MITCON Consultancy & Engineering Services Ltd IPO Review (Avoid)

After three SME Emerge IPOs with book building process, NSE is having first fixed priced SME listing IPO from MITCON.

MITCON Consultancy & Engineering Services Ltd. (MCESL)  is an ISO 9001:2008 certified company, having its headquarter at Pune with pan India presence through its regional offices at Mumbai, New Delhi, Ahmedabad, Chennai, Bangalore and Nagpur which are equipped with high speed communication network with state of the art infrastructure. MCESL shareholders include private sector banks, nationalized banks, financial institutions and state government development corporations.

 Over the last three decades, the company gained proficiency in providing corporate solutions in power, energy efficiency, renewable energy, climate change and environmental management sectors. Over the years, it has diversified into providing services to banking, infrastructure and biotechnology sectors. It provides solutions to its clients depending on their requirements inter alia including feasibility studies, detailed project reports, techno economic feasibility reports, financial syndication, lender’s engineer services, Environment Impact Assessment (EIA), basic and detailed engineering, bid process management, project management, cluster development, technical/ financial restructuring, energy audits, corporate debt restructuring, valuations , due diligence, qualitative and market research, assets/ business valuation and consultation services in wind power project registration. The company also conducts IT based training courses and skill based training programs.  

MITCON has more than 200 employee base and provide services to small and medium enterprises (SME’s), large corporates, banks, financial institutions and various government organizations. With nine divisions and dedicated workforce, MITCON prides itself in providing the best assistance to existing & new entrepreneurs. With a comprehensive and clear understanding of businesses across segments, MITCON's goal is to integrate environmentally responsible consulting into the framework of every client's project to maximize value and reduce the environmental footprint. It is committed to contributing to the economic and environmental growth of the society.

To acquire offices in other metros to expand its business and to furnish new offices and buying lab equipments and general corpus funds, the company is offering 4100000 equity share of Rs. 10 each at a fixed price of Rs. 61 per share to mobilize Rs. 25.01 crore. Issue opens for subscription on 15.10.13 and will close on 18.10.13. As usual, being Emerge SME IPO, it has opted for grading of IPO. CRISIL has given IPO grade 4 to this IPO that indicates superior fundamentals of the company.  Issue is lead managed by IDBI Capital Market Services Ltd and Keynote Corporate Services Ltd. Link Intime India Pvt. Ltd. is the registrar to the issue. Post this issue, its existing equity of Rs. 8 crore will rise to Rs. 12.10 crore. Minimum application is to be made for 2000 shares and in multiples thereof, thereafter. Post allotment the shares will be listed on NSE Emerge (SME). The company has issued two bonus shares so far (3 for 2 in 2007) and (15 for 1 in 2013).

For last three fiscals ended 31.03.13, the company has posted an average EPS of Rs. 12.57 on an equity base of Rs. 8 crore (i.e. on the paid up capital after 15 for 1 bonus of June 2013). Its RoNW has been sliding down for past three years. Its NAV before this IPO is at Rs. 60.40. If we attribute the earnings on enhanced equity post this issue, then the EPS stands at around Rs. 8 and thus the asking price is at a P/E of 7.5+ and at a P/BV of 1. There has been no progress in the top and bottom-lines of the company for past three years.