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Solex Energy NSE SME IPO review (May apply)

Review By Dilip Davda on Jan 17, 2018

Solex Energy Ltd. (SEL) is engaged in providing renewable energy solutions, specialized in the manufacturing of Solar photovoltaic module, solar home light, solar street light, solar lantern, solar power plant, solar invertors, solar water heating systems and wood fired water heater etc. It also provides the offered appliances in numerous specifications and customization in accordance with the demands of customers. Solex Energy Limited is an ISO 9001:2015 Certification, ISO 14001:2015 Certification, OHSAS 18001:2007 and CE MARK CERTIFIED offering systems of high quality and reliability. Solex modules are TUV certified & tested by the UL India Pvt. Ltd and comply in accordance with the standards. SEL’s products ranges from Solar PV Module (3WP - 325 WP), Solar Lanterns (CFL & LED Base), Solar Home Light System (CFL & LED Base), Solar Street Light System (CFL & LED Base), Solar Off-Grid Power Plant (Solar Rooftop Systems), Solar Grid Connected Power Plant, Solar Water Heater Flat Plant Collector, Solar Water Heater ETC Type, Solar Submersible Pump (AC & DC), Solar Surface Pump (DC). It also provides solution for solar roof top system, solar home and rural lighting system, solar power pack and solar power plant. SEL products are eligible for Subsidy from Government which is reduced from sales value during the sale of Product and thereafter release to the Company directly from Government.

To part finance its working capital and general corpus fund needs, SEL is coming out with a maiden IPO of 1380000 equity shares of Rs. 10 each at a fixed price of Rs. 52 per share to mobilize Rs. 7.18 crore. Issue opens for subscription on 22.01.18 and will close on 25.01.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Issue constitutes 27.94% of the post issue paid up capital of the company. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Swastika Investmart Ltd. and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Average cost of acquisitions of shares by the promoters is Rs. 6.25 per share. Company’s entire equity is issued at par and it has also issued bonus shares in the ratio of 3 for 5 shares in September 2017. Post issue its current paid up equity capital of Rs. 3.56 crore will stand enhanced to Rs. 4.94 crore.

On performance front, SEL posted turnover/net profits of Rs. 6.37 cr. / Rs. 0.10 cr. (FY15), Rs. 46.62 cr. / Rs. 0.39 cr. (FY16) and Rs. 34.50 cr. / Rs. 0.92 cr. (FY17). For last three fiscals it has posted an average EPS of Rs. 2.49 and average RoNW of 20.88% on an equity base of Rs. 2.23 crore. For first four months of the current fiscal, it has earned net profit of Rs. 0.31 crore on a turnover of Rs. 6.35 crore. Company has preferred to give four months’ working instead of first half and is surprising. It has shown inconsistency in top and bottom lines for all these years. Issue is priced at a P/BV of 4.71 based on its NAV of Rs. 11.04 as on 31.07.17 and at a P/BV of 2.31 based on post issue NAV of Rs. 22.49. If we annualize latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 27 plus making this issue aggressively priced. As per offer documents, SEL is considering Swelect as its peers which is currently trading around 17 P/E.

On merchant banker’s front, this is the 11th mandate from its stable in last three fiscals. Last 10 listings have opened with a rewards ranging from 1 to 20% on the issue price in opening on the listing day.

Conclusion: Considering highly priced offer, cash surplus risk savvy investors may consider moderate investment for long term. (Other – apply at your own risk).


Conclusion / Investment Strategy

Considering highly priced offer, cash surplus risk savvy investors may consider moderate investment for long term. (Other – apply at your own risk).

Review By Dilip Davda on Jan 17, 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

Solex Energy IPO FAQs

  1. 1. Why Solex Energy IPO?

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

  2. 2. How is Solex Energy IPO?

    Read the Solex Energy IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Solex Energy IPO what should investors do?

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

  4. 4. Is Solex Energy IPO good?

    Our recommendation for Solex Energy IPO is to subscribe for long term.

  5. 5. Is Solex Energy IPO worth Investing?

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

  6. 6. When will Solex Energy IPO allotment status?

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

  7. 7. When will Solex Energy IPO list?

    The Solex Energy IPO will list on Monday, February 5, 2018, at NSE SME.

2 Comments

2. Suresh kumar gupta  Jan 31, 2018 8:25:26 PM
Alloted 1 in three lots applied
1. Suresh kumar gupta  Jan 31, 2018 8:25:07 PM
Allowed 1 in three lots applied