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Veritaas Advertising Limited IPO Review



Veritaas Advertising Limited IPO Review


Veritaas Advertising Limited, an entity that has carved a niche for itself in the advertising industry, stands as a testament to the power of strategic marketing and brand positioning. Incorporated on July 31, 2018, as Veritaas Advertising Private Limited, the company was later converted into a public limited company, reflecting its growth and the ambition to scale new heights.


At the helm of Veritaas Advertising Limited are the promoters Debojyoti Banerjee, Sangita Debnath, and Mina Debnath. Their vision for the company is rooted in a deep understanding of the advertising sector and a commitment to delivering excellence. The promoter family's dedication has been pivotal in steering the company through the competitive landscape of advertising. Kolkata, the cultural epicenter of West Bengal, is the city where Veritaas Advertising Limited was born. Known for its rich history and vibrant arts scene, Kolkata provides the perfect backdrop for a company that thrives on creativity and innovation. The city's dynamic environment has undoubtedly influenced Veritaas's approach to advertising, enabling it to craft campaigns that resonate with diversity and depth.


The inception of Veritaas Advertising Limited was driven by the need to offer comprehensive advertising solutions that transcend traditional boundaries. The company was established to provide 360-degree services across various platforms, ensuring that clients' brands not only find a voice but also an identity that stands out in the cluttered space of advertising. With a focus on outdoor (OOH) advertising, Veritaas recognized the untapped potential in this segment and sought to revolutionize the way brands interact with their audience.


Veritaas Advertising Limited was not just founded as a business venture; it was created with a mission to redefine the advertising landscape. The company's purpose is to elevate brands by creating a presence that commands attention and fosters engagement. Through strategic media planning, creative services, and impactful branding strategies, Veritaas aims to increase brand awareness, educate customers, and ultimately drive sales and conversions. The company's belief in the efficacy of outdoor advertising as a medium that can withstand the volatility of online platforms has positioned it as a leader in the industry.


Today, Veritaas Advertising Limited continues to expand its horizons, owning ad spaces in key locations like West Bengal, Guwahati, and Shillong, and operating in major cities such as Delhi, Mumbai, and Pune. As it embarks on its journey toward an IPO, the company stands ready to welcome new challenges and opportunities that come with being a public entity.



Competitive Strengths


Veritaas Advertising Limited (VAL) is a name that has been resonating in the advertising industry with a strong presence and a robust portfolio. As an integrated advertising agency, VAL offers a 360-degree service range across multiple platforms, distinguishing itself as a versatile and dynamic player in a highly competitive market.


Revenue, Sales, and Profit



Veritaas Advertising Limited, an integrated advertising agency, has shown a remarkable financial performance in recent times. For the fiscal year ending on March 31, 2023, the company reported a revenue of ₹786.75 lakhs and a net profit of ₹43.89 lakhs. In the period leading up to February 10, 2024, Veritaas Advertising Limited earned a net profit of ₹1.57 crores on a total revenue of ₹9.04 crores, indicating a significant growth trajectory. The company's IPO, which opened for subscription on May 13, 2024, was aimed at raising ₹8.48 crores through a fresh issue of 744,000 shares, reflecting the company's strategic initiatives for expansion and growth. The price band for the IPO was set at ₹109 to ₹114 per share, with a minimum lot size of 1200 shares, making it accessible for retail investors at a minimum investment of ₹136,800.


Distribution Network and Geographical Reach


Veritaas Advertising Limited (VAL) is an integrated advertising agency that offers a wide range of services across multiple platforms. With a focus on owning advertising spaces, VAL has established a significant presence in West Bengal, Guwahati, and Shillong. This strategic ownership allows the company to be one of the few media-owning marketing and advertising agencies in these regions, providing it with a competitive edge. Additionally, VAL operates in major Indian cities such as Delhi, Mumbai, and Pune, further expanding its geographical reach. The company's distribution network is enhanced by its advertising services, which enable clients to monetize their marketing collaterals effectively. VAL's approach includes strategizing and building creative narratives around brands, which is crucial for increasing a brand's influence and reaching the target audience. Their services encompass various offline platforms, including police booth hoardings, newspaper insertions, brochures, and outdoor hoardings, among others. VAL's commitment to creativity is evident in all its services, ensuring compelling ideations and communications that capture public attention. Despite the reliance on third parties for certain advertising spaces, VAL maintains long-term relationships with these parties, although it typically does not enter into long-term agreements with intermediaries.


