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Review By Dilip Davda on December 23, 2023
• APIL is in the business of sustainable quality power solutions and enjoys niche place.
• The company posted inconsistency in its bottom lines for the reported periods.
• With the recent new contracts on hand, the company is poised for bright prospects.
• Based on FY24 annualized earnings, the issue appears fully priced.
• Investors may park funds for the medium to long term rewards.
PREFACE:
The company tried to bring its maiden IPO in the month of September 2023, but stood withdrawn for the reasons best known to the Lead Manager and Promoters. Surprisingly the company has lifted its IPO price band from Rs. 40 - Rs. 45 per to Rs. 52 - Rs. 55 per share and has just increased the IPO size from 4995000 to 4998000. According to the management, this hike in price is mirroring new developments and contracts awarded to them in the last three months' duration. According to the management, they have advanced technological product that is set to bring revolution in the segment.
ABOUT COMPANY:
Akanksha Power and Infrastructure Ltd. (APIL) is engaged in the business of manufacturing electric equipment, including electrical panels, instrument transformers, and vacuum contactors, catering to consumers from institutions, industries, and electricity transmission and distribution utilities. The Company has two (2) manufacturing plants, to manufacture the products with emphasis on quality and performance. Akanksha was founded in 2008 with a vision to provide sustainable and reliable power solutions to its customers; and from 2008 to 2010, the Company was engaged in the trading of Capacitors, which were procured from EPCOS India Private Limited, currently known as TDK Electronics.
The Company entered into a new sector of business, i.e., turnkey construction of High Tension (HT) and Low Tension (LT) electrical infrastructure including 33/11 KV Substations, Distribution Substations, etc. In the year 2016, the Company added new products like Current Transformer (CT), Potential Transformer (PT), and Residual Voltage Transformer (RVT), used to measure current and voltage in electrical systems. In 2018, the Company got the green field LED street light projects on a turnkey basis in 12 districts of Odisha, and currently, it is providing operation and maintenance (O&M) services for the next 7 years.
In the year 2019, the company launched another new product - Vacuum Contactors. These contactors are used in heavy-duty applications and are designed to operate reliably even in harsh environments. Additionally, the company also introduced capacitor switches that help control power systems more efficiently. Now the Company is ready to launch its own Advanced Metering Infrastructure (AMI) for effective control of Technical and Commercial losses.
The Company presently has two (2) manufacturing plants situated at Plot No. 87/4, MIDC, Satpur, Nashik- 422007, Maharashtra, India, and F- 97, MIDC, Satpur, Nashik- 422007, Maharashtra, India.
The Company is engaged in business to business (B2B) segment as well and also supplies products to end customers. It caters to engineering projects and products for its various clients in India. APIL supplies products to institutional, non-institutional, and corporate customers. In addition, it supplies products to power utilities, which primarily includes the supply of APFC Panels, Instrument Transformers, and other electrical equipment under direct contractual arrangements to electricity boards and power distribution companies, as well as through project contractors. As of June 30, 2023, it had a total of 439 employees on its payroll including 377 contractual staff.
The Company's vision is to be a leading and sustainable Power Quality Solution (PQS) Provider, using the latest technology, for customer from Industry and DISCOMs. According to the management, it is the only company engaged in this kind of business and hence it poised for bright prospects ahead with the support across the board on Pan-India basis. Company's client list includes Nalco, Mahatransco, SAIL, ABB, HAL, Hitachi, Oil India, Coal India, Larsen & Toubro, to name a few.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden book-building route IPO of 4998000 equity shares of Rs. 10 each. The company has announced a price band of Rs. 52 - Rs. 55 per share and mulls mobilizing Rs. 27.49 cr. at the upper cap. The issue opens for subscription on December 27, 2023, and will close on December 29, 2023. The minimum application to be made is for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.99% of the post-IPO paid-up capital of the company. From the net proceeds of IPO funds, it will utilize Rs. 5.00 cr. for capital expenditure, Rs. 15.00 cr. working capital, and the rest for general corporate purposes.
Narnolia Financial Services Ltd. is the sole lead manager and Link Intime India Pvt. Ltd. is the registrar of the issue. Nikunj Stock Brokers Ltd. and SS Corporate Securities Ltd. are the market makers for the company. PLS Capital Consultants Pvt. Ltd. and Longview Research and Advisory Services Pvt. Ltd. are the advisors on the issue.
The issue is underwritten 15.01% by Narnolia Financial, 42.50% by Nikunj Stock Brokers Ltd., and 42.50% by SS Corporate Securities Ltd.
Having issued/converted initial equity shares at par, the company issued further equity shares at a fixed price of Rs. 50.00 per share in June 2023. It has also issued bonus shares in the ratio of 6 for 1 in June 2023. The average cost of acquisition of shares by the promoters is Rs. 1.63 and Rs. 1.80 per share.
Post-IPO, APIL's current paid-up equity capital of Rs. 13.52 cr. will stand enhanced to Rs. 18.52 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 101.85 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the past three fiscals, the company has posted a total revenue/net profit of Rs. 74.41 cr. / Rs. 3.92 cr. (FY21), Rs. 52.07 cr. / Rs. 2.41 cr. (FY22), and Rs. 46.44 cr. / Rs. 2.91 cr. (FY23). While its top line marked declining trends, the bottom line posted inconsistency. For Q1 of FY24 ended on June 30, 2023, it earned a net profit of Rs. 0.71 on a total revenue of 10.27 cr.
For the last three fiscals, APIL has reported an average EPS of Rs. 2.43 and an average RoNW of 21.39%. The issue is priced at a P/BV of 0.51 based on its NAV of Rs. 15.35 as of March 31, 2023, and at a P/BV of 0.80 based on its post-IPO NAV of Rs. 23.35 per share.
If we attribute FY24 annualized earnings to the post-IPO fully diluted paid-up equity capital of the company, then the asking price is at a P/E of 35.72. Thus the issue appears fully priced. According to the management, their second half is always better with maximum business historically and hence Q1-FY24 cannot be indicative of the prospects in store.
For the last three fiscals, APIL has reported PAT margins of 2.07% (FY21), 4.65% (FY22), and 6.30% (FY23), 7.19% (Q1-FY24).
DIVIDEND POLICY:
The company has not declared any dividends for any financial year so far. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown HPL Electric, Genus Power, and Cospower Engg. as their listed peers. They are trading at a P/E of 42.03, 110.43, and 194.21 (as of December 22, 2023). However, they are not comparable on an apple-to-apple basis.
MERCHANT BANKER'S TRACK RECORD:
This is the 7th mandate from Narnolia Financial in the last two fiscals (including the ongoing one). Out of the last 5 listings, all are listed with premiums ranging from 4.35% to 57.08% on the date of listing.
Review By Dilip Davda on December 23, 2023
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Akanksha Power and Infrastructure Limited offers an early investment opportunity in Akanksha Power and Infrastructure Limited. A stock market investor can buy Akanksha Power and Infrastructure IPO shares by applying in IPO before Akanksha Power and Infrastructure Limited shares get listed at the stock exchanges. An investor could invest in Akanksha Power and Infrastructure IPO for short term listing gain or a long term.
Read the Akanksha Power and Infrastructure IPO recommendations by the leading analyst and leading stock brokers.
Akanksha Power and Infrastructure IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Akanksha Power and Infrastructure IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Akanksha Power and Infrastructure IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Akanksha Power and Infrastructure IPO.
The Akanksha Power and Infrastructure IPO allotment status will be available on or around January 1, 2024. The allotted shares will be credited in demat account by January 2, 2024. Visit Akanksha Power and Infrastructure IPO allotment status to check.
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