• The company is engaged in infrastructure sector and providing its services for BOT, HAM, EPC projects.
• After incurring losses till FY23, it just turned the corner for FY24.
• Though the RI it at a discount of around 32% based on its last traded price, it's a "High Risk/Low Return" bet.
• Well-informed investors may park moderate funds for long term.
ABOUT COMPANY:
Modern Engineering and Projects Ltd. (MEPL) is in the Infrastructure Sector with key focus on infrastructure construction, engineering, and other allied activities. It offers competitive business solutions in the areas of transportation engineering, civil construction and other allied works under the Build, Operate and Transfer (BOT), Hybrid Annuity Mode (HAM) model, Engineering, Procurement and Construction (EPC).
Its range of services includes engineering design, planning and estimation of a project, market studies, feasibility report preparation, project management services, architectural and construction engineering services, project commissioning, operations and maintenance, and special advisory services. Leveraging proficiency in providing end-to-end infra-engineering consultancy solutions for complex and challenging projects across diverse sectors, it equips clients with the necessary tools for success and growth.
The company is presently engaged in the construction of large-scale infrastructure. Its focus area includes Civil Construction. MEPL offers a well-diversified portfolio of road construction projects that helps connect key cities and corridors in India. Leveraging technology, world-class equipment and a competent team helps drive operational efficiency for fulfilling its vision of creating last-mile connectivity to aid India's development.
It is dedicated in providing innovative and sustainable solutions that address the unique needs and challenges of clients. Its team of experts are committed to delivering exceptional results through efficient project management, cutting-edge technology, and a customer-centric approach are dedicated to providing innovative and sustainable solutions that address the unique needs and challenges of clients. As of the filing of this offer document, it had 15 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 12360000 equity shares of Rs. 10 each at a fixed price of Rs. 40 per share to mobilize Rs. 49.44 cr. The RI has already opened for subscription on September 05, 2024, and will close on September 17, 2024. The company is offering RI in the ratio of 4 for 1 to its eligible stakeholders as of the record date of August 26, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.54 cr. for this RI process and from the net proceeds, it will utilize Rs. 5.46 cr. for purchase of fixed assets/machinery, Rs. 26.00 cr. for working capital, Rs. 5.97 cr. for repayment/prepayment of certain borrowings, and Rs. 11.47 cr. for general corporate purposes. (Page no. 46 of offer document has some garble in its net proceeds data).
The issue is self-managed by the company itself, and Purva Sharegistry (I) Pvt. Ltd. is the registrar to the issue.
Company's current paid-up equity capital of Rs. 3.09 cr. will stand enhanced to Rs. 15.45 cr. Based on RI pricing, the company is looking for a market cap of Rs. 61.80 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit/ - (loss) of Rs. 0.08 cr. / Rs. - (0.04) cr. (FY21), Rs. 20.84 cr. / Rs. - (4.56) cr. (FY22), and Rs. 69.43 cr. / Rs. - (2.65) cr. (FY23). For FY24 it posted a net profit of Rs. 3.65 cr. on a total income of Rs. 93.84 cr. Thus it has turned the corner from FY24.
DIVIDEND POLICY:
The company has not declared any dividends for the last five fiscals. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 539762 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 187.85 on August 23, 2024, and opened on an ex-right basis at Rs. 72.95 on August 26, 2024. Since then, it has marked a high/low of Rs. 75.95 / Rs. 59.09. The scrip last closed at Rs. 59.09 as of September 06, 2024. For the last 52 weeks' it has posted a high/low of Rs. 87.25/ Rs. 10.16. The counter is currently under ESM: Stage 2.
The promoters' holding has been constant at 62.85% for the last three quarters ended with June 30, 2024. The counter is well managed above the RI price to tempt investors.
Review By Dilip Davda on September 8, 2024
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