Unique Features


Veritaas Advertising Limited (VAL) is an integrated advertising agency known for its comprehensive 360-degree service offerings across multiple platforms. A distinctive feature of VAL is its ownership of advertisement spaces in key locations such as West Bengal, Guwahati, and Shillong, which positions it as one of the few media owning marketing and advertisement agencies with a presence in Delhi, Mumbai, and Pune as well. VAL's approach to advertising is unique in that it operates and advertises in police booths and outdoor hoardings, reducing reliance on third parties and enabling integrated services. This strategy allows for the creation of compelling brand stories that enhance return on investment (ROI) and distinguishes VAL from competitors in the market. The company's expertise spans strategizing and building conversations that increase a brand's influence and reach the desired target audience. VAL has managed successful marketing campaigns for various brands, working with large budgets to drive the best reach and engagement for clients. It offers a high-end ecosystem and end-to-end advertising solutions platform, covering brand strategy, events, outdoor media services, and more.


Investment in Research and Development


Veritaas Advertising Limited (VAL) is an integrated advertising agency that has shown a significant commitment to innovation through its investments in research and development (R&D). While specific figures for R&D investment are not publicly disclosed, the company's strategic initiatives indicate a strong focus on creative ideation and the development of advertising solutions. VAL operates across multiple platforms and owns advertisement spaces in key locations, which suggests an investment in both physical assets and the creative processes necessary to leverage these assets effectively. The company's approach to advertising, which includes owning media spaces and providing 360-degree services, implies a business model that values the integration of R&D to enhance the effectiveness of its campaigns and client ROI. Moreover, the company's recent IPO details suggest that it may be channeling funds towards expanding its R&D capabilities to maintain its competitive edge in a fragmented market. This aligns with industry practices where advertising agencies invest in R&D to stay ahead of market trends and meet the evolving needs of their clients.



Veritaas Advertising Limited IPO Details


  • Issue Date: The Issue Date in an Initial Public Offering (IPO) refers to the specific day when a company's shares are first made available for public purchase on the stock market. This date is a critical milestone in the IPO process, marking a company's transition from private to public status and allowing investors to buy shares directly from the company for the first time. (Issue Date: May 13, 2024 to May 15, 2024).


  • Listing Date: The listing date refers to the day when the company's shares are officially listed and begin trading on a stock exchange. This is typically several business days (3-6 days) after the issue date after processes like share allotment and finalization are completed. On this date, investors who were allotted shares during the IPO can begin selling them, and new investors can start purchasing them on the exchange at the prevailing market price. (Listing Date: Tuesday, May 21, 2024).


  • Face Value of Shares: The face value of shares in an Initial Public Offering (IPO) refers to the original cost of the shares as determined by the company going public. It represents the nominal value and is often set at a lower figure, such as Rs. 10 or Rs. 100, which remains constant irrespective of the market price of the share after the company is listed on the stock exchange. When a company launches an IPO, the shares are typically offered at a price that includes this face value plus an additional premium, which reflects the current market valuation of the company. The premium over the face value is determined by the company's financial performance and future growth prospects as assessed by the investment bankers managing the IPO. (Face Value: ₹10 per share).


  • Price Band: A price band of an IPO is the range of prices within which the investors can bid for the shares of a company that is going public. The price band is set by the issuer and the lead managers of the IPO, based on various factors such as the demand and supply of the shares, the financial performance and valuation of the company, and the market conditions. (IPO Price: ₹109-₹114 per share).


  • Lot Size: In the context of an Initial Public Offering (IPO), the term "lot size" refers to a fixed number of shares that the issuing company sets as the minimum quantity that investors can apply for. This lot size is predetermined before the IPO and is mentioned in the application forms. The lot size varies from one company to another and is an important factor for investors to consider when applying for an IPO. (Lot Size: 1200 Shares).


  • Total Issue Size: The total issue size represents the total number of shares the company is offering to raise capital through the IPO. This number is determined by the company and its advisors, considering factors like their funding needs and the expected investor demand. The total issue size is then divided by the lot size to determine the total number of lots available for purchase by investors. (Total Issue Size: 744,000 shares (aggregating up to ₹8.48 Cr)).


