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Review By Dilip Davda on May 18, 2017
Shri Ram Switchgears Ltd (SRSL) is engaged in manufacturing of Transformers, Distribution boxes, Switchgears, Junction Boxes, Feeder Pillars, Panels, LT (Low Tension)/ HT (High Tension) Line materials and other electrical products required in power distribution system utilities. The company also undertakes turnkey projects including erection, installation, operation and maintenance services of power transmission lines.
To part finance its working capital requirements and general corpus fund needs, SRSL is coming out with a maiden IPO of 2670000 equity share of Rs. 10 each at a fixed price of Rs.19 per share to mobilize Rs.5.07 crore. Issue opens for subscription on 25.05.17 and will close on 30.05.17. Minimum application is to be made for 6000 shares and in multiples thereof, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Sarthi Capital Advisors Pvt Ltd is the sole lead manager to the issue and Bigshare Services Pvt Ltd is the registrar to the issue. Since incorporation till March 2015 it issued all equities at par. In February 2016 it issued few shares at a price of Rs. 17 per share and in January 2017 it issued bonus shares in the ratio of 1 share for every 2 shares held. Post issue its current paid up equity capital of Rs. 7.34 crore will stand enhanced to Rs. 10.01 crore.
On performance front, the company has reported turnover/net profit of Rs. 39.21 cr. / Rs. 0.42 cr. (FY14), Rs. 54.37 crf. / Rs. 1.21 cr. (FY15), Rs. 48.23 cr. / Rs. 0.85 cr. (FY16). For the first 11 months of the current fiscal ended on 28.02.17 it has earned net profit of Rs. 1.77 crore on a turnover of Rs. 55.36 cr. Thus for the fiscal 2016 it suffered a setback in top and bottom lines. If we annualize the latest earnings and attribute it to the fully diluted equity post issue then asking price is at a P/E of 9.8 (against peers trading at an average P/E of 28 currently)and at a P/BV of 1.3. For last three fiscals, its average RoNW is just around 10.
On merchant banker’s front, this is the 27th mandate from its stable. Last 10 listings have shown positive trends on the day of listing.
Conclusion: Investors may consider investment for medium to long term in this power sector issue.
Review By Dilip Davda on May 18, 2017
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 Shri Ram Switchgears Limited offers an early investment opportunity in Shri Ram Switchgears Limited. A stock market investor can buy Shri Ram Switchgears IPO shares by applying in IPO before Shri Ram Switchgears Limited shares get listed at the stock exchanges. An investor could invest in Shri Ram Switchgears IPO for short term listing gain or a long term.
Read the Shri Ram Switchgears IPO recommendations by the leading analyst and leading stock brokers.
Shri Ram Switchgears IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Shri Ram Switchgears IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Shri Ram Switchgears IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Shri Ram Switchgears IPO.
The Shri Ram Switchgears IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Shri Ram Switchgears IPO allotment status to check.
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