South West Pinnacle NSE SME IPO Review (Subscribe)

Review By Dilip Davda on Jan 30, 2018

South West Pinnacle Exploration Ltd. (SWPEL) is providing end-to-end drilling, exploration and allied services to coal, ferrous, non-ferrous, atomic and base metal mining industries and water & unconventional energy industries. Currently the company hs 37 operational rigs and support equipment of different capacities to drill upto a depth of 2500 meters. It also provides consultancy for geological field services and allied services. SWPEL has recently diversified into aquifer mapping for Hydro-geological organizations in India for determining the quantity and quality of groundwater in a particular area, viz – water level, productivity and concentration of various chemicals in groundwater. So far it has completed more than 950000 meters of drilling including 60 CBM exploratory and166 CBM production wells for both Government and Private sectors. At present it has 10 running projects in different states of India.

To part finance its repayment/pre-payment of debt, purchase of machinery, working capital and general corpus fund needs, SWPEL is coming out with a maiden IPO of 4596800 equity shares of Rs. 10 each via book building route with a price band of Rs. 76 - 78 to mobilize Rs. 34.94cr to Rs. 35.86 cr. (based on lower and upper price bands). Issue opens for subscription on 06.02.18 and will close on 08.02.18. Minimum application is to be made for 1600 shares in multiples thereon, thereafter. It has reserved few shares for its eligible employees. Post allotment, shares will be listed on NSE SME Emerge.  Average cost of acquisition of shares by the promoters is Rs. 3 and Rs. 4 per share. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Issue constitutes 32.95% of post issue paid up capital of the company. From inception till September 2011, it issued equity shares at par. Thereafter, it raised further equity in a price range of Rs. 50 to Rs. 78 per share. It has issued bonus shares in the ratio of 1 for 1 in September 2017. Post issue, its current paid up equity capital of Rs. 9.35 crore will stand enhanced to Rs. 13.95 crore.

On performance front, SWPEL (on standalone basis) has posted turnover/net profits of Rs.52.24cr. / Rs. 2.82 cr. (FY14), Rs. 63.41 cr. / Rs. 2.91 cr. (FY15), Rs. 84.93 cr. / Rs. 3.86 cr. (FY16) and Rs.72.74 cr. / Rs. 6.01 cr. (FY17). For first half of current fiscal, it has earned net profit of Rs. 3.25 cr. on a turnover of Rs. 36.44 cr. Although it suffered a setback in top line for FY17, it posted higher net due to lower finance cost and other expenses.  On consolidated basis it has earned net profit of Rs. 6.11 cr. on a turnover of Rs. 74.75 cr. for FY17 and posted net profit of Rs. 3.27 cr. on a turnover of Rs. 37.32 cr. for first half of current fiscal. On standalone basis it has posted an average EPS of Rs. 5.17 and RoNW of 18.21% on an equity base of Rs. 4.65 crore. Issue is priced at a P/BV of 2.45 based on its consolidated basis NAV of Rs. 31.80 as on 31.03.17. If we annualize latest earnings and attribute it to fully diluted post issue equity, then asking price is at a P/E of around 17 against peer Selan Exploration and Deep Ind. Trading at a P/E of 42 and 9 respectively. Thus pricing appears reasonable.

On merchant banker’s front, this is the 62nd mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened around par and the rest with premiums ranging from 1% to 130% on the day of listing. 130% rewards are from the only main board IPO of this merchant banker i.e. Astron Paper.


Conclusion / Investment Strategy

Considering push for infra projects that will augur well for this company, investment may be considered for short to long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Jan 30, 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

South West Pinnacle IPO FAQs

  1. 1. Why South West Pinnacle IPO?

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

  2. 2. How is South West Pinnacle IPO?

    Read the South West Pinnacle IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. South West Pinnacle IPO what should investors do?

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

  4. 4. Is South West Pinnacle IPO good?

    Our recommendation for South West Pinnacle IPO is to subscribe.

  5. 5. Is South West Pinnacle IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the South West Pinnacle IPO.

  6. 6. When will South West Pinnacle IPO allotment status?

    The South West Pinnacle IPO allotment status will be available on or around Feb 14, 2018. The allotted shares will be credited in demat account by Feb 16, 2018. Visit South West Pinnacle IPO allotment status to check.

  7. 7. When will South West Pinnacle IPO list?

    The South West Pinnacle IPO will list on Monday, February 19, 2018, at NSE SME.








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