Savy Infra NSE SME IPO review (Apply)

•    The company is engaged in EPC contracts and related logistics services.
•    It has orders on hand and in the pipeline worth Rs. 430 cr.
•    The company posted growth in its top and bottom lines for reported periods.
•    Surge in profits is attributed to cost management and asset light model.
•    Based on its financial data, the issue appears fully priced.
•    Investors may park funds for medium to long term.

ABOUT COMPANY:
Savy Infra & Logistics Ltd. (SILL) is an Engineering, Procurement and Construction (EPC) company focused on earthwork and foundation preparation for infrastructure projects such as road construction, embankments, sub-grade preparation, granular sub-bases, and bituminous or concrete surfaces. Over the years, it has gradually expanded from supplying quartzite for infrastructure projects to providing a range of services, including excavation, grading, utility work, and paving. Initially focused on earthwork and foundation activities, the company has also extended its expertise to managing the logistics of excavated materials, ensuring their efficient transportation and disposal. Its approach has evolved to offer integrated solutions across the infrastructure, steel and mining sectors, maintaining a focus on providing reliable and efficient civil engineering services that meet the needs of clients.

Its EPC projects include earthwork services which involve moving and shaping large volumes of soil and other materials, creating a strong and reliable base for buildings, roads, or other infrastructure. Additionally, its services also cover demolition, where it safely and efficiently dismantles existing structures to clear space for new projects. SILL rents advanced machinery, including rock breakers, heavy excavators, and cutting-edge blasting technology. 

The company utilizes mechanical excavators for efficient excavation and manage all related processes, such as shoring, strutting, side protection to prevent collapses, and slush removal. It also handles the carting away and disposal of excavated materials. As part of its logistics segment, SILL offers Full Truck Load (FTL) services to clients in the infrastructure, steel and mining sectors. Its FTL services involve the efficient and reliable movement of large volumes of freight from one location to another, tailored to meet the unique needs of each client. The company ensures point-to-point delivery, meaning that the freight is transported directly from the client’s designated starting location to the final destination without intermediate stops or transfers. This minimizes handling, reduces the risk of damage, and ensures timely delivery.

It operates an asset light business model where it offers specialized services by renting trucks and drivers and managing the execution of transportation. This approach allows the company to avoid the challenges of owning trucks, manpower issues, theft, accidents, and maintenance. By focusing on execution, it minimizes costs related to interest, depreciation, and asset ownership, which helps improve profit margins. As of April 30, 2025, it had 33 employees on its payroll and additional 500 contract workers in various departments as per its needs.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 5832000 equity shares of Rs. 10 each to mobilize Rs. 69.98 cr. at the upper cap. It has announced a price band of Rs. 114 – Rs. 120 per share. The issue opens for subscription on July 21, 2025, and will close on July 23, 2025. The minimum number of shares to be applied is for 2400 shares and in multiples of 1200 shares, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 28.03% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 49 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Unistone Capital Pvt. Ltd., and Maashitla Securities Pvt. Ltd., is the registrar to the issue. Globalworth Securities Ltd. is a market maker as well as a syndicate member.

Having issued initial equity shares at par value, the company has issued further equity shares at a fixed price of Rs. 7200.00 per share between June 2024, and July 2024. It has also issued bonus shares in the ratio of 119 for 1 in July 2024. The average cost of acquisition of shares by the promoters is Rs. 0.45, and Rs. 6.27 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 14.98 cr. will stand enhanced to Rs. 20.81 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 249.70 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 6.19 cr. / Rs. 0.34 cr. (FY23), Rs. 101.62 cr. / Rs. 9.87 cr. (FY24), Rs. 283.77 cr. / Rs. 23.88 cr. (FY25). 

According to the management, the surge in profits is due to its asset light model of business that has based on FY25 financial data) around 80% EPC projects revenue, 14% from logistics, and the rest from other related activities. It has planned to expand its HCV fleet that are EVs and hopes to generate over 30% logistics revenue and EPC revenues will be around 70% in coming few years. It has an ongoing job worth Rs. 200 cr. and another Rs. 230.00 cr. confirmed orders

The company is the only player that is engaged in EPC as well as logistics segments, which augurs well for its future plans and economy of scale in its operations which has resulted in higher margins. The company gets around 74% contracts on direct basis and in that around 89% is recurring contracts. The company aims to be the numero uno in EV Logistics segment with its plans afoot.

For the last three fiscals, the company has reported an average EPS of Rs. 11.08 and an average RoNW of 62.90%. The issue is priced at a P/BV of 3.44 based on its NAV of Rs. 34.89 as of March 31, 2025, and at a P/BV of 2.04 based on its post-IPO NAV of Rs. 58.74 per share (at the upper cap). 

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 10.45. Based on FY24 earnings, the P/E stands at 25.32. 

For the reported periods, the company has posted PAT margins of 5.45% (FY23), 9.71% (FY24), 8.43%, (FY25), and RoCE margins of 15.11%, 78.71%, 36.69%, respectively for the referred periods. 

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

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown AVP Infracon, Ganesh Infraworld, and Active Infra, as their listed peers. They are trading at a P/E of 15.1, 20.4, and 26.9 (as of July 17, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
This is the 22nd mandate from Unistone Capital in the last three fiscals including the ongoing one.  From the last 12 listings, 3 listed at discount, and the rest with a premium ranging from 3.84% to 86.62%, on the listing date.