Daps Advertising coming with an IPO to raise upto Rs 5.10 crore

Daps Advertising

• Daps Advertising is coming out with an initial public offering (IPO) of 1700000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 30 per equity share.
  
• The issue will open on October 31, 2022 and will close on November 3, 2022.
  
• The shares will be listed on SME Platform of BSE.
  
• The share is priced 3.00 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Shreni Shares.
  
• Compliance Officer for the issue is Pooja Kapoor.
  

Profile of the company

The company is engaged in the business of providing advertising agency services offering range of advertising media services consisting of print media, electronic media and outdoor media services which covers advertisement modes such as newspapers, brochures, magazines, television channels, FM channels and display of outdoor hoardings etc. It is an INS (Indian Newspaper Society) accredited Company. The Company acts as an intermediary between clients and the media and its scope of services includes assisting clients in choosing the optimal advertisement channel in accordance with their budget and regional preference, designing of advertisement (through in-house team or third party), negotiating and booking ad space with chosen media agency and ensuring publication of requisite advertisement.

The company’s client domain mainly includes corporate clients operating in various business fields viz. construction, education, electronics, automobiles, FMCG, jewellery, apparels, insurance, housing, hospital, financial service providers, aviation, Government organizations etc, thus providing it exposure to serve clients working in various industries and thus widening its exposure.

Proceed is being used for:

• Funding working capital requirements.
  
• General corporate purposes.
  

Industry overview

The services sector is the largest sector of India. Gross Value Added (GVA) at current prices for the services sector is estimated at Rs 96.54 lakh crore in 2020-21. The services sector accounts for 53.89% of total India’s GVA of Rs 179.15 lakh crore. With GVA of Rs 46.44 lakh crore, the Industry sector contributes 25.92%. While Agriculture and allied sector share 20.19%. Share of primary (comprising agriculture, forestry, fishing, and mining & quarrying), secondary (comprising manufacturing, electricity, gas, water supply & other utility services, and construction), and tertiary (services) sectors have been estimated as 21.82 percent, 24.29 percent, and 53.89 percent. The Agriculture sector’s contribution to the Indian economy is much higher than the world’s average (6.4%). The industry and services sector’s contribution is lower than the world’s average 30% for the Industry sector and 63% for the Services sector.

India’s advertising industry plays an important role, like in other world markets, in shaping sentiments towards products and services in the minds of its consumers. The brand recall for several companies over the decades has hung solely on the balance of their advertisements. From the “utterly, butterly delicious” Amul cartoon girl, to Vodafone’s Zoozoos, and being a Complan boy/girl, among numerous other tag lines that are synonymous with specific consumables, it comes as no surprise that the country has one of the most successful ad markets in the world. India has one of the fastest-growing advertising industries, recording just under 750 billion Indian rupees in revenues in 2021, indicating a speedy recovery since the pandemic. A high share of television ownership across the country made it the leading source of revenues for ads, having long overtaken print. Television in India remains the booming source for ads among traditional media – thanks mostly to a sustained love for daily soaps, reality shows, movies, and cricket in particular. Digital advertising in India has seen tremendous growth in recent years. Propelled by the Digital India initiative and the rapid adoption of smartphones with the availability of cheap data, mobile ads made up the largest share within this segment. 

Pros and strengths

Expansion of existing service portfolio: The company is currently offering various services in the segments of print, electronic and outdoor media. As on September 30, 2022, almost 88.47 % of its revenue is derived from the print media and remaining 10.90% of its revenue is derived from electronic and outdoor media. Thus, it aims to increase its business operations in electronic and outdoor media in order to reduce its revenue dependency on print media and to build a strong Customer base in electronic and outdoor media, which will lead to revenue and profitability growth in its business.

