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Mehai Techno BSE SME IPO review (Avoid)

Review By Dilip Davda on Sep 18, 2017

Mehai Technology Ltd. (MTL) is a diversified company engaged into manufacturing of LED Bulbs, Fixtures, Moon Light Bulbs, Tubelights as well as assembling of Pen Drives and Power Banks. The company is selling its products through a set of dealers/distributors as well as online portals like Fliipkart, eBay, Amazon, Shopclues, PayTM etc. It is planning manufacturing of Pen Drives in near term.

To part finance its working capital and general corpus fund needs, MTL is coming out with a maiden IPO of 1500000 equity share of Rs. 10 each at a fixed price of Rs. 40 per share to mobilize Rs. 6.00 crore. Issue opens for subscription on 25.09.17 and will close on 28.09.17. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by SPA Capital Advisors Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 28.01% of fully diluted post issue paid up equity capital of the company. Having issued initial equity at par between incorporation and April 2014,it raised further equity at a price of Rs. 50 per share in April 2017 and has issued bonus in the ratio of 2 for 1 in June 2017. Post issue its current paid up equity capital of Rs. 3.86 crore will stand enhanced to Rs. 5.36 crore.

On performance front, MTL has posted turnover/net profits of Rs. 0.62 cr. / Rs. 0.01 cr. (FY15), Rs. 1.24 cr. / Rs. 0.02 cr. (FY16), Rs. 5.22 cr. / Rs. 0.31 cr. (FY17). For the first month ended on 30.04.17 of the current fiscal, it has earned net profit of Rs. 0.04 crore on a turnover of Rs. 0.29 crore. For last three fiscals it has reported weighted average EPS of Rs. 18.84 with an average RoNW of 43.34% on an equity capital of Rs. 1.29 crore. If we annualize this and attribute on fully diluted equity post issue, then asking price is at a P/E of 44 plus. As claimed in the prospectus it has no listed peers to compare with. Issue is priced at a P/BV of around 2.38. Thus issue is aggressively priced.

On merchant banker’s front, this is the 1st mandate from its stable and it has no track records.

Conclusion: No harm in giving this highly priced issue a miss.


Conclusion / Investment Strategy

No harm in giving this highly priced issue a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 18, 2017

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

Mehai Technology IPO FAQs

  1. 1. Why Mehai Technology IPO?

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

  2. 2. How is Mehai Technology IPO?

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

  3. 3. Mehai Technology IPO what should investors do?

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

  4. 4. Is Mehai Technology IPO good?

    Our recommendation for Mehai Technology IPO is to avoid.

  5. 5. Is Mehai Technology IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Mehai Technology IPO.

  6. 6. When will Mehai Technology IPO allotment status?

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

  7. 7. When will Mehai Technology IPO list?

    The Mehai Technology IPO will list on Monday, October 9, 2017, at BSE SME.