Review By on March 1, 2018
Macpower CNC Machines Ltd. (MCNC) is engaged in manufacturing of CNC (Computer Numerical Control) Turning centers, vertical machining centers, horizontal machining centers, cylindrical grinder, vertical turret lathe, turn mill centers, drilling tap center, twin spindle VMC and also multi tasking 5-axis along with sub spindle. It has also offered robotic automation integrated with CNC machines to meet the technology driven demands. Company imports various components and parts to make its products.
To part finance its plans to set up backward integration facilities and general corpus fund needs, MCNC is coming out with a maiden IPO of 2615000 equity shares of Rs. 10 each via book building process with a price band of Rs.126-140 to mobilize Rs. 32.95 cr. to Rs. 36.61 crore based on lower and upper price bands. Issue opens for subscription on 12.03.18 and will close on 14.03.18. Minimum application is to be made for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Original size of the issue was 3040000 equity shares, but as company issued 425000 equity shares as pre-IPO placement at Rs. 126 per share and has raised Rs. 5.36 crore, the size has been reduced to that extent. Having issued initial equity at par, it raised further equity in the price range of Rs. 37 to Rs. 126 per share between January 2007 and February 2018. It has also issued bonus shares in the ratio of 8.4 shares for every 1 share held in November 2017. Post issue its current paid up equity capital of Rs. 7.19 crore will stand enhanced to Rs. 9.81 cr. Average cost of acquisition of shares by the promoters is Rs. 3.84 and Rs. 4.49 per share. Net issue post pre-IPO placement constitutes 26.71% of the post issue paid up capital of the company.
On performance front, MCNC has reported turnover/net profits of Rs. 42.37 cr. / Rs. 0.28 cr. (FY14), Rs. 64.26 cr. / Rs. 0.29 cr. (FY15), Rs. 64.16 cr. / Rs. 0.49 cr. (FY16) and Rs. 69.55 cr. / Rs. 0.79 cr. (FY17). For first half of current fiscal, it has earned net profit of Rs. 2.50 cr. on a turnover of Rs. 46.45 cr. Issue is priced at a P/BV of 5.37 based on its NAV of Rs. 10.06 as on 30.09.17. First half performance is really a surprising one with best turnover/profits of history that appears to be the Pre-IPO cooked up one. For last three fiscals it has posted an average EPS of Rs. 0.92 and an average RoNW of 19.10% on an equity base of Rs. 0.60 crore that is swelling to Rs. 9.81 crore post issue. If we annualize latest (cooked up) workings and attribute it on fully diluted equity post issue then asking price is at a P/E of 11 and thus it appears a reasonable bet. As per offer document, it is comparing Lokesh Machines as it listed peer which is trading at a P/E of around 29 as on 01.03.18.
On merchant banker’s front, as per offer document, this is the 63rd mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened at discount to offer price, 1 just Rs. 0.05 paise up on offer price, 7 with a premium ranging from 4% to 20% and 1 (main board issue) with a premium of 130% on the offer price on the day of listing.
Company that has static top line with marginally improving bottom line, but sudden jump in top and bottom line for the first half is really a surprising one (may be cooked up ahead of IPO). Equity is rising from Rs. 0.60 crore to Rs. 9.81 crore and raises concern. Investors may consider investment on their own risk .
Review By on March 1, 2018
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of Macpower CNC Machines Ltd. offers an early investment opportunity in Macpower CNC Machines Ltd.. A stock market investor can buy Macpower CNC Machines IPO shares by applying in IPO before Macpower CNC Machines Ltd. shares get listed at the stock exchanges. An investor could invest in Macpower CNC Machines IPO for short term listing gain or a long term.
Read the Macpower CNC Machines IPO recommendations by the leading analyst and leading stock brokers.
Macpower CNC Machines IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Macpower CNC Machines IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Macpower CNC Machines IPO?"
Our recommendation for Macpower CNC Machines IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Macpower CNC Machines IPO.
The Macpower CNC Machines IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Macpower CNC Machines IPO allotment status to check.
