Ranjeet Mechatronics BSE SME IPO review (May apply)

Review By Dilip Davda on Sep 8, 2018

•    Company is engaged in trading, consultancy and servicing business.
•    It has inconsistent financial performance.
•    Sector is not doing well as expressed by Peer Company.
•    First mandate from LM. No track record.
•    Issue is priced aggressively.

ABOUT COMPANY:
Ranjeet Mechatronics Ltd. (RML) is incorporated with the main object to carry on the business of electrical and electrical mechanical engineers and sell supply, establish, fix and carry out and deal in industrial pumps, diesel engines, electrical motors and equipments etc. Later it diversified into providing specialized firefighting solutions including end to end solutions in installation, designing, commissioning, testing, implementing, managing and operating support for technology based security and fire solutions.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, RML is coming out with a maiden lIPO of 1800000 equity shares of Rs. 10 each at a fixed price of Rs. 25 per share. Company is mobilizing Rs. 4.50 cr. through this issue. It opens for subscription on 12.09.18 and will close on 17.09.18. 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 lead managed by Beeline Broking Ltd. while Alankit Assignments Ltd. is the registrar to the issue. Issue constitutes 27.27% of the post issue paid up capital of the company. Having raised initial equity at par, it raised further equity in the price range of Rs. 13 to Rs. 47 per share between September 2008 and May 2018. It has also issued bonus shares in the ratio of 3 for 1 in May 2018. Average cost of acquisition of shares by the promoters is Rs. 6.82 and Rs. 7.10 per share. Post issue RML’s current paid up equity capital of Rs. 4.80 cr. will stand enhanced to Rs. 6.60 cr.

FINANCIAL PERFORMANCE:
On financial performance front, for last four fiscals, RNL has posted turnover/net profits of Rs. 24 cr. / Rs. 0.05 cr. (FY15), Rs. 25.29 cr. / Rs. 0.16 cr. (FY16), Rs. 17.64 cr. / Rs. 0.51 cr. (FY17) and Rs. 18.04 cr. / Rs. 0.91 cr. Thus it has seen set back in top lines but surprisingly posted improvement in bottom lines. Issue is priced at a P/BV of 4.01 on the basis of its NAV of Rs.6.23 as on 31.03.18 and at a P/BV of 1.63 on the basis of post issue NAV of Rs. 15.37. For last three fiscals, it has posted an average EPS of Rs. 1.58 and an average RoNW of 30.10%. If we consider FY18 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 18 plus, thus issue is aggressively priced.

COMPARISION WITH LISTED PEERS:
As per offer documents, it has shown Nitin Fire as its listed peers that is trading at a negative P/E.

MERCHANT BANKER’S TRACK RECORD:
On merchant banker’s front, this is the first mandate from its stable and hence no track record is available.


Conclusion / Investment Strategy

Issue is priced aggressively. This sector is not doing well as expressed by its peer. Sudden jump in bottom line with static top line for FY17 and 18 is a bit surprising. Considering this, risk savvy cash surplus investors may consider investment at their own risk.

Review By Dilip Davda on Sep 8, 2018

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

Ranjeet Mechatronics IPO FAQs

  1. 1. Why Ranjeet Mechatronics IPO?

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

  2. 2. How is Ranjeet Mechatronics IPO?

    Read the Ranjeet Mechatronics IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Ranjeet Mechatronics IPO what should investors do?

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

  4. 4. Is Ranjeet Mechatronics IPO good?

    Our recommendation for Ranjeet Mechatronics IPO is to subscribe for long term.

  5. 5. Is Ranjeet Mechatronics IPO worth Investing?

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

  6. 6. When will Ranjeet Mechatronics IPO allotment status?

    The Ranjeet Mechatronics IPO allotment status will be available on or around Sep 21, 2018. The allotted shares will be credited in demat account by Sep 25, 2018. Visit Ranjeet Mechatronics IPO allotment status to check.

  7. 7. When will Ranjeet Mechatronics IPO list?

    The Ranjeet Mechatronics IPO will list on Wednesday, September 26, 2018, at BSE SME.
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