Supertech EV BSE SME IPO review (Avoid)

•    The company is engaged in manufacturing/assembling of two-three wheeler EVs.
•    It has a net work of 445 distributors in 19 states.
•    It has introduced 12 models for EV 2-wheelers and E-Rikshaw.
•    The company posted boosted top and bottom lines for FY24 and FY25.
•    There is no harm in skipping this pricey offer.

ABOUT COMPANY:
Supertech EV Ltd. (SEL) has acquired the running business operations of “Supertech Inc”, proprietorship firm which was established in fiscal year 2005, engaged in the business of manufacturing E-Rickshaw, vide agreement dated April 01, 2023. Supertech Inc was engaged in the manufacturing of E-Rickshaw and other related products including the chassis body for other market players. The Company was incorporated to manufacture E-Rikshaw and to assemble 2-wheeler e-scooter including high speed and low speed products. With this acquisition, it has consolidated all operations in respect to the manufacturing of E-rickshaw and assembling of two wheelers scooters. 

To synergies the business activities of both the entities the Company has acquired Supertech Inc effective from April 01, 2023. To manufacture the E-Rickshaw, the Company procures the majority of raw materials including motors, controllers, brakes, differentials, axle, tyres etc. from the domestic suppliers and for 2 wheelers, since presently it is engaged in assembling of two wheelers, therefore majority of products/ raw materials in CKD (Completely Knocked-Down) were imported products from China.

As a pioneering force in the Indian electric vehicle (EV) market. Since our inception, it has been at the forefront of driving the electrification of mobility in India, leveraging its manufacturing facilities located in Haryana with an introduction of 12 models including 8 variants of EV 2 wheelers and 4 variants of E-Rickshaw, with a distributor base of 445 across India and presence in 19 states.

SEL’s core focus lies in capitalizing on the burgeoning opportunities presented by the electrification of mobility, aligning its efforts with India's vision for a cleaner, greener future. With a diverse portfolio of electric vehicles, including E-Rickshaws and E-Scooters, the company caters to the evolving needs of the Indian automobile market. The company has rapidly evolved to become a significant player in the market, specializing in the design, development, manufacturing, and distribution of high-quality electric two-wheelers and E-rickshaws.  As of May 31, 2025, it had 148 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 3249600 equity shares of Rs. 10 each to mobilize Rs. 29.90 cr. The company has announced a price band of Rs. 87 – Rs. 92 per share. The issue opens for subscription on June 25, 2025, and will close on June 27, 2025. The minimum number of shares to be applied is for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.29% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, the company will utilize Rs. 16.50 cr. for working capital, Rs. 3.00 cr. for repayment of certain borrowings, and the rest for general corporate purposes. 

The IPO is solely lead managed by Corporate Makers Capital Ltd., and Skyline Financial Services Pvt. Ltd., is the registrar to the issue. Asnani Stock Broker Pvt. Ltd. is the market maker. The issue is underwritten to the tune of 84.97% by Asnani Stock Broker and 15.03% by Corporate Makers Capital.

The company has issued initial equity shares at par value. It has issued further equity shares in the price range of Rs.11.00 – Rs. 110.00 per share between February 2024, and June 2024. It has also issued bonus shares in the ratio of 1 for 1 in May 2024. The average cost of acquisition of shares by the promoters is Rs. 5.00, and Rs. 5.39 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 9.11 cr. will stand enhanced to Rs. 12.36 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 113.70 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 2.38 cr. / Rs. 0.06 cr. (FY23), Rs. 65.14 cr. / Rs. 5.02 cr. (FY24), Rs. 75.19 cr. / Rs. 6.19 cr. (FY25). 

For the last three fiscals, the company has reported an average EPS of Rs. 7.57 and an average RoNW of 36.58%. The issue is priced at a P/BV of 4.96 based on its NAV of Rs. 18.55 as of March 31, 2025, but its post-IPO NAV data is missing from offer document.

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 18.36. Based on FY24 earnings, the P/E stands at 22.66. The issue relatively appears aggressively priced.

For the reported periods, the company has posted PAT margins of 2.68% (FY23), 7.72%, (FY24), 8.25% (FY25), and RoCE margins of 5.94%, 51.77%, 36.66% for the referred periods, respectively. 

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It has adopted a dividend policy in June 2024, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Delta Autocorp as their listed peers. It is trading at a P/E of 13.4 (as of June 20, 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 3rd mandate from Corporate Makers in the last two fiscals, including the ongoing one.  It has a track record for only 1 listing so far, which opened at a discount and thus, it has poor track record.