Innovators Facades BSE SME IPO review (May apply)

Innovators Facades Systems Ltd. (IFSL) is engaged in designing, engineering, fabrication and installation of façade systems with total solutions as per the customer’s requirements. It has developed its brand image with over 18 years of history. IFSL specialize in technically demanding facades. Its manufacturing facility is at Wada – Maharashtra and is executing end to end fabrication of its products from designing of facades to dispatching. Company’s product basket ranges from glazing curtain walls, high end doors & windows, skylights, canopies, louver, stone cladding, metal cladding, roofing and others. It offers facades which are resistant against UV rays, acidic rain, dust, noise etc. It has executed orders in various states i.e. Haryana, Karnataka, Tamil Nadu, UP and Maharashtra. It has five branch offices across India. It has executed over 279 projects so far covering residential building, commercial complexes, IT Parks, Airports, Retail and Pharma projects etc. It has served clients like Hiranandani, Relcon Infra, L & T, Grauer & Weil and others.

To part finance up gradation and modernization of existing facility, working capital and general corpus fund needs, IFSL is coming out with a maiden IPO of 5660800 equity shares of Rs. 10 each via book building route with a price band of Rs. 71- Rs. 72 per share to mobilize Rs. 40.19 cr. – Rs. 40.76 cr. (based on lower and upper price bands). Issue opens for subscription on 14.05.18 and will close on 16.05.18. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Issue constitutes 30 % of post issue paid up capital of the company.  Having issued initial equity at par, it raised further equity in the price range of Rs. 20 to Rs. 72 (including 1532258 shares issued under private placement at Rs. 62 in the month of March 2018 to Pantomath group and Vijay Kedia). It has also issued bonus shares in the ratio of 1.86 for 1 share held in July 2005. Average cost of acquisition of shares by the promoters is Rs. 12.72 and Rs. 37.08 per share. Post issue, its current paid up equity capital of Rs. 13.21 cr. will stand enhanced to Rs. 18.87 cr.

On performance front, IFSL has (on a consolidated basis) posted turnover/net profits of Rs. 83.75 cr. / Rs. 2.69 cr. (FY14), Rs. 92.05 cr. / Rs. 3.14 cr. (FY15), Rs. 94.39 cr. / Rs. 1.66 cr. (FY16) and Rs. 102.36 cr. / Rs. 1.82 cr. (FY17). For first nine months of FY18 it has earned net profit of Rs. 5.75 cr. on a turnover of Rs. 126.30 cr. which is really surprising. It suffered set back in bottom lines for FY16 and FY17 despite higher top lines. Issue is priced at a P/BV of 1.13 on the basis of its NAV of Rs. 63.64 as on 31.12.17. If we annualize superb performance in pre-IPO year and attribute it on fully diluted equity post issue, asking price is at a P/E of around 18 plus. It has no listed peers to compare with. It has posted an average EPS of Rs. 2.13 for last three fiscals and an average RoNW of 3.41%. Thus issue appears aggressively priced.

On merchant banker’s front, this is 71st mandate from its stable in last four fiscals. Out of last 10 listings, all have opened with a premium ranging from 1.6% to 20% on debut day.