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Review By Dilip Davda on December 7, 2023
• The company is engaged in the manufacturing of Metro Rail and Infra related products.
• The company has posted steady growth in its top lines for the reported periods.
• After average net earnings, it posted bumper profits from FY23 onwards.
• The issue appears fully priced based on its FY24 supper annualized earnings.
• Well-informed investors may consider parking moderate funds for the medium to long term rewards.
ABOUT COMPANY:
Presstonic Engineering Ltd. (PEL) manufactures Metro Rail Rolling Stock Products, Metro Rail Signaling Products, Infrastructure Products and supplies to renowned Global and Domestic OEM's engaged in the Rail and Metro Rail Rolling stock and Signaling equipments manufacturing and servicing companies.
Its manufacturing facility is spread over approx. 28,317.50 sq.ft. situated at Sy. No. 2, Khatha No. 145, Hoysala Main Road, Pillappa Industrial Layout, Srigandhadakavalu, Sunkadakatte, Viswaneedam, Bangalore, North Bangalore, Karnataka - 560091 and is equipped with latest machineries, equipment and instruments which is capable of manufacturing of diverse products for Railways and Metros.
As on March 31, 2023, it had an unexecuted order book of Rs. 63.90 cr. Further April 01, 2023 onwards the company has been awarded additional order of Rs. 4.57 cr. As of November 30, 2023, it had 36 employees on its payroll.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 3236800 equity shares of Rs. 10 each at a fixed price of Rs. 72 per share to mobilize Rs. 23.31 cr. The issue opens for subscription on December 11, 2023, and will close on December 13, 2023. The minimum application to be made is for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 42% of the post-IPO paid-up capital of the company. PEL is spending Rs. 3.25 cr. for this IPO process, and from the net proceeds, it will utilize Rs. 2.32 cr. for capex on new plant and machinery, Rs. 5.00 cr. for prepayment of certain borrowings, 9.24 cr. for working capital, and Rs. 3.50 cr. for general corporate purposes. The issue appears fully structured with around 14% issue expenses.
The issue is solely lead managed by Finshore Management Services Ltd., and Cameo Corporate Services Ltd. is the registrar of the issue. Nikunj Stock Brokers Ltd. is the market maker for the company.
The company has issued entire equity capital at par so far and has also issued bonus shares in the ratio of 1 for 1 in May 2023. The average cost of acquisition of shares by the promoters is Rs. 5.00 per share.
Post-IPO, PEL's current paid-up equity capital of Rs. 4.47 cr. will stand enhanced to Rs. 7.71 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 55.49 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit / - (loss) of Rs. 7.69 cr. / Rs. - (0.17) cr. (FY21), Rs. 12.72 cr. / Rs. 0.14 cr. (FY22), and Rs. 21.13 cr. / Rs. 2.56 cr. (FY23). For H1 of FY24 ended on September 30, 2023, it earned a net profit of Rs. 1.52 cr. on a total income of Rs. 14.32 cr. Thus while its topline grew steadily, its bottom line spurted from FY23 onwards and that raises eyebrows.
For the last three fiscals, PEL has reported an average EPS of 2.91 and an average RoNW of 26.67%. The issue is priced at a P/BV of 4.99 based on its NAV of Rs. 14.44 as of September 30, 2023, and at a P/BV of 1.97 based on its post-IPO NAV of Rs. 36.64 per share.
If we attribute FY24 annualized super earnings to post-IPO fully diluted paid-up equity capital of the company, then the asking price is at a P/E of 18.23.
DIVIDEND POLICY:
The company has not declared any dividends for reported financial years. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.
MERCHANT BANKER'S TRACK RECORD:
This is the 23rd mandate from Finshore Management in the last four fiscals (including the ongoing one). Out of last10 listings, 3 opened at discount, 1 at par and the rest with premiums ranging from 16.67% to 63.13% on the day of listing.
Review By Dilip Davda on December 7, 2023
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. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. 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 their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About 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.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Presstonic Engineering Limited offers an early investment opportunity in Presstonic Engineering Limited. A stock market investor can buy Presstonic Engineering IPO shares by applying in IPO before Presstonic Engineering Limited shares get listed at the stock exchanges. An investor could invest in Presstonic Engineering IPO for short term listing gain or a long term.
Read the Presstonic Engineering IPO recommendations by the leading analyst and leading stock brokers.
Presstonic Engineering IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Presstonic Engineering IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Presstonic Engineering IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Presstonic Engineering IPO.
The Presstonic Engineering IPO allotment status will be available on or around December 14, 2023. The allotted shares will be credited in demat account by December 15, 2023. Visit Presstonic Engineering IPO allotment status to check.
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