Smaaash | Upcoming IPO

Get detailed information about the Smaaash Entertainment Pre IPO shares. In this research report, you will get to know about Smaaash Entertainment Private Limited Key Ratio data. In addition, get the Complete details about the Net Profit Growth, Revenue Growth and Book Value Growth.

Smaaash Revenue Growth

The company's revenue in FY19 has witnessed a growth of 34% from FY18. Sales of services account for 83% of revenue from operations, which grew by 36% from FY18. This increase in the sales of services has been the major cause of the increase in the total revenue of the company. Revenue from other income has also increased by a factor of 5.7x, further improving the total revenue in FY19. The company has also been selling their proprietary VR (virtual reality) and simulator games internationally, which have been installed in 30+ countries. The company acquired bowling venture bluO Entertainment from PVR and Major Cineplex Group and Sri Venkateshwara Multiplexes-owned SVM Bowling and Gaming for an undisclosed amount in FY19. With this consolidation, the company has been able to reap its benefits in revenue from operations. As per management, more than Rs. 100 Cr. of revenue came from food and beverages sold at its outlets.

Smaaash Net Profit Growth(PAT)

The company has been improving its revenue year-on-year (y-o-y) and, conversely, its net profits have been decreasing during the same time. The company has shown a de-growth of 144% in FY19 from FY18. The reason for such low profitability was heavy fund-raising costs and bad debts in their accounts. The company's total expense in FY19 was Rs. 192 Cr, compared to Rs. 124 Cr in FY18. Revenue from operations per unit of expenses has fallen from 1.7 to 1.5 in FY19 from FY18. Other operating expenses account for 76% of total expenses. Miscellaneous expenses account for most of the other expenses, which were Rs. 114 Cr. in FY19. The company has also added assets, converting them into heavy depreciation of Rs. 70 Cr., collectively reducing the profitability of the business.

Smaaash EPS Growth

The company has issued a fresh issue of its equity shares of 4,74,87,739 to raise funds, correspondingly leading to an increase in the equity base of the company. With the consequent losses made by the company in FY19, EPS fell and showed a de-growth of 69% in FY19 over FY18.

Smaaash Book Value Growth

The book value per share of the company in FY19 has increased and showed a growth of 12% over FY18. This increase in the book value has been best explained by the increase in the equity shares of the company. The company has made fresh issues of shares of 4,74,87,739 at a face value of Rs. 10. On the other hand, the other equity part of the company has been severely impacted due to abnormal losses faced by the company in FY19, which was Rs. 105 Cr. The company has added Rs. 41 Cr. to its reserves and Rs. 3 Cr. on account of distribution to the owner, and some other changes in equity have collectively led to a negative sum total of Rs. 54 Cr.

Smaaash EBITDA Growth

The company generated an EBITDA of Rs. 44 Cr. in FY19, which grew from Rs. 42 Cr. in FY18. During the same time, the margin of the company is stood at 15% over 20% in FY18, primarily on account of poor control over expenses despite generating higher revenue in FY19 than in FY18. The company has incurred miscellaneous expenses of Rs. 114 Cr., which accounts for fund-raising fees, acquisition-related costs, IPO expense costs, and other costs. Employee benefit expenses have also registered a growth of 17% in FY19 over FY18, which stood at Rs. 45 Cr. Other expenses account for 76% of the total expenses.

Smaaash Operating Profit Growth

Operating profit of the company has been low due to the lower EBITDA margin made by the company. Depreciation accounted for Rs. 70 Cr. in FY19. The EBIT of the company realised in FY19 was negative Rs. 25 Cr, which in total showed a de-growth of 96% from FY18.

Smaaash Asset Growth

Total assets of the company were Rs. 595 Cr. in FY19. Non-current assets accounted for 84% of the total assets. There has been a marginal growth in the total assets of 2% in FY19 over FY18, which is best explained by the growth in the non-current assets of 3%. Smaaash has outlets at various locations across India as well as overseas, which required heavy capital expenditure, leading to high property, plant and equipment on the books. The company made a capital expenditure of Rs. 101 Cr. in FY19, which led to this increase in the marginal increase in the total assets.