Continue to maintain good relationships with customers: Maintaining good relationship with customers is a most critical factor in its business to keep growing. Through regular interaction with its clients and understanding the client requirements such as location, target audience, concept, ad design etc. and choosing the most appropriate media source which enables it to not only attract new customers but also leads to recurring business with its existing clients. It will continue to focus on timely and accurate delivery of quality services which will help in forging strong relationships with its customers and gaining increased business from them.

Invest in CRM, marketing and analytics to more effectively target consumers and drive sales: The company intends to continue to invest in customer relationship management, or CRM, strategies, campaigns and technologies to analyse and manage customer interactions and related data throughout the customer lifecycle, with the goal of creating a long-term relationship with customers, building customer retention and driving sales. Developing a deep and nuanced understanding of its customers is crucial to its business.

Risks and concerns

Depend on print media advertisement business: The company derive a significant portion of its revenue from print media advertisement business. In the event of any downturn or cyclical fluctuation in the newspaper industry on account of factors, including but not limited to growth in online news media or emergence of any new platform leading to migration of readers from newsprint to online news sources, can heavily affect its revenue from print media business, as its clients will prefer to choose online platform over newspapers for advertisement needs. Accordingly, any reduction in newspaper advertising spending by its customers can adversely affect its business, results of operations, financial conditions and prospects.

Requires significant amounts of working capital: The company intends to continue growing by expanding its business operations. This may result in increase in the quantum of its current assets. Its inability to maintain sufficient cash flow, credit facility and other sources of fund, in a timely manner, or at all, to meet the requirement of working capital could adversely affect its financial condition and result of operations.

Operate in a competitive environment: The industry in which the Company operates is fairly competitive and its results of operations and financial condition are sensitive to, and may be materially adversely affected by competitive pricing and other factors. Competition may result in pricing pressures, reduced profit margins, lost market share or a failure to grow its market share, any of which could substantially harm its business and results of operations. The domestic segment which it caters to is fragmented and fairly competitive. It competes primarily on the basis of quality of its services, customer satisfaction and marketing. Thus, some of its competitors may have certain other advantages over it, including established track record, superior service offerings, larger portfolio of services, technology and greater market penetration, which may allow its competitors to better respond to market trends.

Outlook

Daps Advertising is engaged in the business of providing advertising agency services. The company offers a range of advertising media services consisting of print media, electronic media and outdoor media services which cover advertisement modes such as newspapers, brochures, magazines, television channels, FM channels and display of outdoor hoardings etc. The company's customers include corporate clients operating in various business fields viz. construction, education, electronics, automobiles, FMCG, jewellery, apparel, insurance, housing, hospital, financial service providers, aviation, Government organizations etc. The company endeavour to maintain the quality of its services, follow strict procedures to ensure control quality, timely delivery and competitive prices. It endeavour in going beyond just media, to understanding business needs of the brand and delivering complete communications solutions. On the concern side, any failure or defect in the company’s services could result in a claim against it for damages, regardless of its responsibility for such a failure or defect. Although it attempt to maintain quality standards, it cannot assure that all its services would be of uniform quality, meet the customer standards which in turn could adversely affect the value of its brand, and its sales could be diminished if it is associated with negative publicity.

The company is coming out with a maiden IPO of 1700000 equity shares of Rs 10 each at a fixed price of Rs 30 per share to mobilize around Rs 5.10 crore. On performance front, the company’s total income for FY 2021-22 and has increased by 133.58% from Rs 803.57 lakh for FY 2020-21 to Rs 1877.00 lakh for FY 2021-22. Profit after tax increased by 1017.75% from Rs 9.77 lakh for FY 2020-21 to Rs 109.19 lakh for FY 2021-22. The increase was mainly due to revival of business post covid lockdown. Meanwhile, the company intends to continue to invest in customer relationship management, or CRM, strategies, campaigns and technologies to analyse and manage customer interactions and related data throughout the customer lifecycle, with the goal of creating a long-term relationship with customers, building customer retention and driving sales. It will continue to focus on timely and accurate delivery of quality services which will help in forging strong relationships with its customers and gaining increased business from them.