Samay Project NSE SME IPO review (May apply)

•    The company is engaged in providing EPC contracts and related services.
•    It specializes in balance of plant systems with major focus on piping systems, tanks etc.
•    It marked inconsistency in its top and bottom lines for the reported periods.
•    Based on its recent financial data, the issue appears fully priced.
•    It had an order book worth Rs. 57.33 cr. as of March 31, 2025.
•    It is operating in a highly competitive and fragmented segment.
•    Well-informed investors may park moderate funds for long term.

ABOUT COMPANY:
Samay Project Services Ltd. (SPSL) is primarily engaged in Engineering, Procurement and Construction (“EPC”) Services providing specialized services in design, engineering, supply, fabrication, erection and commissioning of balance of plant (“BOP”) systems in various industries. Company is involved in EPC projects which consists of (i) Piping System, (ii) Tanks and vessels and fabricated structures; and (iii) fire protection and detection systems / firefighting systems (“FFS). 

The various systems engineered, procured and constructed by the Company finds its application in a diverse range of Industries, including Power, Sugar and Distilleries, Iron and Steel, Infrastructure, etc. The system may consist of subsystems, products and raw materials, which are procured directly by the company from the vendors, fabricated, erected at site to provide the complete functionality of the overall system, meeting tender requirements. In case of tanks, carbon steel or stainless steel, as the case may be, is procured as hot rolled sheets with cutting, edge preparation, rolling, erection, fit-up, welding carried out at site as per the approved drawings under the supervision of Company’s engineers.

SPSL has executed many power plant orders for designing, engineering, supplying, assembling, testing and commissioning of piping and appurtenances and firefighting systems. Further, it has also executed an overseas project in Mauritius for the supply, erection and commissioning of Public Health Engineering (PHE) System in the year 2020.  As of March 31, 2025, it had 51 employees on its payroll. As of the said date, it was carrying an order book worth Rs. 57.33 cr.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 4320000 equity shares of Rs. 10 each to mobilize Rs. 14.69 cr. at the upper cap. It has announced a price band of Rs. 32 – Rs. 34 per share. The issue opens for subscription on June 16, 2025, and will close on June 18, 2025. The minimum number of shares to be applied is for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 28.14% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 12.00 cr. for working capital, and the rest for general corporate purposes. It is spending Rs. 2.41 cr. for this IPO process, indicating at a structured mode of the issue with funding arrangements.

The IPO is solely lead managed by Smart Horizon Capital Advisors Pvt. Ltd. (erstwhile known as Shreni Capital Advisors Pvt. Ltd.), and Bigshare Services Pvt. Ltd., is the registrar to the issue. Smart Horizon Group’s Shreni Shares Ltd., is the market maker as well as a syndicate member.

The company has issued initial equity shares at par value, and issued further equity capital in the price range of Rs. 40 – Rs. 386 per share between March 2012, and March 2018. It has also issued bonus shares in the ratio of 9 for 1, in August 2010, and 35 for 1 in December 2023. The average cost of acquisition of shares by the promoters is Rs. 0.00, and Rs. 0.61 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 11.03 cr. will stand enhanced to Rs. 15.35 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 52.19 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 20.82 cr. / Rs. 3.44 cr. (FY23), Rs. 40.95 cr. / Rs. 4.62 cr. (FY24), Rs. 37.72 cr. / Rs. 4.19 cr. (FY25). While it posted inconsistency in its top lines, boosted bottom lines raises eyebrows and concern over its sustainability going forward. Its trade receivables of Rs. 13.26 cr. as of March 31, 2025, with debtor holding days at 109 days are at an alarming level.

For the last three fiscals, the company has reported an average EPS of Rs. 3.82 and an average RoNW of 24.98%. The issue is priced at a P/BV of 1.85 based on its NAV of Rs. 18.34 as of March 31, 2025, but the offer documents are missing its post-IPO NAV data.

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 12.45. Based on FY24 earnings, the P/E stands at 11.30. The issue relatively appears fully priced.

For the reported periods, the company has posted PAT margins of 16.88% (FY23), 11.33% (FY24), 11.29%, (FY25), and RoCE margins of 22.94%, 34.00%, 24.56%, respectively for the referred periods.  

DIVIDEND POLICY:
The company has not declared any dividends for the referred periods of the offer document. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Pratham EPC, as their listed peer. It is trading at a P/E of 20 (as of June 12, 2025). However, they are not truly comparable on an apple-to-apple basis. This compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
This is the 7th mandate from Smart Horizon in the last two fiscals including the ongoing one.  From the last 6 listings, 1 listed at par, 1 at discount, and the rest with a premium ranging from 4.44% to 90%, on the listing date.