Macpower CNC Machines NSE SME IPO review (Apply at your own risk)

Review By Dilip Davda on Mar 1, 2018

Macpower CNC Machines Ltd. (MCNC) is engaged in manufacturing of CNC (Computer Numerical Control)  Turning centers, vertical machining centers, horizontal machining centers, cylindrical grinder, vertical turret lathe, turn mill centers, drilling tap center, twin spindle VMC and also multi tasking 5-axis along with sub spindle. It has also offered robotic automation integrated with CNC machines to meet the technology driven demands. Company imports various components and parts to make its products.

To part finance its plans to set up backward integration facilities and general corpus fund needs, MCNC is coming out with a maiden IPO of 2615000 equity shares of Rs. 10 each via book building process with a price band of Rs.126-140 to mobilize Rs. 32.95 cr. to Rs. 36.61 crore based on lower and upper price bands. Issue opens for subscription on 12.03.18 and will close on 14.03.18. Minimum application is to be made for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Original size of the issue was 3040000 equity shares, but as company issued 425000 equity shares as pre-IPO placement at Rs. 126 per share and has raised Rs. 5.36 crore, the size has been reduced to that extent. Having issued initial equity at par, it raised further equity in the price range of Rs. 37 to Rs. 126 per share between January 2007 and February 2018. It has also issued bonus shares in the ratio of 8.4 shares for every 1 share held in November 2017. Post issue its current paid up equity capital of Rs. 7.19 crore will stand enhanced to Rs. 9.81 cr. Average cost of acquisition of shares by the promoters is Rs. 3.84 and Rs. 4.49 per share. Net issue post pre-IPO placement constitutes 26.71% of the post issue paid up capital of the company.

On performance front, MCNC has reported turnover/net profits of Rs. 42.37 cr. / Rs. 0.28 cr. (FY14), Rs. 64.26 cr. / Rs. 0.29 cr. (FY15), Rs. 64.16 cr. / Rs. 0.49 cr. (FY16) and Rs. 69.55 cr. / Rs. 0.79 cr. (FY17). For first half of current fiscal, it has earned net profit of Rs. 2.50 cr. on a turnover of Rs. 46.45 cr. Issue is priced at a P/BV of 5.37 based on its NAV of Rs. 10.06 as on 30.09.17. First half performance is really a surprising one with best turnover/profits of history that appears to be the Pre-IPO cooked up one. For last three fiscals it has posted an average EPS of Rs. 0.92 and an average RoNW of 19.10% on an equity base of Rs. 0.60 crore that is swelling to Rs. 9.81 crore post issue. If we annualize latest (cooked up) workings and attribute it on fully diluted equity post issue then asking price is at a P/E of 11 and thus it appears a reasonable bet. As per offer document, it is comparing Lokesh Machines as it listed peer which is trading at a P/E of around 29 as on 01.03.18.

On merchant banker’s front, as per offer document, this is the 63rd mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened at discount to offer price, 1 just Rs. 0.05 paise up on offer price, 7 with a premium ranging from 4% to 20% and 1 (main board issue) with a premium of 130% on the offer price on the day of listing.


Conclusion / Investment Strategy

Company that has static top line with marginally improving bottom line, but sudden jump in top and bottom line for the first half is really a surprising one (may be cooked up ahead of IPO). Equity is rising from Rs. 0.60 crore to Rs. 9.81 crore and raises concern. Investors may consider investment on their own risk .

Review By Dilip Davda on Mar 1, 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

Macpower CNC Machines IPO FAQs

  1. 1. Why Macpower CNC Machines IPO?

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

  2. 2. How is Macpower CNC Machines IPO?

    Read the Macpower CNC Machines IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Macpower CNC Machines IPO what should investors do?

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

  4. 4. Is Macpower CNC Machines IPO good?

    Sorry, we didn't rate the Macpower CNC Machines IPO.

  5. 5. Is Macpower CNC Machines IPO worth Investing?

    Our lead analyst Mr. Dilip Davda didn't rate the Macpower CNC Machines IPO.

  6. 6. When will Macpower CNC Machines IPO allotment status?

    The Macpower CNC Machines IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Macpower CNC Machines IPO allotment status to check.

  7. 7. When will Macpower CNC Machines IPO list?

    The Macpower CNC Machines IPO will list on Thursday, March 22, 2018, at NSE SME.

2 Comments

Devang Mehta
2. Devang Mehta  Mar 11, 2018 17:37
and according to RHP, company has nearly 300 nos. of order with advance on hand which ensures good revenue in coming future.
akash sav
1. akash sav  Mar 2, 2018 18:07
Umang your review
research for wealth
1.1. research for wealth  Mar 11, 2018 14:29
Explanation given by promoter
on cnbc interview for increase in top & bottomline
1. Co expands its capacity from 425 to 600 unit per month and all investment done through Co. ''s own fund no debt taken
2. Due to GST , Co able to claim 2% cst (now gst ) as input credit on raw material purchased
3. Instead of outsourcing, Co has started production of some parts in-house which resulted in fast production and increase in margine








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