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Power Mech Projects Ltd IPO Review (Apply)

Review By Dilip Davda on Jul 31, 2015

The last main board IPO of Syngene Intl Ltd getting overwhelming response with little over 32 times oversubscription and that is sure to lure many IPOs in coming months. This month starts with a main board IPO from Power Mech Projects Ltd. (PMPL) Details of the same are as under:

PMPL is an integrated power infrastructure services company in India providing comprehensive erection, testing and commissioning of boilers, turbines and generators (ETC-BTG) and balance of plant (BOP) works, civil works and operation and maintenance (O&M) services. Company’s operations include three principal business lines: (i) Erection Works; (ii) Operation & Maintenance Services; and (iii) Civil Works. In order to provide comprehensive O&M solutions, it has entered into a joint venture agreement dated December 1, 2014, with Chengdu Pengrun New Energy Development Company Limited (Chengdu), a company registered under PRC laws, to establish a joint venture entity in Hong Kong for manufacturing and distribution of equipment and spare parts, including boilers, turbines and generators, for O&M projects in India.

Company’s  aggregate order Book as of March 31, 2015 was Rs. 34,06.27 crore, comprising Order Book in the Erection Works, O&M Services and Civil Works businesses of Rs. 2302.87 crore, Rs.  590.43 crore and Rs.  512.97 crore respectively. As of June 30, 2015, PMPL is engaged on 23 AMC services for power plants across India with an aggregate unit capacity of 32,835 MW.

To meet its funding of working capital and listing purpose, the company is coming out with a maiden IPO of 4269000 equity share of Rs. 10 each (consisting offer for sale of 2141000 shares and remaining as a fresh equity issue) in a price band of Rs. 615-640. Issue opens on 07.08.15 and will close on 11.08.15. Minimum application is to be made for 20 shares and in multiples thereon, thereafter. Based on lower and upper price band, the fund mobilization will be between Rs. 262.54-Rs.273.22 crores. Since inception till 2009 it issued equity shares at par and then during 2011 to 2014 it issued shares in the price range of Rs. 142.64 – Rs. 200 per share. So far it has made three bonus issues – 2 for 1 (in 2007), 1 for 2 (in 2008) and 1.2 for 10 (in 2014) that took its equity to Rs. 125.83 crore that will rise to Rs. 147.11 crore post IPO. BRLM to this IPO are Kotak Mahindra Capital Co. Ltd, IIFL Holdings Ltd and Motilal Oswal Investment Advisors Pvt. Ltd and registrar to the issue is Karvy Computershare Pvt. Ltd. Post allotment, shares will be listed on BSE and NSE.

On performance front, for last three fiscals the company has posted an average EPS of Rs. 53.76. For the FY 2014-15 (on consolidated basis) it has posted net profit of Rs. 71.40 crore on a turnover of Rs. 1371.98 crore with an EPS of Rs. 56.74. If we attribute these earnings on post IPO equity of Rs. 147.11 crore then EPS stands at Rs.  48.53 and thus asking price is at a P/E of 13 plus that augurs well against industry average P/E of 21 plus. However, it is almost three times plus against last issue made at a price of Rs. 200 in July 2014.

On merchant banker’s front, they have mixed trends for their past mandates.


Conclusion / Investment Strategy

Remarks: Worthy bet for long term

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Jul 31, 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

Power Mech Projects IPO FAQs

  1. 1. Why Power Mech Projects IPO?

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

  2. 2. How is Power Mech Projects IPO?

    Read the Power Mech Projects IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Power Mech Projects IPO what should investors do?

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

  4. 4. Is Power Mech Projects IPO good?

    Our recommendation for Power Mech Projects IPO is to subscribe.

  5. 5. Is Power Mech Projects IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Power Mech Projects IPO.

  6. 6. When will Power Mech Projects IPO allotment status?

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

  7. 7. When will Power Mech Projects IPO list?

    The Power Mech Projects IPO will list on Wednesday, August 26, 2015, at BSE, NSE.