatives to boost the retail sector. These include recognizing retail and wholesale trades as MSMEs, allowing 100% FDI in online retail, and introducing a new framework for offline digital payments.
E-commerce, a significant driver of the retail revolution in India, offers consumers a wide range of products at competitive prices. The sector is expected to reach a value of US$ 2 trillion by 2032.
On Door Concepts IPO Review – Financial Highlights
On Door Concepts’ financial performance has demonstrated resilience. While the company’s operational revenue saw a slight dip from ₹182.6 crore in March 2021 to ₹180 crore in March 2023, its Profit After Tax (PAT) experienced a positive turnaround, moving from -₹5.2 crore in March 2021 to ₹13 crore in March 2023.
The company’s net worth has shown consistent growth, increasing from -₹60 crore in 2021 to ₹51.2 crore in 2023. This positive shift indicates that Ondoor Concepts has not only returned to a positive net worth but also achieved a debt-free status during the fiscal year 2022-23.
In recent quarters, the company has shown strong performance, generating a revenue of ₹70 crore and a Profit After Tax (PAT) of ₹55 lakhs.
In terms of financial ratios, On Door Concepts has a robust Return on Equity (ROE) of 25.51% and a Return on Capital Employed (ROCE) of 50.90%.
Financial Metrics
(Source: RHP of the company)
Competitors of the company:
On Door Concepts faces competition from various players in the retail market. In the organized retail sector, it competes with national brands such as Osia Hyper Retail, D’Mart, Reliance Retail, and Spencer’s, as well as local and regional chains. In the online retail market, it contends with platforms like Big Basket and Blinkit, among numerous emerging entrants.
Strengths of the company
- The company has a strategic expansion that utilizes a cluster approach for opening new stores, targeting densely-populated residential areas with a majority of middle and aspiring upper-middle-class consumers.
- On-door concepts offer dual convenience in the supermarket industry, it offers both local stores and hyperlocal home delivery for online orders.
- The company purchases products directly from manufacturers or FMCG companies and through a network of wholesale market suppliers, enabling competitive pricing across product categories.
- On Door Concepts’ strength lies in its strategic use of the Franchise Owned Company Operated (FOCO) model. This approach enables the company to rapidly expand its franchise network across various cities, facilitating swift growth and widespread reach.
Weaknesses of the company
- The company needs to maintain sufficient inventory across all stores, necessitating substantial working capital for seamless daily operations. Any disruption or inability to secure adequate working capital on favorable terms could negatively impact operations.
- On-door concepts purchase inventory from various vendors based on projected sales and demand. Due to space constraints in stores, most of the inventory is stored in warehouse centres. Effective and optimal inventory management is crucial to prevent product expiry and ensure smooth business operations.
- The company relies heavily on a few suppliers for its material requirements. Any compromise in quality or supply from these top suppliers could adversely affect the business.
- A significant portion of the company’s revenue is generated from Madhya Pradesh, which contributes 100% to the total revenue. Any demographic changes in this region could directly impact the business’s revenue.
On Door Concepts IPO Review – GMP
As of 16th October 2023, The IPO for On Door Concepts is set at a price of ₹208. The latest grey market price stands at ₹25. The IPO is projected to be listed at a premium of 12.02% with an estimated listing price of ₹233
On Door Concepts IPO Review – Key IPO Information
| PARTICULARS | DETAILS |
|---|---|
| IPO Size | 31.18Cr |
| Fresh Issue | 31.18Cr |
| opening date | 23rd october 2023 |
| closing date | 27th october 2023 |
| face value | ₹10 per share |
| price band | ₹208 |
| lot size | 600 shares |
| Minimum lot | 1 (600 shares) |
| maximum lot | 1 (600 shares) |
| Investment amount | ₹124,800 |
| listing date | 6th November 2023 |
Promoters: NSB BPO Solutions Private Limited, Mr Narendra Singh Bapna, Mr Pramod Ramdas Ingle, Mrs Swati Bapna and Mrs Vaishali Ingle are the Promoters of our Company.
Book Running Lead Manager: First Overseas Capital Limited
Registrar to the Offer: Bigshare Services Private Limited
The Objective of the Issue:
The Issue Proceeds from the Fresh Issue will be utilized towards the following objects:
- Augmenting additional working capital requirements
- General Corporate Purpose
In Closing
On Door concepts offer a broad selection of groceries and home essentials. The company anticipates rapid growth from smaller cities as it focuses on these areas with its Franchise Model.
Over the next few years, On Door Concepts plans to expand its store network in western, northern, and central India. The company’s dual objectives are to bring the benefits of modern trade to rural and small-town customers and to provide an omni-channel and convenient purchase experience to urban consumers.
However, it is important to note that this is an SME IPO where the minimum investment amount is 1,24,800 which is higher than a mainline IPO.
What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.
Written By Niharika Jadhav
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