Investment Imperative has come out in its Report on CRP Risk Management IPO as on January 16, 2018
Earlier an Employee Background Check Service Company, CRP Risk Management has evolved on to become a Risk Management and Risk Mitigation company, with the decent revenue growth of 10% in FY17 and EBDITA margins consistent between 13-16% since FY13. The company also operates in Veterinary Division which involves trading of animal feed products such as poultry feed enzymes; poultry feed toxin binders, aquaculture feeds and other products. Under its Risk Management services segment, the company primarily caters to BFSI corporates and KYP (Know Your People) checks for commercial/ residential retail segment. CRP has generated an average return on the Net worth of 14.5% over past three financial years.We recommend “Subscribe” – For Long Term Investment, Strong Database Held by the Company, Unique mix of Technology, People’s Contribution in Services.
CRP Risk management has been able to clog growth rate in revenues in FY17 at 8.6% considering its shift in business model.Valuations
CRP Risk Management is garnering above 25% operating margins in its risk division. The company is expected to increase the contribution of its risk business to more than 70% by FY18 and above 80% by FY19. The company is having a unique mix of a strong on ground workforce to eliminate risk propositions first hand, technology and processes to implement ideas, risk mitigation processes at the earliest.
On a pre - IPO basis, the company is valued at Rs.81 crores and Rs.105 crores post IPO basis. Based on the FY17 numbers, the IPO is coming at a price to earnings ratio of 16x and 16.5x based on 4MFY18 numbers (annualized) reflecting fair valuations amid growth expectations from the industry. We are recommending subscribe for returns left on the table as well as expected long-term wealth generation.