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Omfurn India Limited - SWOT Analysis - NSE SME Company

Posted On: 2017-10-10 05:05:17 (Time Zone: IST)

Omfurn was started in 1997 in the state of Gujarat to provide premium quality furniture. The company started full fledged manufacturing operations by 2005 with a plant in Umbergaon, Gujarat. Currently the company's manufacturing unit having a constructed area of about 80,000 square feet has the latest woodworking CNC machinery imported from Italy, Germany, Turkey & Austria of the latest brands. From a single coffee table to a fully integrated fit out over a number of floors, the Company has the machinery to manufacture as per Customer's requisite demand. At Umbergaon unit the company has recently installed a finishing line which has a Wide Belt Sander machine from Germany and a Kleen Spray Booth from Cefla, ltaly for Sanding and Polishing of Laquer / Veneer based products particularly to cater to hotel industries as well as growing industries of corporate world.

The company has come up with a public offer to issue 18,12,000 equity shares at an issue price of 23/share to raise around 4 cr. The company intends to use the capital raised to fund capacity expansion of the division catering to the real estate segment which is running at full utilization. At the issue price, the issue is priced at around 10 PE post dilution.

Strengths -

- Expertise in the niche furniture segment and one of the few listed players.
- High margins resulting in good free cash flow.
- Funds raised & bank loan to be used to fund expansion

Weaknesses -

- Competition from too many smaller players.
- Availability of quality raw materials i.e wood
- Degrown in FY17.

Opportunity -

- Huge untapped market that provides visibility.
- Variable cost is directly linked to sales with lower fixed costs
- Can be profitable even at lower sales

Threats -

- Almost zero entry barriers for a new player to enter this market.

Disclaimer: SME investments are subject to illiquidity risk & information asymmetry risk. This is not a buy / sell advise. Please do your own due diligence before buying / selling this stock.

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