  • Fresh Issue: A Fresh Issue in the context of an Initial Public Offering (IPO) refers to the creation and sale of new shares by a company to the public. Unlike an Offer for Sale, where existing shareholders sell their shares, a Fresh Issue results in the generation of new capital for the company. This capital is typically used for growth initiatives such as expansion, research and development, or debt repayment. (Fresh Issue: 744,000 shares (aggregating up to ₹8.48 Cr)).


  • Issue Type: The type of an IPO can vary depending on the market and regulatory conditions. Some of the common types of IPOs are, Fixed priced IPO, Auction IPO, Book Building IPO, and Hybrid IPO. (Issue Type: Book Build Issue IPO).


  • Listing At: An integral part of the IPO process is the listing. This refers to the day the company's shares officially begin trading on a stock exchange, such as the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE) in India. Once listed, anyone with a brokerage account can buy and sell the company's shares on the exchange. (Listing at: NSE SME).


  • Retail Shares Offered: Retail shares offered in an IPO refer to the portion of shares that are specifically allocated for individual investors, as opposed to institutional investors. These shares are part of the public offering where companies going public aim to raise capital by selling shares. Retail investors are typically allocated a certain percentage of the total shares available for the IPO. The allotment process for retail investors is designed to be fair and transparent, ensuring that all investors have an equal chance of receiving shares based on their application and market conditions. (Retail Shares Offered: 248,400 (33.39%)).


  • Market Makers Shares Offered: Market Maker Shares in an IPO refer to the shares that are allocated to market makers, who are responsible for improving the liquidity and facilitating better price discovery of the stock post-IPO. Market makers are registered members of the stock exchange and provide two-way quotes, buying and selling shares at predetermined prices. This system is particularly important for SME (Small and Medium-sized Enterprises) IPOs, where market makers play a crucial role in ensuring that there is enough trading activity and stability in the stock's price. (Market Maker Shares Offered: 37,200 (5.00%)).


  • QIB Shares Offered: QIBs are institutional investors such as banks, mutual funds, insurance companies, pension funds, etc., who have expertise and financial resources to invest in the securities market. They are considered as informed and sophisticated investors who can assess the risks and returns of an IPO. QIBs can bid for up to 50% of the total shares offered in an IPO via the profitability route, or up to 75% of the total shares offered in an IPO via the QIB route. QIBs have to pay only 10% of the bid amount at the time of application, and the rest after the finalization of the basis of allotment. (QIB Shares Offered: 177,600 (23.87%)).


  • NII (HNI) Shares Offered: NII stands for Non-Institutional Investors, which includes High Net-worth Individuals (HNIs) who bid for shares worth more than ₹200,000. The NII category is reserved for investors who do not fall under the retail or Qualified Institutional Buyers (QIBs) categories. Typically, a certain percentage of the IPO, usually around 15%, is allocated for NIIs to ensure a wider distribution of shares. HNIs within the NII category often have a higher chance of allotment compared to retail investors, making it an attractive option for those looking to invest larger sums in an IPO. (NII (HNI) Shares Offered: 106,800 (14.35%)).


  • Anchor Investor Shares Offered: Anchor investor shares in an IPO refer to a portion of shares reserved for Qualified Institutional Buyers (QIBs) who commit to purchasing the shares before the IPO is open to the public. These investors, often including banks, mutual funds, and pension funds, are seen as a vote of confidence in the IPO, as they typically conduct thorough research before investing. They help in price discovery and can stabilize the share price post-listing by agreeing to a lock-in period, where they cannot sell their shares immediately. (Anchor Investor Shares Offered: 174,000 (23.39%)).


Competitors of Veritaas Advertising Limited


The advertising industry is known for its dynamic and competitive nature, and Veritaas Advertising Limited (VAL) is no exception. VAL operates in a highly competitive and fragmented segment of the market, offering 360-degree services across multiple platforms. The company has carved out a niche for itself by owning advertisement spaces in strategic locations such as West Bengal, Guwahati, and Shillong, and operating in major cities like Delhi, Mumbai, and Pune.


