Shreeshay Engineers BSE SME IPO review (Avoid)

Review By Dilip Davda on Mar 7, 2018

Shreeshay Engineers Ltd. (SEL) is a part of DKP group that is engaged in real estate segment in and around Mumbai. SEL is a real estate construction and engineering focused solutions company that has developed around 90,000 sq. ft. of built up real estate vide project(s) named “Kailas Jyoti I” and “Kailas Jyoti II” at Ghatkopar, Mumbai. Over the last few years it has been realigning its business policies and recently increased its focus towards becoming the “EPC” arm of the group; with a view to develop a strong execution track record and goodwill in this segment. SEL believe being an “EPC” focused business line will help garner sustainable business due to group synergy and going forward it will be able to leverage this experience to take EPC orders from other players in the Industry. Recently it has entered into works contract for construction of real estate project “Kailas Nagar”.

To part finance its working capital and general corpus fund needs, SEL is coming out with a maiden IPO of 3600000 equity shares of Rs. 10 each at a fixed price of Rs. 15 per share to mobilize Rs. 5.40 crore. Issue opens for subscription on 09.03.18 and will close on 13.03.18. Minimum application is to be made for 8000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Aryaman Financial Services Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 27.27% of post issue paid up capital of the company. Average cost of acquisition of shares by the promoters is Rs. 12.96 and Rs. 13.94 per share. Since inception till August 1999 it raised equity at par and thereafter it raised further equity at a price of Rs. 15 per share in September 2017. It has also issued bonus shares in the ratio of 8 for 10 in the same month. Its paid up equity as on 31.03.17 has enhanced to Rs. 9.60 cr. as on 31.10.17 that will further rise to Rs. 13.20 cr. post issue.

On performance front, SEL has posted turnover/net profits of Rs. 0.11 cr. / Rs. – (0.05) cr. (FY14), Rs. 0.10 cr. / Rs. 0.04 cr. (FY15), Rs. 0.10 cr., / Rs. 0.04 cr. (FY16) and Rs. 0.22 cr. / Rs. 0.16 cr. (FY17). For first seven months ended on 31.10.17 of the current fiscal, it has earned net profit of Rs. 0.15 cr. on a turnover of Rs. 0.29 cr. For last three fiscals it has posted an average EPS of Rs. 1.15 and an average RoNW of 7.90%. Issue is priced at a P/BV of around 1 based on its NAV of Rs. 14.93 as on 31.10.17 and NAV of 15.12 post issue. If we annualize latest earnings and attribute it on the fully diluted equity post issue, then asking price is at a P/E of around 75 against industry composite of 62. Thus issue is priced very aggressively. As per offer document, it has considered Capacite, JMC Projects and Simplex Infra as its listed peers that are trading at a P/Es of around 30, 21 and 20 respectively (as on 07.03.18).

On merchant banker’s front, this is the 26th mandate from its stable. Out of last 10 listings, 4 opened at a discount, 1 at par, 4 with a premium ranging from 2% to 20% and 1 main board IPO with a premium of 73.8% on the day of listing.


Conclusion / Investment Strategy

Shreeshay Engineers SME IPO is an aggressively priced issue. There is no harm in giving this a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Mar 7, 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

Shreeshay Engineers IPO FAQs

  1. 1. Why Shreeshay Engineers IPO?

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

  2. 2. How is Shreeshay Engineers IPO?

    Read the Shreeshay Engineers IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Shreeshay Engineers IPO what should investors do?

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

  4. 4. Is Shreeshay Engineers IPO good?

    Our recommendation for Shreeshay Engineers IPO is to avoid.

  5. 5. Is Shreeshay Engineers IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Shreeshay Engineers IPO.

  6. 6. When will Shreeshay Engineers IPO allotment status?

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

  7. 7. When will Shreeshay Engineers IPO list?

    The Shreeshay Engineers IPO will list on Wednesday, March 21, 2018, at BSE SME.








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