Goblin IPO Review: Growth play at value prices


Goblin IPO Review – Travel luggage player Goblin India is launching its maiden public offer today at BSE’s SME platform. The Ahmedabad-based player designs, markets and sells a wide range of travel, business and casual luggage as well as travel accessories. The company plans to sell 2,924,000 shares in the price range of INR51 – 52 per share. In total, the company plans to raise as much as INR15.20 crore through the public offer. Please head to this discussion page to get more details and grey market price movements about the upcoming IPO. We have gone through the prospectus to better understand the company and have analyzed its operations on 25 parameters. Here is our analysis of Goblin’s public offer, please scroll down for the total score.

Goblin India IPO Review: Business Basics

Are the company’s annual revenues more than INR50 crore?

Yes. The company’s top line stood at INR68.5 crore in FY2019.

Are the company’s annual profits after tax in excess of INR5 crore?

No, Goblin India’s net income in FY2019 was at INR3.4 crore.

Has the company got a strong and recognizable brand?

Yes. Goblin has forged relationships with airport retailers and airlines and also sells its products on major e-commerce websites like Amazon and Flipkart.

Is there a strong moat in place in the form of entry barriers, market reach etc?

Yes, Goblin operates in a competitive industry where capital requirements are high. This acts as a formidable entry barrier as a result, there aren’t many players in the travel luggage industry. Currently, the company sources luggage bags and other travel gear accessories from different suppliers but plans to set up its own manufacturing plant from IPO proceeds.

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Has the company got a diversified set of customers?

Yes. Goblin’s customers are retail buyers and thus, it has a well diversified client base with no reliance on a few clients.

Do exports contribute a sizeable chunk to annual revenues, giving the company an edge over its competitors?

No. Although Goblin has a subsidiary in France, its revenues are largely focused on India.

Is there a strong connect between the company and retail consumers?

Yes. As mentioned above, the company operates in B2C trade and thus, has got a strong yet developing retail connect through airport stores and e-commerce platforms.  

Goblin IPO Review: Management Analysis

Is the company’s top management experienced enough to lead operations through difficult times?

Yes. The company’s promoter Mr Manoj Choukhany has led the company since 2002 through a variety of business cycles.

Are the management members/promoters paying themselves fairly without jeopardizing shareholders’ interests?

Yes, we didn’t find excessive remuneration for management.

Do the promoters have sizeable equity left in the company after the IPO?

Yes, the promoters and promoter group currently own 5,517,616 shares or 73.4% equity stake in the company. Following the IPO, this shareholding will drop to 52.8%.

Is the current management trustworthy? Are there instances of putting shareholders’ interests at risk for personal gains?

Yes, we didn’t find such instances.

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Are the litigations or criminal proceedings against the company insignificant in nature and don’t involve big numbers?

There is no outstanding litigation against the company or its directors.  

Are the company management’s shares free from any pledge with banks or financial institutions?

Yes. As on the date of the red herring prospectus, no promoter shares were pledged.

Are there external investors such as private equity or venture capital firms on board?

No. As mentioned above, the company’s biggest shareholders are current promoters and promoter group and there is no external investor.

Goblin IPO Review: Financial performance

Have the company’s revenues grown at a CAGR of at least 10% in the last three years?

Yes. Goblin India’s revenues increased from INR52.4 crore in FY2017 to INR68.5 crore in FY2019.

Have the company’s net profits grown at a CAGR of at least 25% in the last three years?

Yes. The company’s earnings jumped from INR63.3 lakh in FY2017 to INR3.45 crore in FY2019 (check more about the company here).

Has the Average Return on Equity (ROE) in the last three years been more than 15%?

Yes. The company’s average Return On Net Worth (RONW) in the last three years has been 48.4%.

Has the company maintained positive operating cashflows in the last three years?

No. The company had negative cashflow from operations in the latest year.

Has the company witnessed a declining trend in debt/equity (D/E) in the last three years?

Yes. Goblin’s D/E ratio decreased from 8.02 to 2.53 in the last three years.

Are the company’s working capital requirements less than 20% of its annual sales?

No. Goblin required working capital of INR25.9 crore in FY2019 which translated in 37.8% of its annual revenues.

Is the Debt/Equity ratio less than 1?

No, the company’s D/E ratio as of 31 March 2019 stood at 2.53.

Goblin IPO Review: IPO objectives and valuations

Are the IPO objectives in line with the broad corporate guidelines? Funds raised shouldn’t be used for fancy purchases and upgrades.

Yes, the funds will be primarily used towards working capital and to set up a new manufacturing plant.

Is the company offering some discount on Price/Earnings (P/E) ratio compared to its peers?

Yes. The company is offering its shares at the P/E ratio of 11.13 – 11.35. This is substantially less than its listed peers VIP Industries and Safari Industries which both trade above the multiple of 40.

Is the company offering some discount on Price/Book Value (P/BV) ratio compared to its peers?

Yes, Goblin’s P/BV is at 4.63 – 4.72 which is less than its listed peers. VIP and Safari quote at multiples of 11.6 and 6.7, respectively.

Are the contingent liabilities less than 10% of latest annual revenues?

Yes. The company had no contingent liabilities at the end of FY2019.

Goblin IPO Review gets a score of 19/25. Head to our IPO discussion page to get latest subscription details and check out this page for latest IPO grey market rates.

Disclaimer The objective behind Goblin IPO Analysis is to offer an unbiased view of the company’s operations, offer details, strengths, weaknesses, financial performance and valuation. The IPO rating framework helps investors in taking a call if Goblin IPO is worth investing or not. Nevertheless, this is not an IPO recommendation to subscribe or avoid and the decision to invest should be based on individual investor’s risk profile.


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