One of the key competitors of VAL is Crayons Advertising, which has established itself as a significant player in the industry. Crayons Advertising offers a wide range of services that include brand strategy, creative design, media planning and buying, digital marketing, and more. Another competitor is Maagh Advertising, which also provides comprehensive advertising services and has been recognized for its creative approach to marketing and advertising solutions.


VAL's unique selling proposition lies in its ownership of advertising spaces, particularly in police booths and outdoor hoardings. This reduces its dependence on third parties and allows for a more integrated service offering. However, this also means that VAL faces competition from various other agencies that have their own or leased advertising spaces, including pole kiosks, newspapers insertions, and outdoor hoardings.


The company's approach to advertising through police booths is particularly noteworthy, as it is believed to draw significant attention from the target audience due to the widespread presence in diverse areas of a city. This strategy has been a key investment for VAL and represents one of its main business verticals.


Financially, competitors are assessed based on various metrics such as market cap, sales, net profit, and total assets. For instance, as per the latest available data, Crayons Advertising is trading at a P/E of 22.4, while Maagh Advertising is trading at a P/E of 219 as of May 08, 2024. These figures provide a glimpse into VAL's competitors' financial health and market perception.


Veritaas Advertising Limited operates in a sector where creativity, strategic placement, and financial acumen are crucial. Its competitors, such as Crayons Advertising and Maagh Advertising, offer similar services but differ in their approach, market positioning, and financial metrics. As the industry evolves, VAL will need to continue innovating and leveraging its unique assets to maintain a competitive edge in the market. For a more detailed comparison of financials and market positioning, interested readers can refer to the comprehensive reports available on financial platforms.


Conclusion


Veritaas Advertising Limited IPO presents a unique opportunity for investors. With a significant jump in its financial performance post-FY23 and a strong foothold in the advertising sector through its integrated services and ownership of ad spaces, the company has demonstrated robust growth. However, the competitive nature of the industry and the aggressive pricing of the IPO warrant a cautious approach. The company's strategy of investing in police booth advertisements has paid off, offering a distinct advantage in the market. While the IPO seems promising based on the super earnings of FY24, potential investors should consider the long gestation period for migration to the main board due to the small paid-up equity capital post-IPO. Therefore, moderate investment with a medium-term perspective could be considered, keeping in mind the company's performance trajectory and market position.


Disclaimer: This is not an investment advisory. The article above is for information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing securities, that suit your needs. The performance and returns of any equity stock can neither be predicted nor guaranteed.


FAQs


Q: What is an IPO?

An Initial Public Offering (IPO) is a process through which a privately held company offers its shares to the public for the first time and becomes a publicly traded company.

 

Q: How can I apply for an IPO?

You can apply for an IPO through various methods:


ASBA (Application Supported by Blocked Amount): In this method, your application money remains in your bank account until the basis of allotment is finalized.

UPI (Unified Payment Interface): You can authorize the blocking of funds in your bank account using UPI while applying for an IPO.


Q: What is ASBA?

ASBA stands for Application Supported by Blocked Amount. It allows your application money to be blocked in your bank account during the IPO bidding process. You continue to receive interest on the blocked amount.


Q: What is the difference between book building and a normal public issue?

Book building is a process where demand for securities is elicited and the price is assessed based on investor bids. In a normal public issue, the price is fixed by the issuer.


Q: Can I make payments through UPI for IPOs?

Yes, you can use UPI as a payment method for IPOs. The UPI platform blocks the funds for IPO applications after you approve the fund block mandate request.


Q: What is the minimum order quantity for an IPO?

The minimum number of shares you can apply for in an IPO is known as the minimum order quantity. It varies for each IPO.


Q: What is the cut-off price in an IPO?

The cut-off price is the price at which you bid for shares without specifying a particular price. It allows you to participate in the IPO without specifying a specific bid price.


Q: Can I revise my bids during the IPO process?

Yes, you can revise your bids multiple times before the IPO bidding period ends.


Q: Which banks offer the ASBA facility for IPOs?

Several banks, known as Self Certified Syndicate Banks (SCSBs), offer the ASBA facility. Some examples include HDFC Bank, ICICI Bank, Axis Bank, and SBI.


Q: How do I find IPO mandates on UPI apps?

You can check the list of UPI handles supported for IPO payments on the National Payments Corporation of India (NPCI) website. These handles allow you to apply for IPOs using UPI.

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