Mewar Hi-Tech BSE SME IPO review (Avoid)

Review By Dilip Davda on Sep 29, 2016

Mewar Hi-Tech Engineering Ltd (MHEL) is engaged in manufacturing of heavy manufacturing machines and industrial material handling equipments including pre-engineering building sheds, cranes, sand machines, concrete mixture machines, batch mixing plants, RMC (ready-mix concrete) plants, industrial products for crushing plants, Double Toggle Grease/Oil Crusher, Single Toggle Grease Jaw Crusher, Vibrating Screen, Horizontal Shaft Impactor, Vertical Shaft Impactor and Cone Crusher and other crushing, screening and customized size reduction equipments. The Company also provides after sales service and warranty facilities for such machines.

To part finance working capital needs and general corpus fund requirements, the company is coming out with a maiden IPO of 1062000 equity share of Rs. 10 each at fixed price of Rs. 22 per share to mobilize Rs. 2.34 crore. Issue opens for subscription on 30.09.16 and will close on 06.10.16. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely managed by Pantomath Capital Advisors Pvt Ltd. Bigshare Services Pvt Ltd is the registrar to the issue. It issued equity at par on incorporation and then all further equity is raised at a fixed price of Rs. 50 per share during 2008 to 2016. In March 2016 it issued bonus in the ratio of 3 for 1 in March 2016. Post issue its current paid up equity capital of Rs. 2.84 crore will stand enhanced to Rs. 3.90 crore.

On performance front, for last four fiscals, the company has reported turnover/net profits of Rs. 33.88 cr./ Rs. 0.64 cr. (FY13), Rs. 23.96 cr. / Rs. 0.32 cr. (FY14), Rs. 40.384 cr. / Rs. 0.19 cr. (FY15) and Rs. 25.35 cr. / Rs. (-0.02 cr.) (FY16). Thus it has shown inconsistency in its performance. However, if we attribute latest earnings on fully diluted equity post IPO then asking price is at a negative P/E and at a P/BV of 1.2 plus. If we attribute FY15 earnings then the asking price is at a P/E of around 44 plus that makes it a costly bet. Although asking price is below peers, its inconsistent performance in the major concern.

On merchant banker’s front, this is the 31st mandate and its past mandates have shown mixed trends.

Conclusion: Inconsistency in performance raises concern. Also being a costly bet, investors may give it a miss.

 


Conclusion / Investment Strategy

Inconsistency in performance raises concern. Also being a costly bet, investors may give it a miss.  

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 29, 2016

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

Mewar Hitech Engineering FAQs

  1. 1. Why Mewar Hitech Engineering?

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

  2. 2. How is Mewar Hitech Engineering?

    Read the Mewar Hitech Engineering recommendations by the leading analyst and leading stock brokers.

  3. 3. Mewar Hitech Engineering what should investors do?

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

  4. 4. Is Mewar Hitech Engineering good?

    Our recommendation for Mewar Hitech Engineering is to avoid.

  5. 5. Is Mewar Hitech Engineering worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Mewar Hitech Engineering.

  6. 6. When will Mewar Hitech Engineering allotment status?

    The Mewar Hitech Engineering allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Mewar Hitech Engineering allotment status to check.

  7. 7. When will Mewar Hitech Engineering list?

    The Mewar Hitech Engineering will list on Monday, October 17, 2016, at BSE SME.








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