Review By on September 8, 2018
• Company is engaged in trading, consultancy and servicing business.
• It has inconsistent financial performance.
• Sector is not doing well as expressed by Peer Company.
• First mandate from LM. No track record.
• Issue is priced aggressively.
ABOUT COMPANY:
Ranjeet Mechatronics Ltd. (RML) is incorporated with the main object to carry on the business of electrical and electrical mechanical engineers and sell supply, establish, fix and carry out and deal in industrial pumps, diesel engines, electrical motors and equipments etc. Later it diversified into providing specialized firefighting solutions including end to end solutions in installation, designing, commissioning, testing, implementing, managing and operating support for technology based security and fire solutions.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, RML is coming out with a maiden lIPO of 1800000 equity shares of Rs. 10 each at a fixed price of Rs. 25 per share. Company is mobilizing Rs. 4.50 cr. through this issue. It opens for subscription on 12.09.18 and will close on 17.09.18. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Beeline Broking Ltd. while Alankit Assignments Ltd. is the registrar to the issue. Issue constitutes 27.27% of the post issue paid up capital of the company. Having raised initial equity at par, it raised further equity in the price range of Rs. 13 to Rs. 47 per share between September 2008 and May 2018. It has also issued bonus shares in the ratio of 3 for 1 in May 2018. Average cost of acquisition of shares by the promoters is Rs. 6.82 and Rs. 7.10 per share. Post issue RML’s current paid up equity capital of Rs. 4.80 cr. will stand enhanced to Rs. 6.60 cr.
FINANCIAL PERFORMANCE:
On financial performance front, for last four fiscals, RNL has posted turnover/net profits of Rs. 24 cr. / Rs. 0.05 cr. (FY15), Rs. 25.29 cr. / Rs. 0.16 cr. (FY16), Rs. 17.64 cr. / Rs. 0.51 cr. (FY17) and Rs. 18.04 cr. / Rs. 0.91 cr. Thus it has seen set back in top lines but surprisingly posted improvement in bottom lines. Issue is priced at a P/BV of 4.01 on the basis of its NAV of Rs.6.23 as on 31.03.18 and at a P/BV of 1.63 on the basis of post issue NAV of Rs. 15.37. For last three fiscals, it has posted an average EPS of Rs. 1.58 and an average RoNW of 30.10%. If we consider FY18 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 18 plus, thus issue is aggressively priced.
COMPARISION WITH LISTED PEERS:
As per offer documents, it has shown Nitin Fire as its listed peers that is trading at a negative P/E.
MERCHANT BANKER’S TRACK RECORD:
On merchant banker’s front, this is the first mandate from its stable and hence no track record is available.
Issue is priced aggressively. This sector is not doing well as expressed by its peer. Sudden jump in bottom line with static top line for FY17 and 18 is a bit surprising. Considering this, risk savvy cash surplus investors may consider investment at their own risk.
Review By on September 8, 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 Ranjeet Mechatronics Ltd. offers an early investment opportunity in Ranjeet Mechatronics Ltd.. A stock market investor can buy Ranjeet Mechatronics IPO shares by applying in IPO before Ranjeet Mechatronics Ltd. shares get listed at the stock exchanges. An investor could invest in Ranjeet Mechatronics IPO for short term listing gain or a long term.
Read the Ranjeet Mechatronics IPO recommendations by the leading analyst and leading stock brokers.
Ranjeet Mechatronics IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Ranjeet Mechatronics IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Ranjeet Mechatronics IPO?"
Our recommendation for Ranjeet Mechatronics 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 Ranjeet Mechatronics IPO.
The Ranjeet Mechatronics IPO allotment status will be available on or around September 21, 2018. The allotted shares will be credited in demat account by September 25, 2018. Visit Ranjeet Mechatronics IPO allotment status to check.
