Review By Dilip Davda on October 7, 2018
• UWCSL is engaged in auto electrical parts.
• It has shown steady growth in top and bottom lines.
• Part IPO process is going for setting up of new unit.
• Issue appears reasonably priced.
ABOUT COMPANY:
Ultra Wiring Connectivity Systems Ltd. (UWCSL) is engaged in the business of manufacturing of couplers, connectors and allied products for automobiles with fully automatic machineries. Its client list includes Tata Motors, Bajaj Auto, Maruti Udyog, TCS Motors, Kinetic Engg., Tata Yazaki, Minda Group of Ind., Lumax Group, Fiem Industries etc.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans for setting up of new parallel production units for Connector and Blade Fuse, working capital and general corpus fund needs, UWCSL is coming out with a maiden IPO of 1376000 equity shares of Rs. 10 each at a fixed price of Rs. 35 per share. Issue opens for subscription on 12.10.18 and will close on 17.10.18.Company mulls mobilizing Rs. 4.82 cr. through this float. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Issue constitutes 26.44% of the post issue paid up capital of the company. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by D&A Financial Services Pvt. Ltd. while Bigshare Services Pvt. Ltd. is the registrar to the issue. Having raised initial equity at par, it raised further equity at a price of Rs. 100 per share between March 2007 and June 2013. It has also issued bonus shares in the ratio of 10 for 1 in February 2018. Average cost of acquisition of shares by the promoters is Rs. 0.91 and Rs. 4.61 per share. Post issue UWCSL’s current paid up equity capital of Rs. 3.83 cr. will stand enhanced to Rs. 5.20 cr.
FINANCIAL PERFORMANCE:
On financial performance front, for last four fiscals, UWCSL has posted turnover/net profits of Rs. 12.34 cr. / Rs. 0.40 cr. (FY15), Rs. 13.94 cr. / Rs. 0.57 cr. (FY16), Rs. 15.18 cr. / Rs. 0.75 cr. (FY17) and Rs. 17.87 cr. / Rs. 1.18 cr. (FY18). Thus it has posted steady growth in top and bottom lines for these fiscals. For first two months ended on 31.05.18 of FY19 it has posted net profit of Rs. 0.24 cr. on a turnover of Rs. 3.49 cr. Issue is priced at a P/BV of 2.16 based on its NAV of Rs. 16.24 as on 31.05.18 and at a P/BV of 1.69 based on post issue NAV of Rs. 20.74. For last three fiscals, it has posted an average EPS of Rs. 2.44 and an average RoNW of 17.43%. If we annualize FY19 earnings and attribute it to fully diluted post issue equity, then asking price is at a P/E of around 13 and thus appears reasonably priced.
COMPARE WITH LISTED PEERS:
As per offer document, UWCSL has no listed peers to compare with.
MERCHANT BANKER’S TRACK RECORD:
On merchant banker’s front, this is the 5th mandate since March 2011. However, in last three fiscals, this is the 2nd mandate and the only listing that took place during this period opened at a discount on the listing day. From 3 issued of 2011/12, on opened at a discount to offer price while the rest 2 opened with a premium ranging 10% to 13.6%. Thus it has average track record.
This auto ancillary segment IPO, at a reasonable value and having growing financial performance, may be considered for long term investment.
Review By Dilip Davda on October 7, 2018
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 Ultra Wiring Connectivity System Ltd. offers an early investment opportunity in Ultra Wiring Connectivity System Ltd.. A stock market investor can buy Ultra Wiring Connectivity IPO shares by applying in IPO before Ultra Wiring Connectivity System Ltd. shares get listed at the stock exchanges. An investor could invest in Ultra Wiring Connectivity IPO for short term listing gain or a long term.
Read the Ultra Wiring Connectivity IPO recommendations by the leading analyst and leading stock brokers.
Ultra Wiring Connectivity IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Ultra Wiring Connectivity IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Ultra Wiring Connectivity IPO?"
Our recommendation for Ultra Wiring Connectivity IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Ultra Wiring Connectivity IPO.
The Ultra Wiring Connectivity IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Ultra Wiring Connectivity IPO allotment status to check.
