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Anlon Technology NSE SME IPO review (May apply)

Review By Dilip Davda on Dec 26, 2022

•    ATSL is primarily engaged in providing engineering services for engineering systems.
•    Its super earnings in the pre-IPO period raise eyebrows. 
•    Based on profits reported recently, the issue appears reasonably priced. 
•    The sustainability of such margins going forward is a major concern.
•    Well-informed cash surplus investors may consider parking funds for the medium to long term.
 
ABOUT COMPANY:
Anlon Technology Solutions Ltd. (ATSL) is primarily engaged in the business of providing engineering services for engineering systems, built on automotive chassis and allied areas, majorly for airports, high-rise buildings, and refineries. The Company also sells spare parts for performing engineering services which is an ancillary part of the engineering services. 

In FY22, the company entered into a contract for the fabrication and installation of airport interior equipment where it did sourcing, supervising & quality control of the manufacturing process, and did safe transportation & installation of the end product to the installation site, overseeing safe installation, and have supplied conveyer belt systems in airports for air cargo handling companies and
have also been providing equipment and services for runway maintenance.

The company identifies requirements in aviation infrastructure and mobile fire-fighting and coordinates for imports of high-performance equipment from world-class suppliers. Part of the mission of the company is to understand the need of the market and translate the same onto specialist manufacturers for working out and offering appropriate solutions. In the case of overseas manufacturers, which most often is the case, Anlon provides end-to-end techno-commercial support which includes specifying the solution, facilitating techno-commercial interaction between the manufacturer and the end user, and assisting in order processing, and support in successful implementation by providing all logistic support in India such as customs clearance, inland transportation, etc. 

ATSL further offers help in installation, commissioning, training, warranty, and post-warranty services and thus looking after the equipment for its whole lifetime. It also supports spare parts distribution. As of the date of filing this offer document, it has 113 employees on its payroll. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden IPO of 1500000 equity shares of Rs. 10 each via the book-building route. It has announced a price band of Rs. 95 - Rs. 100 and mulls mobilizing Rs. 15.00 cr. at the upper cap. The issue opens for subscription on December 29, 2022, and will close on January 02, 2023. The minimum application to be made is for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.76% of the post-issue paid-up capital of the company. From the net proceeds of the IPO money, ATSL will utilize Rs. 10.25 cr. for the working capital, and for general corporate purposes. It has allocated 76800 shares for the market maker, 710400 (50%) shares for QIBs, 213600 (15%) shares for HNIs, and 499200 (35%) shares for Retail investors. 

The sole lead manager for this IPO is GYR Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar of the issue while Rikhav Securities Ltd. is the market maker for the company. 

Having issued initial equity shares at par, the company issued further equity shares at Rs. 100 per share in September 2022. It has also issued bonus shares in the ratio of 400 for 1 in July 2022. The average cost of acquisition of shares by the promoters is Rs. 0.0014 and Rs. 0.02 per share. 

Post-IPO, ATSL's current paid-up equity capital of Rs. 4.11 cr. will stand enhanced to Rs. 5.61 cr. At the upper cap of the IPO price band, the company is looking for a market cap of Rs. 56.05 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, ATSL has posted a turnover/net profit of Rs. 13.81 cr. / Rs. 0.69 cr. (FY20), Rs. 14.44 cr. / Rs. 0.74 cr. (FY21), and Rs. 19.59 cr. / Rs. 2.43 cr. (FY22). For H1 of FY23, it earned a net profit of Rs. 2.39 cr. on a turnover of Rs. 13.42 cr. The sudden boost in bottom lines in the pre-IPO year appears as window dressing. 

For the last three fiscals, the company has reported an average EPS of Rs. 3.93 and an average RoNW of 41.45%. The issue is priced at a P/BV of xx based on its NAV of Rs. 20.05 as of September 30, 2022, and at a P/BV of xx based on its post-IPO NAV of Rs. 41.44 per share (at the upper cap). 

If we annualize FY23 super earnings and attribute it to post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of around 11.71.  However, the sustainability of super margins posted recently is the main concern.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. 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 no listed peers to compare with. 

MERCHANT BANKER'S TRACK RECORD:
The Lead Manager associated with the issue has handled 9 public issues in the last two fiscals (including the ongoing one), out of which no issues closed below the issue price on the listing date.


Conclusion / Investment Strategy

ATSL is an engineering services provider with the supply of related spares and after-sales services. Based on its super earnings posted in the Pre-IPO period the issue is reasonably priced, but the sustainability of such super margins going forward is a major concern. The small equity base post IPO indicates longer gestation for migration to the mainboard. Well-informed cash surplus investors may park their funds for the medium to long term.

Review By Dilip Davda on Dec 26, 2022

Review Author

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. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. 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 own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

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.

Email: dilip_davda@rediffmail.com

Anlon Technology Solutions IPO FAQs

  1. 1. Why Anlon Technology Solutions IPO?

    The initial public offer (IPO) of Anlon Technology Solutions Limited offers an early investment opportunity in Anlon Technology Solutions Limited. A stock market investor can buy Anlon Technology Solutions IPO shares by applying in IPO before Anlon Technology Solutions Limited shares get listed at the stock exchanges. An investor could invest in Anlon Technology Solutions IPO for short term listing gain or a long term.

  2. 2. How is Anlon Technology Solutions IPO?

    Read the Anlon Technology Solutions IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Anlon Technology Solutions IPO what should investors do?

    Anlon Technology Solutions IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Anlon Technology Solutions IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Anlon Technology Solutions IPO good?

    Our recommendation for Anlon Technology Solutions IPO is to subscribe for long term.

  5. 5. Is Anlon Technology Solutions IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Anlon Technology Solutions IPO.

  6. 6. When will Anlon Technology Solutions IPO allotment status?

    The Anlon Technology Solutions IPO allotment status will be available on or around Jan 5, 2023. The allotted shares will be credited in demat account by Jan 9, 2023. Visit Anlon Technology Solutions IPO allotment status to check.

  7. 7. When will Anlon Technology Solutions IPO list?

    The Anlon Technology Solutions IPO will list on Tuesday, January 10, 2023, at NSE SME.

2 Comments

2. Manoj Gupta   I Like It. |Report Abuse|  Link|Jan 6, 2023 12:13:33 AMReply
1/4
1. Jayesh   I Like It. |Report Abuse|  Link|Dec 30, 2022 4:16:56 PMReply
What is promoter holding after ipo