Marine Electricals NSE SME IPO review (Apply)

Review By Dilip Davda on Sep 22, 2018

•    MEIL is an integrated electrical solution provider.
•    It has marquee client list and also relationship with known leaders in the field.
•    Financial performance indicating bright prospects ahead.
•    LM’s clumsy track record is the major concern.

ABOUT COMPANY:
Marine Electricals (India) Ltd. (MEIL) is a growing Integrated Electrical and Automation Solution Provider dealing in comprehensive electrical solution across industries with significant presence in Marine sector (Indian Navy, Commercial Shipbuilding) and Non Marine sector (Data Centre, Building Management Systems, Industrial etc). The Company provides solution in Low Voltage, Medium Voltage and Industrial Automation backed by In-house Product Design & Development, Manufacturing, Installations and after sale service. It has business relationships with global electrical players like Schneider Electric, Siemens, GE. Such strategic tie ups give it the competitive edge over competitors. Further, it has entered into an agreement with NLC India Limited to provide Solar Power Evacuation system, thus venturing into the renewable energy segment. Company has global presence through own subsidiaries. The company provides a combination of engineering, manufacturing, testing facilities and after sales support that provides customer delight to the equipment offered by it.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, MEIL is coming out with a maiden IPO of 6496000 equity shares of Rs. 10 each via book building route. It has fixed priced band of Rs. 64 – Rs. 66 per share. The company mulls mobilizing Rs. 41.57 cr. to Rs. 42.87 cr. Issue opens for subscription on 28.09.18 and will close on 03.10.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Aryaman Financial Services Ltd. while Bigshare Services Pvt. Ltd. is the registrar to the issue. Having raided initial equity at par, it raised further equity in September 2017 at Rs. 58 per share. It has also issued bonus shares in the ratio of 3 for 1 in March 2012. Average cost of acquisition of shares by the promoters is Rs. 2.50, Rs. 3.71 and Rs. 5.14 per share. Post issue, MEIL’s current paid up equity capital of Rs. 18.04 cr. will stand enhanced to Rs. 24.53 cr.

FINANCIAL PERFORMANCE:
On financial performance front, for last four fiscals, MEIL has (on a consolidated basis) posted turnover/net profits of Rs. 238.39 cr. / Rs. 8.50 cr. (FY15), Rs. 251.69 cr. / Rs. 9.35 cr. (FY16), Rs. 273.65 cr. / Rs. 10.80 cr. (FY17) and Rs. 383.46 cr. / Rs. 16.26 cr. (FY18). For last three fiscals, it has posted an average EPS of Rs. 7.21 and an average RoNW of 15.09%.  Issue is priced at a P/BV of 1.27 based on its NAV of Rs. 52.14 as on 31.03.18 and at a P/BV of 1.18 based on post issue NAV of Rs. 55.81 (at upper cap).  If we consider FY18 earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 10 against industry average of 40. Thus issue is attractively priced.

COMPARE WITH LISTED PEERS:
As per offer documents, it has shown ABB India, Schneider Electric and Siemens as its listed peers that are currently trading at a P/Es of around 66, 00 and 39 respectively (as on 21.09.18). However, these peers are not strictly comparable.


MERCHANT BANKER’S TRACK RECORD:
On merchant banker’s front, this is the 40th mandate from its stable in last four fiscal years. Out of last 10 listings, 1 opened at discount, 3 around par and the rest with premium ranging from 1 to 6% on the day of listing. Thus it has poor track record.


Conclusion / Investment Strategy

Issue is attractively priced; its client list has marquee customers. The only concern is the LM that has poor track record. Investors may consider investment for medium to long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Sep 22, 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

Marine Electricals IPO FAQs

  1. 1. Why Marine Electricals IPO?

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

  2. 2. How is Marine Electricals IPO?

    Read the Marine Electricals IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Marine Electricals IPO what should investors do?

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

  4. 4. Is Marine Electricals IPO good?

    Our recommendation for Marine Electricals IPO is to subscribe.

  5. 5. Is Marine Electricals IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Marine Electricals IPO.

  6. 6. When will Marine Electricals IPO allotment status?

    The Marine Electricals IPO allotment status will be available on or around Oct 8, 2018. The allotted shares will be credited in demat account by Oct 10, 2018. Visit Marine Electricals IPO allotment status to check.

  7. 7. When will Marine Electricals IPO list?

    The Marine Electricals IPO will list on Thursday, October 11, 2018, at NSE SME.








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