Accord Synergy NSE SME IPO review (Apply)

Accord Synergy Ltd (ASL) is engaged in offering support services to the high end telecom segments such as network planning & optimization, network rollout, managed services and manpower solutions through sub-contracting basis. ASL provides all services related to planning, installation & commissioning, operation, expansion, modification and maintenance of telecom networks and provide manpower solutions to customers. The company is offering a wide variety of services and solutions i.e. technical site surveys, radio surveys, network planning, radio and core equipment (BBS, RBS 2G, 3G and LTE) installation, installation supervision and commission/integration services to a wide variety of equipments and vendors.

The continued growth in the number of cellular subscribers & service provider’s along with increasing minutes of usage per subscriber will require telecom operators to add additional equipments and make investment on cellular sites to maintain optimum performance of their networks. Today, the cellular operators have to continuously increase their foot-print by offering services to areas where there is no coverage. In order to meet the growing demand of new subscribers and the market, the telecom operators are resorting more and more to outsource their network roll out components. The activities like operation and maintenance are now being routinely outsourced by all major telecom operators.

To part finance its working capital and general corpus fund needs, the company is coming out with a maiden IPO of 972000 equity share of Rs. 10 each at a fixed price of Rs. 60 per share to mobilize Rs. 5.83 crore. Issue opens for subscription on 22.06.17 and will close on 28.06.17. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge platform. Issue is solely lead managed by Hem Securities Ltd and Link Intime India Pvt Ltd is the registrar to the issue. The company has issued initial equity at par and a bonus in the ratio of 249 shares for every 1 share held in January 2017. Post issue its current paid up equity capital of Rs. 2.50 crore will stand enhanced to Rs. 3.47 crore.

On performance front, the company has posted turnover/net profits of Rs. 8.71 cr. / Rs. 0.32 cr. (FY16), Rs. 63.04 cr. / Rs. 2.60 cr. (FY16). For first nine months ended 31.12.16 it has earned net profit of Rs. 2.23 crore on a turnover of Rs. 49.05 crore. If we annualize latest earnings and attribute to fully diluted equity post issue, then asking price is at a P/E of 7 and at a P/BV of 2.91 with RoNW of 43% plus. There are no listed peers to compare with.

On merchant banker’s front, this is the 34th mandate from its stable and last 10 listings has given positive returns on the day of listing.

Conclusion: Investors may consider investment in this reasonably priced issue for medium to long term.