FirstMeridian Business Services Ltd IPO

Mumbai-based HR and staffing company FirstMeridian Business Services Ltd is preparing to launch an IPO and has already filed its draft papers with the market regulator. It has proposed an IPO size of Rs. 740 crore comprising both a fresh issue and an Offer for Sale. Proceeds from the fresh issue will be used for repayment or prepayment of outstanding debt.

If you are looking forward to diversifying your portfolio by investing in the Human Resource service sector, you can consider investing in FirstMeridian Business Services Ltd IPO.  Here in this article, we have discussed the company and its financials, risks, strengths and more.

About the Company

Since its incorporation in 2018, FirstMeridian Business Services Ltd has emerged as the third-largest staffing company in India in terms of its revenue. It offers a variety of services in staff recruitment some of which include contract staffing solutions, general staffing, automation of workforces, allied services, global tech solutions, etc. 

It also provides related HR services such as permanent recruitment, RPO (recruitment process outsourcing) and staffing in across industries like healthcare, pharmaceutical, financial accounting, engineering, legal department, etc. Its clients include the likes of Phone Pvt Ltd, Exide Industries Ltd, Dell International Services India Pvt Ltd, Adani Ports and Special Economic Zones Ltd. 

Moreover, it has a presence across the country with 1,26,824 associates employed in more than 53 office branches. As the human resource service sector gains from economies of scale, therefore being one of the top players in the market has an edge over the small, new or regional players.

First Meridian IPO Details and Objectives

FirstMeridian Business Services Ltd has already filed a DRHP and is waiting for SEBI’s approval. It has proposed a total offer size of Rs. 740 crore where the fresh issue is of up to Rs. 50 crore and an OFS of approximately Rs. 690 crore by promoters and shareholders.

The company will not be receiving any proceeds from its offer for sale, while the selling shareholders will be entitled to the net proceeds after paying out all offer-related expenses.

Furthermore, the company has proposed to utilise the proceeds from the fresh issue in the following ways.

• To prepay or repay a certain portion of outstanding debt obtained by one of its subsidiaries namely:  Innovsource Services Private Ltd
• To meet any expenses related to general corporate purposes

The company first filed a DRHP in May 2022 to float an IPO worth Rs. 800 crore. In January 2023, it again filed another draft paper for an IPO of a slightly smaller size. In February 2023, SEBI provided its approval for the First Meridian IPO.

Also Read: Benefits of Investing in IPO

Company Financials 

Here is the financial summary of FirstMeridian Business Services Ltd for FY2020, FY2021, FY2022

Particulars	For the Financial Year Ending (Rs. Millions Except EPS)
	March 31, 2022	March 31, 2021	March 31, 2020
Total Assets	10,028.49	6,234.75	6,399.59
Total Liabilities	6,043.67	3,948.78	3,792.82
Total Expenses	28,465.34	21,537.90	21,026.31
Total Revenue	28,693.76	21,241.76	20,754.01
Profit/Loss After Tax	340.92	(336.56)	(196.11)
EBITDA	592.52	396.80	437.31
EPS (Basic and Diluted)	4.67 (Basic)4.53 (Diluted)	-4.66 (Basic)-4.66 (Diluted)	-2.72 (Basic)-2.72 (Diluted)

Also Read: How Can You Analyse An IPO?

Strengths of the Company

Here are some of the strengths of this company:

• FirstMeridian Business Services Ltd has a positional advantage as it is the third largest staffing company in the country in terms of its revenue. It also has a wide presence with over 53 branch offices in over 3,500 places in the country.
• The company’s business is quite diversified with human resource offerings across multiple industries such as BFSI, telecommunication, construction, retail, infrastructure etc. On 30 September 2022, it had 946 customers for its general staffing services.
• It has a proven track record of in organic and organic strategic acquisitions to improve its business operations with diversification of revenue streams.
• The company employs a highly experienced and skilled senior management team with considerable experience in the HR and staffing industry. Also, the director and CEO have significant experience and expertise in the fields of human resources, marketing, sales, and profit and loss management.

Risks Involved

Each and every business has certain risk factors embedded in it. Here are the risk factors associated with FirstMeridian Business Services:

• The company has a history of losses and a record of negative cash flows from investing, financing and operating activities. A failure to generate sufficient profits can result in the decline of its share price post-IPO.
• Any uncertainties such as the COVID-19 pandemic can have an adverse effect on the operations and the overall profitability of the business.
• FirstMeridian Business Services Ltd operates in a highly fragmented and competitive industry with very little entry barrier. Therefore, it might face difficulties in competing with new or existing competitors. 
• It incurs a significant portion of employee benefit expenses. If the overall employee cost in the Indian market rises, it might have to reduce its profitability to bear such expenses.

Also Read: Risk of investing in IPO

Summary

Hopefully, by now you have got better clarity on the upcoming First Meridian IPO. Considering the line of business, IPO objective, competitive strengths, and risk factors you can make an informed decision. 

However, there are many updates that are yet to be declared by the company such as financial performance till FY 2023 and more. Keep an eye on our website for recent updates.

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