At a Glance
Crayons is a full-service advertising and digital strategy firm catering to private brands and government campaigns. It went public in 2023 with a flashy ₹148 high, only to be ghosted by both investors and ROCE. Now trading under book value, the question is: can it revive with new acquisitions, or is this a pitch gone cold?
1. 🎯 Business Model – India’s Own Madison Avenue?
They cover it all:
- 🎨 Creative: Campaigns, UI/UX, digital content
- 📱 Execution: Website dev, influencer outreach, social media mgmt
- 📊 Analytics: ORM, web insights, social listening
- 📺 Media Buying: Search, display, native, even YouTube pre-rolls
- 🧠 Consulting: Digital strategy for clients across sectors
👨💼 Also bagging Govt. contracts + PSUs = large deals, slow payments.
2. 📉 Financial Highlights – Profit? Just a Sketch.
| Metric | FY24 | FY25 |
|---|---|---|
| Revenue (₹ Cr) | 234 | 234 (Flat YoY 😐) |
| PAT (₹ Cr) | 18 | 11 |
| EPS (₹) | 7.18 | 4.48 |
| OPM (%) | 9% | 3% |
| ROCE | 9.3% | 9.3% |
| ROE | 9.8% | 9.8% |
😓 Profit crashed 39% YoY, despite zero revenue growth
🚨 Operating margin fell to 3% — worse than selling pani puri
🧾 Other income = ₹6 Cr = >50% of FY25 profit came from not ads
📉 1Y Stock fall: -64% from ₹148 → ₹46.9
3. 📦 Balance Sheet – Stable but Meh
| Metric | FY25 |
|---|---|
| Equity | ₹24 Cr |
| Reserves | ₹92 Cr |
| Debt | ₹5 Cr (🟢 Minimal) |
| Debtors | ~₹103 Cr (😬 161 days) |
| Cash Flow from Ops | ₹8 Cr |
| Net Cash Flow | ₹+1 Cr |
🧠 Edu POV: Balance sheet is fine, but 161 debtor days = agencies waiting for payments longer than for client approvals.
4. 🎯 Fair Value – Is It Undervalued or Just “Under”?
FY25 EPS = ₹4.48
CMP = ₹46.9
P/E = 10.5x
Book Value = ₹47.8 → trading at 0.98x BV
| Scenario | P/E | Fair Value |
|---|---|---|
| Bear Case | 8x | ₹36 |
| Base Case | 12x | ₹54 |
| Bull Case (margin recovery) | 15x | ₹67 |
🎯 Edu FV Range: ₹36 – ₹67
🧠 CMP at ₹47 = fair if you’re patient, cheap if you believe margins will bounce.
5. 🔎 Peer Check – The Ad Club Battle
| Company | CMP | Mcap (₹ Cr) | ROCE | EPS | OPM | P/E |
|---|---|---|---|---|---|---|
| Crayons | ₹46.9 | ₹115 | 9.3% | ₹4.48 | 3% | 10.5x |
| Bright Outdoor | ₹559 | ₹813 | 15.7% | ₹20.5 | 20.6% | 42x |
| Vertoz | ₹91.7 | ₹782 | 15.5% | ₹14.3 | 14.3% | 30x |
| R K Swamy | ₹192 | ₹971 | 9.8% | ₹10.0 | 10.0% | 52x |
💡 Crayons is the cheapest by valuation, but also weakest on margins.
💬 It’s not undervalued, it’s under-delivered.
6. 🚩 Red Flags – The “Don’t Skip This” List
- 😱 Debtor Days = 161 → massive WC lock-in
- 📉 Margins collapsed from 9% to 3%
- 💰 PAT = ₹11 Cr, but ₹6 Cr is other income
- 🪂 FII stake crashing from 5.3% → 0.6% in just 5 quarters
- 🧾 Acquisition spree: Buying into BB&HV Pvt Ltd – but unclear strategic logic
- 🚫 No dividend despite repeated profits
7. 🧠 EduInvesting Verdict: Creative Agency or Creative Accounting?
Crayons can recover — if it:
- Fixes margins
- Unlocks receivables
- Delivers on digital campaigns that are actually monetizable
But for now, it’s a trading below book value microcap where the chart looks like a ski slope and P&L looks like a rejected campaign pitch.
This isn’t yet a multibagger canvas. But it’s a decent doodle — if you can wait for the brand revamp.
Tags:
crayons advertising, ad agency sme stock, media buying india, digital marketing stock, sme ipo, undervalued sme, eduinvesting
✍️ Written by Prashant | 📅 26 June 2025
