Bright Solar NSE SME IPO review (Apply at your own risk)

Review By Dilip Davda on Jun 19, 2018

Bright Solar Ltd. (BSL) is engaged in assembling of DC/AC Solar Pumps and Solar Pump Systems under the registered brand name of “PUMPMAN”, “BRIGHT SOLAR”, and “BRIGHT SOLAR WATER PUMP”. It is also engaged in EPC contracts of Solar Photovoltaic Water pumps which include supplying, installing and commissioning of the pump system along with comprehensive maintenance contract for a specific period of 1-5 years. In solar pump system it has wide range of products of DC Solar Pump, Solar Pump Inverter and AC Solar Pump. In addition, BSL has also been added water supply, sewerages and infra project in our service portfolio. Company is also planning to set up water treatment plant assembling unit at Patna (Bihar).

To part finance its plans for acquisition of land including stamping and registration for proposed solar PV Modules/panels manufacturing project, working capital and general corpus fund needs, BSL is coming out with a maiden IPO of 5400000 equity shares of Rs. 10 each with a fixed price of Rs. 36 per share to mobilize Rs. 19.44 cr. Issue opens for subscription on 26.06.18 and will close on 29.06.18. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Swastika Investmart Ltd. Alankit Assignments Ltd. is the registrar to the issue. Issue constitutes 26.47% of the post issue paid up capital of the company. Having issued initial equity at par, it raised further equity in the price range of Rs. 50 to Rs. 91 in the year 2015 and 2016. It has also issued bonus shares in the ratio of 9 for 1 in February 2018. Average cost of acquisition of shares by the promoters is Rs. 1.48 per share. Post issue, BSL’s current paid up equity capital of Rs. 15.00 cr. stand enhanced to Rs. 20.40 cr. Its current debt equity ratio is 0.12:  1

On performance front, for last four fiscals BSL has posted turnover/net profits of Rs. 28.46 cr. / Rs. 0.54 cr. (FY14), Rs. 47.84 cr. / Rs. 1.97 cr. (FY15), Rs. 15.47 cr. / Rs. 0.71 cr. (FY16) and Rs. 18.13 cr. / Rs. 1.71 cr. (FY17). For first 10 months ended on 31.01.18 of FY18, it has earned net profit of Rs. 5.35 cr. on a turnover of Rs. 28.27 cr. Sudden jump in top line for FY 15 and fall thereafter and more surprising it rise in profits on lower top lines for FY 16 onwards and robust net profit for first ten months of FY18 raises eyebrows of one and all. For last three fiscals it has reported an average EPS of Rs. 0.97 and an average RoNW of 19.08%. Issue is priced at a P/BV of 3.47 on the basis of its NAV of Rs. 10.36 as on 31.01.18 and at a P/BV of 2.10 on the basis of post issue NAV of Rs. 17.14. If we annualized latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 11. As per offer document, it is showing Urja Global and Shakti Pumps as its listed peers that are currently trading at a P/E of around 0 and 29 (as on 19.06.18). Thus pricing appears reasonable based on its latest earnings, but will it sustain such robust performance going forward?

On merchant banker’s front, this is 16th mandate from its stable in last three fiscals. Out of last 10 listings, 2 opened at a discount to offer price, 8 with a premium ranging from 1.67% to 20% on the day of listing.


Conclusion / Investment Strategy

Inconsistency in its performance for last few years and superb earnings for first 10 months of FY18 raises concern. Though pricing looks reasonable, concern over sustainability of such earnings going forward raises doubt. Hence risk savvy investors may consider investment on their own risk. (Other).

Review By Dilip Davda on Jun 19, 2018

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

Bright Solar IPO FAQs

  1. 1. Why Bright Solar IPO?

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

  2. 2. How is Bright Solar IPO?

    Read the Bright Solar IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Bright Solar IPO what should investors do?

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

  4. 4. Is Bright Solar IPO good?

    Sorry, we didn't rate the Bright Solar IPO.

  5. 5. Is Bright Solar IPO worth Investing?

    Our lead analyst Mr. Dilip Davda didn't rate the Bright Solar IPO.

  6. 6. When will Bright Solar IPO allotment status?

    The Bright Solar IPO allotment status will be available on or around Jul 4, 2018. The allotted shares will be credited in demat account by Jul 6, 2018. Visit Bright Solar IPO allotment status to check.

  7. 7. When will Bright Solar IPO list?

    The Bright Solar IPO will list on Monday, July 9, 2018, at NSE SME.








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