One of the country’s fastest-growing staffing companies, FirstMeridian Business Services Ltd., has filed a prospectus to get listed on the stock exchange. The public offer of Rs 800 crore includes Rs 50 crore in new issues and Rs 730 crore in an offer for sale of equities.
FirstMeridian Business Services is the country’s third-largest staffing company in terms of revenue in FY21. They are involved in offering a wide range of staffing services, including general staffing and allied service, global technology solutions, and other HR services.
They have 50 offices in 75 cities, catering to 1,212 clients, including Indian and global clients, as per data available for March 31, 2022.
FirstMeridian Business Services Ltd.Objective
- The net proceeds from the new shares will be utilised in repayment and prepayment of certain market borrowing.
Why should you invest in FirstMeridian Business Services Ltd.IPO?
Here are our top reasons.
- They have a large geographical presence with 1212 clients, of which 923 are from the general staffing and allied services, 100 from global technology solution services and 189 from other HR services.
- The staffing company caters to telecommunications, retail, BFSI and construction and infrastructure industries, meaning their revenue doesn’t depend on a single source.
- FirstMeridian Business Services has made several strategic acquisitions that helped in the organic and inorganic growth of the company and expanded its revenue.
IPO Financials
| Particulars | FY21 | FY20 |
|---|---|---|
| Revenue From Operation | 21,102 | 20,584 |
| EBITDA | 394.14 | 355.02 |
| EBITDA Margin (%) | 1.9 | 2.1 |
| Profit After Tax | NA | NA |
| EPS | NA | NA |
| ROE | NA | NA |
Know before investing
Strengths
3The HR staffing sector in the country is highly fragmented, with five large companies controlling 12% of the market, resulting in high growth prospects.
The company leverages technology to offer paperless onboarding using advanced software.
They have an established track record of organic and inorganic growth.
Risks
3Although fragmented, the staffing industry is highly competitive, impacting the company’s future cash flow.
The company had recorded losses in the past, experiencing negative cash flow arising from the operation, investing, and financial activities.
Investors applying for the IPO must understand that the business is subject to extensive government regulations, which might impact the company’s ability to provide certain services.
Peer Comparison
| Company Name | Total Income (in Rs million) | P/E | EPS | Dividend Yield |
|---|---|---|---|---|
| FirstMeridian Business Services Ltd. | 21,241.76 | NA | 4.66 | - |
| Quess Corp Ltd. | 108,820.00 | 175.59 | 3.87 | - |
| Team Lease Services Ltd. | 49,162.00 | 77.48 | 45.33 | - |
