Tankup Engg NSE SME IPO review (May apply)

•    The company is engaged in the manufacturing of tailor-made specialized vehicle superstructures for complex mobility.
•    It is operating in a highly competitive and fragmented segment.
•    It has an order book worth Rs. 22.11 cr. as of March 13, 2025.
•    Small post-IPO equity base indicates longer gestation for migration.
•    Based on its financial data, the issue appears aggressively priced.
•    Well-informed/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Tankup Engineers Ltd. (TEL) is in the business of manufacturing specialised vehicle superstructure for complex mobility and storage solutions of various capacities. This involves manufacturing large containers or tank like solutions used for transporting/ storing various materials, which could include liquids, gases or solids, depending on customer product range. These tanks may be custom-built to meet specific client requirements regarding size, material, capacity, and features. The company caters to a broad spectrum of end-use industries like: Petroleum, Mining, Infrastructure, Defence etc. Its diversified range of product applications has helped it evolve as manufacturer of special purpose vehicle with superstructures to address complex mobility and storage solutions required by customers.

TEL’s focus on mobile solutions is intended to provide convenient solutions for transporting and dispensing goods like: fuel, water, other consumables in complex applications. These mobile tanks facilitate transportation from a storage facility to a remote site. Its tanks are mainly designed to cater to locations where access to products like: fuel, water, explosives is limited, such as construction sites, mining operations or remote industrial facilities. They serve as a backup during emergencies or in areas prone to power outages or disruptions in supply, ensuring continuity of operations. Addressing the specific logistical challenges of industries and operations that rely on diesel fuel, the Refueller manufactured by TEL is equipped with IoT monitored hardware modules where it has Components like: Dispensing Unit, GPS and Lock attached to it. They allow for the controlled dispensing of diesel fuel directly into machinery, vehicles, or storage tanks, ensuring that fuel is delivered where it's needed without the need for a fixed fuelling station.

As a part of expanding its operations the company is also engaged in fabrication of Mobile Service Vans/Workshop Container which are used as remote service setups for mining and infrastructure. The Company also provides repairs and reconditioning services for these mobility/storage solutions. Recently it has initiated to further expand its operations in defence and aviation industry. The company has received order from Ministry of Defence for supply of specialized vehicles superstructure designed for defence to be delivered at designated IAF station spread across India. It has also received order for supply of refuellers finding application in defence industry. As of November 30, 2024, it had 61 employees on its payroll and additional 34 contractual employees. As of March 13, 2025, it had an order book worth Rs. 22.11 cr. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 1395000 equity shares of Rs. 10 each to mobilize Rs. 19.53 cr. at the upper cap. It has announced a price band of Rs. 133 – Rs. 140 per share. The issue opens for subscription on April 22, 2025, and will close on April 25, 2025. The minimum number of shares to be applied is for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.35% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, the company will utilize Rs. 3.50 cr. for repayment in part or full certain borrowings, Rs. 10.00 cr. for working capital, and the rest for general corporate purposes. 

The company has reserved 36000 equity shares for its eligible employees and 70000 shares for the market maker, from the rest, it has allocated 50% for QIBs, 15% for HNIs and 35% for Retail investors.

The IPO is solely lead managed by Hem Securities Ltd., and Bigshare Services Pvt. Ltd. is the registrar to the issue. HEM group’s Hem Finlease Pvt. Ltd., is the Market Maker for the company, as well as a syndicate member. 

Having issued/converted initial equity shares at par value, the company issued further equity shares in the price range of Rs. 12.89 – Rs. 13.40 per share between February 2023, and August 2024. It has also issued bonus shares in the ratio of 10 for 1 in August 2024. The average cost of acquisition of shares by the promoters is Rs. 0.00, Rs. 1.01, and Rs. 13.39 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 3.90 cr. will stand enhanced to Rs. 5.30 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 74.13 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 1.40 cr. / Rs. 0.05 cr. (FY22), Rs. 11.85 cr. / Rs. 0.79 cr. (FY23), and Rs. 19.54 cr. / Rs. 2.57 cr. (FY24). For 8M of FY25 ended on November 30, 2024, it earned a net profit of Rs. 0.95 cr. on a total income of Rs. 12.48 cr. 

For the last three fiscals, the company has reported an average EPS of Rs. 5.71 and an average RoNW of 62.38%. The issue is priced at a P/BV of 8.50 based on its NAV of Rs. 15.82 as of November 30, 2024, but post-IPO NAV data is missing from offer documents.

If we attribute FY25 annualized earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 52.24. Based on FY24 earnings, the P/E stands at 28.87. The issue relatively appears aggressively priced. Its borrowings of Rs. 7.59 cr. as of November 30, 2024 also raise concern.

For the reported periods, the company has posted PAT margins of 3.29% (FY22), 6.68% (FY23), 13.23%, (FY24), 7.61% (8M-FY25), and RoCE margins of 3.89%, 30.30%, 46.49%, 10.63% respectively for the referred periods. 

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

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with. 

MERCHANT BANKER’S TRACK RECORD:
This is the 61st mandate from Hem Securities in the last three fiscals.  Out of last 60 listings, 2 IPOs closed below the IPO price on listing date.