S S Infrastructure NSE SME IPO review (May apply)

S S Infrastructure Development Consultants Ltd. (SSIDC) is engaged in the business of Engineering Consultancy and is an Integrated Infrastructure Development solution provider in India. Company provides Architectural Planning, Comprehensive Civil/Structural designs, Project Management Consultancy, Repairs and Rehabilitation, Quality Management Systems through well qualified teams and experienced promoters. SSIDC mainly participates in the tenders floated by the Government authorities, corporate establishments and other business entities. The pricing of its services is determined on the basis of construction, type of customization, equipment required and estimated duration within which it needs to be completed. It has executed large projects for organizations like Cyient Limited (formerly known as Infotech Enterprises Ltd.), Granules India Limited and Government Organizations.

To part finance renovation of existing offices and opening of new branch office, purchase of software and hardware, repayment of certain loans, working capital and general corpus fund needs, SSIDC is coming out with a maiden IPO of 4278000 equity shares of Rs. 10 each via book building route with a price band of Rs. 37 – Rs. 40 to mobilize Rs. 15.83 cr. to Rs. 17.11 cr. (Based on lower and upper price bands). Issue opens for subscription on 28.03.18 and will close on 05.04.18. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 30.19% of the post issue paid up capital of the company. Having raised initial equity at par, it raised further equity at a price of Rs. 14541 per share. It has also issued bonus shares in the ratio of 800 for 1 in September 2017. Average cost of acquisition of shares by promoters is Rs. 0.01 per share. Post issue, its current paid up equity capital of Rs. 9.89 cr. will stand enhanced to Rs. 14.17 cr.

On performance front, SSIDC has posted revenue/net profits of Rs. 18.55 cr. / Rs. 2.63 cr. (FY14), Rs. 28.31 cr. / Rs. 3.83 cr. (FY15), Rs. 26.62 cr. / Rs. 3.42 cr. (FY16) and Rs.24.68 cr. / Rs. 3.80 cr. (FY17). Thus last three fiscals top line has shown declining trends. However, for the first half it has earned net profit of Rs. 2.80 cr. on revenue of Rs. 14.60 cr. indicating surge in top and bottom lines. As on 21.03.18 it has order book of Rs. 125 crore. Currently its revenue mix is Govt. v/s Private is 80:20 approx; which will transpire in 60:40 ratios going forward. For last three fiscals it has posted an average EPS of Rs.4.60 and an average RoNW of 23.99%. Issue is priced at a P/BV of 1.61 on the basis of its NAV of Rs. 24.80 as on 30.09.17. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 10 against industry average of 67. It has shown Mold Tek, ATV Proj and Artefact as its listed peers and are trading at a P/E of around 25, 0.35 and -8 (as on 21.03.18 on BSE). However, all these peers are not strictly comparable.

On merchant banker’s front, this is 65th mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened at discount to offer price, 1 just Rs. 0.05 paise up on offer price, 7 with a premium ranging from 4% to 20% and 1 (main board issue) with a premium of 130% on the offer price on the day of listing.