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Gensol Engineering BSE SME IPO review (May apply)

Review By Dilip Davda on September 27, 2019

•    GEL is a solar design and engineering and O&M advisory company.
•    It has good clients with repeat orders and contracts.
•    The major thrust for high margin activates boosted its bottom line for the last two fiscals.
•    Order on hand worth Rs. 340 cr. indicates future prospects.
•    This company is purely a service provider company enjoys good margins.

Gensol Engineering Ltd. (GEL) is a solar design & engineering company with a team of more than 500 employees. It currently provides technical expertise for over 19000+ MW solar projects world over. GEL is a one-stop solution provider across the entire value chain of solar industry. It also undertakes turnkey engineering, procurement and co9nstruction contracts under its EPC business with an international footprint. It has also erected solar power plants of more than 188MW on roofs as well as lands. Its client list includes Zee Group, Greenko Group, GMT, Essel, Mytrah, SunEdition, Adani Green, Govt. of Maharashtra, Hindustan Zink, Soft Bank Energy, Amplus, Sterlite, Axis Bank, PFC, IDBI, SBI, RattanIndia, Carlsberg, Welspun, Suzlon, Tata Power, etc.

Currently, GEL has order book worth Rs. 340 cr. plus and the number is expected to go up as many new project bids are in pipeline. As the government is aggressively pushing solar energy to reach the target of 450GW, issues faced by this sector are being eased in a speedy way.

To part finance its working capital (Rs. 13.50 cr.) and general corpus fund needs, GEL is coming out with a maiden IPO via book building route. The company is issuing 2160000 equity shares of Rs. 10 each in a price band of Rs. 81-Rs. 83 to mobilize Rs. 17.50 cr. - Rs. 17.93 cr. (based on lower and upper price bands).  The issue opens for subscription on 30.09.19 and will close on 04.10.19. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 26.33% of the post issue paid-up capital of the company.

The issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. while Link Intime India Pvt. Ltd. is the registrar. Gretex Share Broking Pvt. Ltd. is the market maker for this IPO.

Having issued initial equity at par, it raised further equity at a price of Rs. 621 per share in January 2013. It has also issued bonus shares in the ratio of 490 shares for every 1 share held in January 2019. The average cost of acquisition of shares by the promoters is Rs. 0.02 per share. Post this issue GEL's current paid-up equity capital of Rs. 6.04 cr. will stand enhanced to Rs. 8.20 cr.

On the financial performance front, for the last three fiscals, GEL has posted turnover/net profits of Rs. 62.32 cr. / Rs. 1.19 cr. (FY17), Rs. 69.64 cr. / Rs. 5.34 cr. (FY18) and Rs. 83.85 cr. / Rs. 6.49 cr. (FY19).  For the last three fiscals, GEL has reported an average EPs of Rs. 8.65 and an average RoNW of 68.47%. Perhaps the company tops the list with the highest RoNW. The issue is priced at a P/BV of 3.85 on the basis of its NAV of Rs. 21.58 as on 31.03.19. If we consider FY19 earnings and attribute it to fully diluted post issue equity of the company, the asking price is at a P/E of around 10.5. Thus issue appears fully priced.

GEL's trade receivables have gone up to Rs. 17.76 cr. for FY19 against Rs. 13.99 cr. for FY18. It intends to increase trade receivable time to 3.26 months against last two fiscal's average of 2.68 months. This raises concern.

As per offer document, it has shown Zodiac Energy as its listed peer which is trading at a P/E of around 5.7 (as on 19.09.19). However, it is not strictly comparable.

On merchant banker's front, this is the 58th mandate from its stable in the last three fiscals (including the ongoing one). Out of last 10 listings, 1 opened at discount (Suich Ind.) and the rest with premiums ranging from 1.17% to 11.11%on the day of listings.

Conclusion / Investment Strategy

As investors have burnt their fingers with investment in solar projects, this issue may face the music. However, GEL is engaged in advisory and O & M services for Solar projects and as such, it differs from others and is poised for bright prospects going forward. Considering financial data and fully priced issue, moderate investment for the long term may be considered.

Review By Dilip Davda on September 27, 2019

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. 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

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: ).

Gensol Engineering IPO FAQs

  1. 1. Why Gensol Engineering IPO?

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

  2. 2. How is Gensol Engineering IPO?

    Read the Gensol Engineering IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Gensol Engineering IPO what should investors do?

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

  4. 4. Is Gensol Engineering IPO good?

    Our recommendation for Gensol Engineering IPO is to subscribe for long term.

  5. 5. Is Gensol Engineering IPO worth Investing?

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

  6. 6. When will Gensol Engineering IPO allotment status?

    The Gensol Engineering IPO allotment status will be available on or around October 10, 2019. The allotted shares will be credited in demat account by October 14, 2019. Visit Gensol Engineering IPO allotment status to check.

  7. 7. When will Gensol Engineering IPO list?

    The Gensol Engineering IPO will list on Tuesday, October 15, 2019, at BSE SME.