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Pennar Engineered Building Systems IPO Review (May apply)

Review By Dilip Davda on Aug 20, 2015

Pennar Engineered Building Systems Ltd (PEBs) is one of the leading custom designed building systems solutions providers in India. The company has capabilities of designing, manufacturing, supply and assembly of custom designed building systems that include pre-engineered buildings, design and engineering services, solar module mounting structures, cold form buildings and structural steel products which are widely used for various manufacturing, warehousing, industrial, infrastructure and custom designed commercial buildings. PEBS also provides design and engineering services for projects being executed by others.  Since the commencement of our business activities in January 2010 and as of June 30, 2015, it has completed design, manufacturing, supply and assembly of 83,967 MT covering sqm area of 18,58,552 pre-engineered buildings in various sectors including warehousing, retail and manufacturing; design, supply and erection of solar module mounting structures for generation of solar power; design, manufacturing, supply and erection of structural steel buildings and cold form buildings. Its core product, i.e. pre-engineered buildings, are steel buildings which are custom designed and fabricated to every customer‘s requirements in accordance with the applicable standards. The company has a non-exclusive technical know-how licensing arrangement with NCI Group, Inc., an established player in the United States‘metals buildings market, for supply of standing seam roofing panel system in India under the brand name “Double Lok” and has also entered into a design services out-sourcing agreement with a U.S. based entity engaged in a similar business.

To part finance its procurement of infrastructure for expansion, repayment of part debt and other general corpus funding requirements, the company is coming out with a maiden IPO in the form of Offer for Sale and fresh equity via book building route.  5516141 equity shares are as Offer for Sale and the rest will be fresh equity issue. Total issue size at the upper price band is Rs. 156.20 crore (including the fresh equity issue that will fetch around Rs. 58 crore). Issue opens for subscription on 25.08.15 and will close on 27.08.15. The company has fixed a price band of Rs. 170-178 per share. Minimum application is to be made for 80 shares and in multiples thereon, thereafter. BRLMs to the issue are Motilal Oswal Investment Advisors Pvt. Ltd, Axis Capital Ltd and Karvy Investor Services Ltd. Karvy Computershare Pvt Ltd is the registrar to the issue. Having issued equity at par from the signing of MoA till March 2010, the company has converted CCPS into equity at a price of Rs. 58.17 during March 15 and July 15 that took its current equity capital to Rs. 31.02 crore that will rise to Rs. 34.28 crore post IPO.  Post allotment, shares will be listed on BSE/NSE.

Company's top five customers for last two fiscals were Reliance Jio Infocom, Frontier Sales Corp, Nuevosol Energy, Larsen & Toubro and Ultratech Cement that contributed around 55% in top lines. It has order on hand worth Rs. 360 crore and the project delivery period is ranging between 2 to 4 months. Thus improvement in delivery schedule may bring more revenues and profits for the company. Its future order hinges on developments in industrialization and infrastructure spending.

On performance front, the company has posted an average EPS of Rs. 6.38 (on fully diluted basis) for last three fiscals. Its turnover and net profits were Rs. 290.96 cr. /Rs. 14.76 cr (FY 13), Rs. 369.75 cr. / Rs. 17.22 cr. (FY14) and Rs. 452.36 cr. /Rs. 21.98 cr. respectively. If we attribute latest working on fully diluted equity post IPO then asking price is at a P/E of 27 plus that makes it a costly bet. As there are no listed peers to compare, the company has provided unlisted peer details that are not relevant as far as investor's point of view is concern.

BRLMs have mixed trends for its past mandates.


Conclusion / Investment Strategy

Being first mover in the segment, issue is aggressively priced. Pennar group is not having any fancy among investors. Hence only risk aver investors may park moderate fund for medium to long term as this IPO being below Rs. 250 crore, will attract "T" tag in initial listing period and will keep short term players away from it.

Review By Dilip Davda on Aug 20, 2015

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. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

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

Pennar Engineered IPO FAQs

  1. 1. Why Pennar Engineered IPO?

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

  2. 2. How is Pennar Engineered IPO?

    Read the Pennar Engineered IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Pennar Engineered IPO what should investors do?

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

  4. 4. Is Pennar Engineered IPO good?

    Our recommendation for Pennar Engineered IPO is to subscribe for long term.

  5. 5. Is Pennar Engineered IPO worth Investing?

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

  6. 6. When will Pennar Engineered IPO allotment status?

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

  7. 7. When will Pennar Engineered IPO list?

    The Pennar Engineered IPO will list on Thursday, September 10, 2015, at BSE, NSE.