Technofab Engineering Ltd IPO Message Board (Page 19)

SahranpuriJi,
Our Stanchart is doing well.Now what is your next IPO?See as I had said the reason for Cox falling heavily from 500+ to 420 was Europe crisis,so that was a correct guess.Please give your thoughts on Technofab.

Dear Natarajan,
What is your opinion about Technofab.Are you thinking of putting any application.I personally think its a very good Issue & will be applying in good quantity.It will be subscribed heavily in FII category & I find very less risk in it.

Guys,
Enough of this bickering.lets get back to discussing IPOs.Please give your opinion about Technofab.

Dear 46. Invester superg
You made it very simple. Technofab business can be defined as “small size mechanical contractor in light engineering (read piping and tankage work etc) construction work”. To some extent similar to Petron Engg. or Sunil high tech. Petron is available at 8.5x FY11 and Sunil high-tech is available at 5PE FY11.

You must also read Technofab’s balance sheet. It’s Net asset is only worth 5cr. What can be done with 5cr. equipment asset ? How competative that business will be which can be run with asset worth of 5cr. Also study its cash flow. It is negative on operational level with 24cr. receivable last year as compare to 4 4cr. to 5cr. receivable for nos. of earlier years ?? what does it say ?

If you compare PE of its cousin (Civil contractors) with bracket of 200 cr. to 500cr. market cap, you will find nos. of company within 5 to 8PE multiples. For ex. Gayatri project 9PE, Simplex proects 8PE, MBL infra and Supreme infra, J.kumar project 7PE, Jaihind project- pipeline and mechanical contractor 6PE. All this company have excellent growth profile. Technofab is being offered at 8.1xFY11 multiple, that too if we believe them that they will grow their profit by 62% this year.

So do not get gung ho. Having said that lot of interest is being built in this counter and may see some hectic activity on this.

Dear Sameer,

You either do a pre money valuation or post money. Its not justified to take previous years PAT divide it by post issue capital to arrive at EPS. That means you are not valuing the cash which will be received from IPO.

Hence please see pre money valuation is 251-71 which is 180 cr working out to 9.6 times and for post money valuation which you have taken on the basis of F.Y.10 PAT is not correct and should be done on estimated F.Y.11 PAT.By no means i am great, i am a ordinary person discussing valuation.

Hope this clarifies the valuation and can ipo king say which stock in this sector is cheaper then this to say "yeh mehanga hai".

muje lagta hai ki 230-240 ka price band thoda zyada hai
Q k 240 Rs k uper price band pe invester ko profit shayad hi mil payega........................
muje to ye ipo overprice lagta hai...

Technofab is offering 29,90,000 shares in its IPO, this constitutes only 28.5% of post-issue equity capital. The equity post-issue works out to 10.5 Cr (1.05 Cr shares of FV 10) So, the EPS for previous year works out to 19.09 Cr (last year's profit) divided by 1.05 Cr (no. of shares) i.e, about Rs. 18.2 and P/E ratio about 13.18 @ Rs. 240. What's your opinion, "Investor superg", the GREAT?

i think people need to be given some valuation lessons. The topline for F.Y.2010 200 crore and Pat is 19 crore. Eps for F.Y. 10 is 25.on non dilutive basis. please do not take eps on the basis of F.Y.10 PAT and fully diluted capital of F.Y.11 post issue. The pre money eps is 25 thus making it 9.6 times on the upper band

F.Y.11 no's are conservative 350 crore from the order book of 533 crore to be executed. Eps for 11 is expected to be around 30 hence forward P.E is around 8.

You cannot find a cheaper stock in this sector of such margin and excellent management.

I think IPO king needs some maths tution to call this overprice or he is just an market anadi.

Go for this ipo for excellent long term returns

Sorry forgot to provide the link
http://www.sebi.gov.in/dp/technofabrhp.pdf

Suraj,
Check this link,This is the red herring prospectus filed on June18.Check page 66 & 67.In that he has clearly given EPS as 25.45 for year ended March2010.That was on a pre Issue equity of 75 Lakhs,Now post equity we have 75+29=1.04 Cr.So EPS will be 19.1/1.04=18.4.RONW is 38.2.

On page 67 comparison is given with Peers.
6. Comparison of accounting ratios with Industry Peers
Name of Company
FaceValue EPS P/E RONW(%)NAVperShare
Technofab Engineering Limited*10 25.45 * 38.20 66.64
Hindustan Dorr Oliver Limited 2 7.7 16.7 21.3 28.2
Shriram EPC Limited 10 8.9 27.7 11.2 86.0
Sunil Hitech Engineers Limited10 12.4 12.9 9.2 141.5
McNally Bharat EngineeLimited 10 5.6 34.8 10.4 63.0
*EPS, Return on Net Worth and NAV per Equity Share have been calculated on basis of standalone
financial statements for the year ended on March 31, 2010.
(Source: Capital Market, Vol. XXV/04, May 17, 2010 May 30, 2010, Category "Engineering Turnkey Services")

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Hope this will settle the issue & there is no more dispute with regard to EPS.In its category it is the cheapest one available & It has Emerging India focus fund as the investor & it is continuing with Technofab & is not looking at any exit route.FIIs already hold 15 percent equity.

avoid this ipo.........
humne to pahle hi yaha 27 number k blog me kaha tha
i justyfy avoid this ipo b'coz highly over priced
viru plus aap ne kaha tha na [why to avoid] iska ans. uper diya hai.......
again i tell u avoid this ipo.....