Smaaash Cash Flow from Operations

Cash flow operations have greatly improved, with a positive Rs. 57 crore in FY19 compared to a negative Rs. 14 crore in FY18. The company made a loss of Rs. 94 crore before taxes. The overall adjustment for reconciling profit was Rs. 143 Cr., owing to depreciation, finance charges, and an increase in the company's payables, all of which increased the cash flow from operations.

Smaaash Solvency Ratios

Smaaash D/E Ratio

The company's debt to equity ratio increased by 18% in FY19 compared to FY18. The company's overall debt increased by 20% in FY19, mostly due to an increase in current maturities of long-term debt and interest incurred, which totaled Rs. 268 Cr. This was a result of the default on the repayment of principal and interest on the non-convertible debenture in FY19, which increased the overall debt of the company. On the other hand, equity has increased as a result of a new share issue, lowering the company's overall debt to equity ratio. It must be noted that despite the increase in equity of the company, the debt to equity ratio is still high.

Smaaash Current Ratio

Current assets were worth Rs. 97 Cr., whilst current liabilities were worth Rs. 354 Cr. in FY21, owing mostly to default on its non-convertible debenture leading to further fall in its current ratio.

Smaaash Quick Ratio

Smaaash's revenue is mostly reliant upon the sales of services, which leads to lower engagement with inventories. Hence, the reason for the fall in the quick ratio is the same as the current ratio.

Smaaash Interest Coverage Ratio

The interest coverage ratio of the company has further declined from -0.3 in FY18 to -0.4 in FY19. Interest expenses of the company grew by 57% in FY19 over FY18. Interest expense on debt securities has increased by 80% in FY19 from FY18. The EBIT of the company has also witnessed a de-growth of 59%. This has further impacted the interest coverage ratio of the company.

Smaaash Operating Efficiency

The company has been making consistent efforts to increase its revenue, but is conversely unable to manage its operations and is far from achieving economies of scale, which is reflected in the operating efficiency ratio of the company. The company's primary focus is to expand their business and bring in more outlets with the latest technology gaming to provide a better experience. In order to achieve their goal, the company has been raising funds, which led to an increase in the expenses such as acquisition charges, financing fees, auditing fees, and many others, which in turn reduce the profitability of the company.

Smaaash Operating Profit EBIT Margin(OPM)

Smaaash Profit Before Tax Margin (PBT Margin)

Smaaash Profit After Tax Margin (PAT Margin)

Smaaash Profitablity Ratio

Smaaash Return on Equity(RoE)

As per Dupont Analysis, the primary reason for the fall in ROE of the company in FY19 lies in the net income margin of the company, which witnessed a de-growth of 83% in FY19 over FY18. This fall in the net income margin is due to management's inability to reduce their expenses and achieve economies of scale. The asset turnover ratio of the company has shown marginal growth of 3% over FY18, as Smaaash is one of the pioneers in family entertainment centres, which makes it the desired destination for gaming among tier 1 cities, leading to higher revenue generation from its assets. And lastly, the equity multiplier of the company, rose sharply by 12% as the company has been on a fund-raising spree, which evidently leads to the financing of assets more from equity than with debt, and for the same reason, the company has issued fresh equity shares to finance its expansion plans.

Smaaash Return on Capital Employed(RoCE)

Smaaash despite being the pioneer as a FEC, the company has performed poorly in terms of capitalisation on the fund raised, either through debt or equity. Funding raised recently was done only to keep the company afloat, which can be seen in its fall in the ROCE. ROCE decreased by 105% in FY19 compared to FY18.

Smaaash Return to Assets (RoA)

Despite having a high turnover ratio for FY19, the company registered a negative ROA of 18% in FY19, which decreased by 89% from FY18. The reason for the significant fall in the ROA is the losses the company suffered in FY19.