Thinking Hats Entertainment Solutions is gearing up for its IPO, which will be open for subscription from September 25 to September 27, 2024. With a total issue size of ₹15.09 crore, this IPO offers a gateway into the vibrant world of event management and OTT content production.
About Thinking Hats Entertainment Solutions
Established in 2013, Thinking Hats Entertainment Solutions has evolved from being an event management company into a comprehensive service provider in:
- Concept development
- Event design and production
- Live and virtual events
- Corporate functions and MICE (meetings, incentives, conferences, and exhibitions)
Over time, the company has expanded its offerings to include over-the-top (OTT) content production and experiential marketing. Thinking Hats caters to diverse industries, including media, retail, finance, healthcare, and technology, offering services such as retail visual merchandising, in-store displays, and ground activations.
Strengths and Competitive Advantages
- Strong Corporate Clientele: Thinking Hats serves major corporate clients, including brands like Tata Group (Westside and Zudio), Goldman Sachs, McDonald’s, Uber, and media houses such as The Times of India, HT Media, Network18, and Radio Mirchi.
- Comprehensive Service Range: The company has built expertise in a variety of event types—from brand launches and fashion shows to corporate conferences and entertainment events. Their services also cover artist management, retail merchandising, and content creation for regional languages.
- Robust Supplier Network: The company has developed strong relationships with key suppliers for critical event elements such as signage, lighting, stage setups, and marketing collateral, ensuring smooth operations.
- Financial Growth: Thinking Hats has consistently improved its financial performance over the years. Revenue from operations grew from ₹11.60 crore in FY22 to ₹26.63 crore in FY24, showcasing strong top-line growth.
Risks to Consider
While Thinking Hats shows promise, there are several risks investors should be aware of:
- Event Management Dependency: A significant portion of the company’s revenue is tied to the event management segment, which contributed over 56.66% of total revenue in FY24. Any downturn in this segment could impact the company’s financial health.
- Customer Concentration: A large portion of revenue comes from the company’s top 10 clients, accounting for 78.87% of revenue in FY24. The loss of a key customer could severely impact revenue.
- Legal Proceedings: The company is involved in ongoing legal cases. Adverse outcomes in these cases could harm its business prospects and reputation.
- Financial Leverage: As of March 31, 2024, Thinking Hats had total borrowings of ₹5.43 crore. While manageable, the inability to repay these loans could strain its financial position.
- Operational Hazards: Being an event management company, Thinking Hats is susceptible to accidents or mishaps during events, which could hurt its reputation and result in financial losses.
Financial Overview
Thinking Hats has shown strong growth in its financials:
| Financial Metric | FY22 | FY23 | FY24 |
|---|---|---|---|
| Revenue (₹ Cr) | 11.60 | 22.15 | 26.63 |
| Total Assets (₹ Cr) | 6.41 | 14.56 | 24.03 |
| Profit After Tax (₹ Cr) | 0.37 | 2.01 | 3.09 |
Key Performance Indicators
| Metric | Value |
|---|---|
| Return on Equity (ROE) | 28.11% |
| Return on Capital Employed (ROCE) | 29.37% |
| Debt/Equity Ratio | 0.49 |
| Profit After Tax Margin | 11.61% |
| Price-to-Book Value (P/BV) | 3.5 |
IPO Application Details
Investors can apply for the IPO in the following price band:
| Application Type | Price Band | Apply Upto |
|---|---|---|
| Regular | ₹42 – ₹44 | ₹2 Lakh |
| High Networth Individual (HNI) | ₹42 – ₹44 | ₹2 – 5 Lakh |
IPO Specifications
| IPO Date | September 25, 2024 – September 27, 2024 |
|---|---|
| Face Value | ₹10 per share |
| Price Band | ₹42 to ₹44 per share |
| Lot Size | 3,000 Shares |
| Total Issue Size | 3,429,000 shares |
| Issue Size | ₹15.09 crore |
| Listing At | NSE SME |
Promoter Holdings
Before the issue, the promoters—Rajesh Bhardwaj, Gaurav Singhania, and Shruti Singhania—hold 78.29% of the company’s equity.
IPO Reservation
| Investor Category | Shares Offered |
|---|---|
| QIB | 3,24,000 (9.45%) |
| NII (HNI) | 8,76,000 (25.55%) |
| Retail Investors | 20,49,000 (59.76%) |
| Market Maker | 1,80,000 (5.25%) |
Lot Size and Investment Limits
| Application Type | Lots | Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 3,000 | ₹132,000 |
| HNI (Min) | 2 | 6,000 | ₹264,000 |
IPO Objectives
The company plans to use the proceeds from the IPO for the following purposes:
- Repayment of loans
- Working capital requirements
- General corporate purposes
Analyst Review
According to Dilip Davda, Thinking Hats Entertainment Solutions operates in a competitive and fragmented sector. Although the company has shown steady growth in its revenue and profit, the issue appears aggressively priced based on FY24 earnings. Investors with a high risk tolerance and a medium-term investment horizon might consider parking moderate funds.
Conclusion
Thinking Hats Entertainment Solutions IPO presents an opportunity for investors to gain exposure to the growing event management and OTT production sectors. With a strong client base, diverse service offerings, and expanding financials, the company has promising prospects. However, potential investors should carefully consider the risks, particularly the company’s reliance on a few key clients and the event management segment.
For more information, contact the IPO registrar:
Mas Services Limited
Phone: (011) 2610 4142
Email: ipo@masserv.com
Website: Mas Services
As the bidding dates approach, Thinking Hats Entertainment Solutions could be a good fit for those looking to diversify their portfolio in the media and entertainment space.