Transwind Infra NSE SME IPO review (Apply)

Transwind Infrastructures Ltd (TIL) is engaged in executing the Government's & Public sector undertaking Projects for various works such as infrastructure development projects in the growing sectors of Railways signaling and telecommunication (S&T), Quad cable & Optical Fiber Cable (OFC) projects with its annual maintenance, Establishing the Gas Pipeline Network for the Gas Distributors. The company has specialization in Railway infrastructure development in the field of signaling and telecommunication for the past 20 years. Initially, TIL worked for the project of Bharat Sanchar Nigam Limited (BSNL) cable network at different Secondary Switching Area (SSA). Subsequently it expanded the work to many SSA thereafter for the last 10 years. The company is also caring out Annual Maintenance Contract (AMC) of quod cable along with repeaters in the section Rajkot, Viramgam, Dhrangadhra, Bhatia- Okha, Rajkot –Bhatia for almost 10 years.mIt has served and continuing to serve to various government and public sector undertakings projects of S&T to Indian Railways (Western Railway, North Western Railway, West Central Railway).Apart from above TIL has done and continuing to provide Domestic Gas connection pipeline projects for various clients like Mahanagar Gas Limited Mumbai, Green Gas Limited Lucknow, Green Gas Limited Agra, Indraprastha Gas Limited, New Delhi and Bhagyanagar Gas Limited Hyderabad.

To part finance its capital expenditures, working capital and general corpus fund needs, the company is coming out with a maiden IPO of 2700000 equity share of Rs. 10 each at a fixed price of Rs. 27 per share to mobilize Rs. 7.29 crore. Issue opens for subscription on 30.06.17 and will close on 04.07.17. Minimum application is to be made for 4000 shares and in multiples thereof, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Swastika Investmart Ltd and Link Intime India Pvt Ltd is the registrar to the issue. Since inception till year 2000 it issued all equity at par. Thereafter it raised further equity in a price range of Rs. 40 to Rs. 160 during December 2007 - May 2017 and has also issued bonus shares in the ratio of 9 shares for every 1 share held in May 2017. Post issue its current paid up equity capital of Rs.3.99 crore will stand enhanced to Rs. 6.69 crore.

On performance front, the company has posted turnover/net profits of Rs. 11.68 cr. / Rs. 0.52 cr. (FY13), Rs. 12.74 cr. / Rs. 0.56 cr. (FY14), Rs. 9.22 cr. / Rs. 0.29 cr. (FY15) and Rs. 9.81 cr. / Rs. 0.33 cr. (FY16). For the nine months ended on 31.12.16 of FY 17, it has earned net profit of Rs. 0.45 cr. on a turnover of Rs. 8.36 cr. Thus it suffered a setback post FY14 in top and bottom lines. If we annualize the latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of 30 and at a P/BV of 2.06. For last three fiscals its average RoNW is around 8.24%. Its peers are trading in a P/E range of 9to 27. Thus issue is aggressively priced.

On merchant banker's front, this is the 5th mandate from its stable and past four issues gave positive returns on the day of listing.

Conclusion: Investors may consider investment for short to long term.