EPS of 15.6 is mentioned in the draft red herring prospectus

Dear Gem,

How did you come across the figure of 15 EPS for fy09-10.On a post equity base of 1.04 Cr it has earned 19.1 Cr for fy09-10.So the EPS will come to 18.6 if Iam correct.Regarding Oil & Gas, Techofab has miniscule presence in the sector,Its major domain is Power & it will remain so.Compare it with Sunil Hitech,Hindustan Dorr ,Shriram EPC & not with the perennial execution delayer Punj Llyod.Following link gives the 27 ongoing projects of Technofab I did not find even one project related to Oil & Gas.
http://technofabengineering.com/main.htm?ongoingprojects

in fy '10 the co may have done an eps of rs. 15/sh.
this yr ending fy'11 the might do an eps of 18-20 /sh.

at the price band of 230-240, the issue is not cheap by any means, the co is in oil and gas construction where punj lloyd is the leader and look at punj lloyd now profit grinding lower and lower every qtr although they have dif problems.

i need further clarity about fy'10 and '11 nos before thinking of applying, after recent fall many good construction co have come to attractive levels for inv.

So friends Issue price decided at 230-240.
Following was posted by me on 16
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1. sreedhar Jun 16, 2010 7:21:12 PM IST Report Spam
Friends,
Finally an IPO worth looking at.Technofab is hoping to raise 750 million by selling approx 3 million shares.Hence it is looking at a price of 250.It had a profit of 19.1 crores on sales of 200 Cr.TEL is engaged in the business of providing Engineering Procurement and Construction (EPC) services, and executing a wide range of Balance-of-Plant (BoP) and electro-mechanical projects on a complete turnkey basis.

Technofab Engineering provides EPC services to domestic and overseas markets across a number of industrial and infrastructure sectors which includes conventional power, nuclear power, oil & gas, water & waste water treatment, electrical distribution & rural electrification and other industrial & infrastructure sectors. Apart from India, the company has presence in international markets like Ethiopia, Kenya and Fiji. Between FY 2008 to FY 2010, the company’s sales increased at a CAGR of 48% and PAT has grown at a CAGR of 189%. Its order book stands at Rs 5337.40 million as on 31st March, 2010 which is 2.7 times sales of FY 10.
So on a post equity base of 1.04 Cr EPS works out to 19 So issue is coming at 12.5 trailing PE.Compare this with other EPC companies for period ending FY09-10
PE RONW Orderbook
1)Hindustan Dorr Oliver- 15 21.3 1.7
2)Shriram EPC 26 11.2 1.5
3)Sunil Hitech 11 9.2 2.4

So it is looking promising in all parameters & the key thing is it is a small company with high potential to grow.Even its order book indicates the same.

Sunil Hitech is cheaper but it has reasons for that.It has just stepped into balance of plant business while Technofab is well entrenched in it.Just look at an interview question to Mr Gutte of Sunil Hitech
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Just to get your opinion on this one you bagged an order from Mahagenco could you highlight a little bit on that?

Yeah, it is first balance of plant order for the company so market was basically looking at emergence of one more company in the power sector to do a balance of plant in operation work. So the first order that has come to us from Mahagenco will put us in a different league altogether and it will put us in the league of all those BOP operators in the country and it opens up a huge opportunity because roughly BOP in totality is almost 2 Crores per megawatt for thermal power plants and if you look at the opportunity that is there in the 11th plan as well as the 12th plan there is a huge amount of market waiting for us to be tapped.
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So Iam looking forward to it & highly confident it will be well received by QIB investors.Mark my words
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MR. TULSIAN IS NOT GIVING ANY COMMENTS.I AM FEELING HELPLESS.WE COULD HAVE GAINED SOMETHING BY ACTING OPPOSITE TO HIS RECOMMENDATIONS.

P/E :- 14.7
EPS:- 15.6 for FY09
good company with good growth

sincerely hope they will not cause vinash of our application money ; it is argenuine company and not a forged onae and finally not a nakli company and is a genuine one.

ISSUE PRICE BAND RS.230 TO 240

PROMOTERS OF OUR COMPANY: MR. AVINASH C GUPTA, MR.ARJUN GUPTA AND MR. NAKUL GUPTA

Issue cleared by SEBI

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Regards,
Vishal