Review By Dilip Davda on May 18, 2017
Shri Ram Switchgears Ltd (SRSL) is engaged in manufacturing of Transformers, Distribution boxes, Switchgears, Junction Boxes, Feeder Pillars, Panels, LT (Low Tension)/ HT (High Tension) Line materials and other electrical products required in power distribution system utilities. The company also undertakes turnkey projects including erection, installation, operation and maintenance services of power transmission lines.
To part finance its working capital requirements and general corpus fund needs, SRSL is coming out with a maiden IPO of 2670000 equity share of Rs. 10 each at a fixed price of Rs.19 per share to mobilize Rs.5.07 crore. Issue opens for subscription on 25.05.17 and will close on 30.05.17. Minimum application is to be made for 6000 shares and in multiples thereof, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Sarthi Capital Advisors Pvt Ltd is the sole lead manager to the issue and Bigshare Services Pvt Ltd is the registrar to the issue. Since incorporation till March 2015 it issued all equities at par. In February 2016 it issued few shares at a price of Rs. 17 per share and in January 2017 it issued bonus shares in the ratio of 1 share for every 2 shares held. Post issue its current paid up equity capital of Rs. 7.34 crore will stand enhanced to Rs. 10.01 crore.
On performance front, the company has reported turnover/net profit of Rs. 39.21 cr. / Rs. 0.42 cr. (FY14), Rs. 54.37 crf. / Rs. 1.21 cr. (FY15), Rs. 48.23 cr. / Rs. 0.85 cr. (FY16). For the first 11 months of the current fiscal ended on 28.02.17 it has earned net profit of Rs. 1.77 crore on a turnover of Rs. 55.36 cr. Thus for the fiscal 2016 it suffered a setback in top and bottom lines. If we annualize the latest earnings and attribute it to the fully diluted equity post issue then asking price is at a P/E of 9.8 (against peers trading at an average P/E of 28 currently)and at a P/BV of 1.3. For last three fiscals, its average RoNW is just around 10.
On merchant banker’s front, this is the 27th mandate from its stable. Last 10 listings have shown positive trends on the day of listing.
Conclusion: Investors may consider investment for medium to long term in this power sector issue.
Review By Dilip Davda on May 18, 2017
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 Shri Ram Switchgears Ltd. offers an early investment opportunity in Shri Ram Switchgears Ltd.. A stock market investor can buy Shri Ram Switchgears IPO shares by applying in IPO before Shri Ram Switchgears Ltd. shares get listed at the stock exchanges. An investor could invest in Shri Ram Switchgears IPO for short term listing gain or a long term.
Read the Shri Ram Switchgears IPO recommendations by the leading analyst and leading stock brokers.
Shri Ram Switchgears IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Shri Ram Switchgears IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Shri Ram Switchgears IPO?"
Our recommendation for Shri Ram Switchgears IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Shri Ram Switchgears IPO.
The Shri Ram Switchgears IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Shri Ram Switchgears IPO allotment status to check.
