:: Satco Capital Markets Limited ::
googlemarker

blog

Reasons to Invest in Salasar Techno Engineering IPO
Mutual Fund | July 14

Salasar Techno Engineering

1.  Salasar Techno Engineering is coming out with an initial public offering (IPO) of 33,21,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs.108 per equity share.

2.     The issue will open on July 12, 2017 and will close on July 17, 2017.

3.     The shares will be listed on BSE as well as NSE.

4.     The share is priced at 10.80 times of its face value of Rs.10.

5.     Book running lead manager to the issue is Sarthi Capital Advisors.

6.     Compliance Officer for the issue is Bavneet Kaur.

Proceed is Being used to:

1.  Meet the working capital requirements of the company including margin money.

2.   General corporate purpose.

 

Salasar Techno Engineering: Business Background

 

Established in 2001, the company offers customized steel fabrication and infrastructure solutions for Telecommunication Towers, Transmission Towers & Substation Structures and Solar Module Mounting Structures. As one can imagine, this requires supply of customized, high-quality material and the company’s service suit includes engineering, designing, fabrication, galvanization and deployment of these products.

The company commenced its manufacturing/fabrication activities in the FY2006/07 and its second unit became operational in FY2008/09. Salasar Techno Engineering recently increased its installed annual manufacturing/fabrication capacity from 50,000 MT to 100,000 MT with the installation of new galvanizing plant at Salasar Stainless Limited, a wholly-owned subsidiary.

UP Power Transmission Corporation Ltd, Tata Power Delhi Distribution Ltd, Unitech Power Transmission Ltd, ATC India Tower Corporation Pvt Ltd, Indus Towers Ltd, ATC Telecom Infrastructure Pvt Ltd, Bharti Infratel Ltd, Reliance Jio Infocomm Ltd, Tower Vision India Pvt Ltd, Viom Networks Ltd, Jakson Engineers Ltd, Prayatna Developers Pvt Ltd, and Welspun Renewables Energy Pvt Ltd are some of its prominent clients.

 

Salasar Techno Engineering IPO Review: Financial Performance

As the description above indicates, Salasar Techno Engineering is into a business that is not easily scalable. Yet, the company has managed to grow its revenues from INR212.9 crores in FY2013 to INR384.6 crores in the latest year. This is quite impressive as majority of the growth has come from the single activity of erecting telecom and transmission towers.

The company has negligible long-term debt and this has helped in shoring up profits in these years. Earnings grew from INR4.9 crores in FY2013 to INR20.7 crores in FY2017. The net profit margin has been improving after hitting a low of 1.9% in FY2015. In the latest year ended 31 March 2017, net margin stood at solid 5.4%.

 

Salasar Techno Engineering’s financial performance (in INR crore)

FY2013

FY2014

FY2015

FY2016

FY2017

Total revenue

212.9

292.6

330.4

310.2

384.6

Total expenses

205.8

282.3

318.1

292.8

354.1

Profit after tax

4.9

6.3

6.3

11.0

20.7

Net profit margin (%)

2.3

2.2

1.9

3.5

5.4

 

Reasons to invest in Salasar Techno Engineering IPO:

 

1. Company consolidated revenues grew at 16% CAGR in last 5 years. Even its standalone revenues grew at 22% CAGR in last 5 years.

2. Its profits are in increasing mode. It earned around 5% margins for FY17.

3.  On the issue price band of Rs.108 and on standalone FY17 EPS of Rs 18.15, P/E ratio works out to 5.8x. Even based on last 5 years standalone EPS of Rs 13.42, P/E ratio works out to 8x. Means, company is asking issue price of Rs 108 for the P/E ratio 5.8x to 8x. Their listed peer like KEC International, Skipper Ltd is trading at 22.8x to 18x P/E ratio. Hence Salasar Techno Engineering IPO Price is reasonably priced.

 

Risk Factors:

 

Company issue size is only Rs 35.8 Crores which < 250 Crores and these would be traded in “T” Segment due to this. Means you cannot buy and sell immediately after listing unless you take the delivery of the stocks. This would make stocks un-attractive and less chances of stock price appreciation.
Application is pending with under Enforcement Department, Securities Exchange Board of India (“SEBI”) for settlement of adjudication proceedings. Any liability on account of said proceedings which may have adverse effect on business and financial position of Company.
Increase in the cost of or a shortfall in the availability of raw materials, and in particular, Steel shapes & sections and Zinc, could have an adverse effect on business, results of operations and financial condition.

 

Suggestion:


Investors can invest in this IPO with 2-3 years’ time frame.

 

For further information and application please contact:


Mr. Sumit Srivastava

Mr. Vaibhav Desai

Senior Manager

Email : vaibhav.desai@satco.co.in

Call : 022-61706700 ext. 208

 

COMMENTS
No Comments Found
LEAVE YOUR COMMENT
ABOUT THE BLOGGERS
Mr. Sumit SrivastavaFundamental Analyst

Sumit Srivastav has been known for his extraordinary fundamental calls. In the crowd of self proclaimed market analysts, he stands out with his pensive and In-depth analysis. Sumit Srivastava carries a decade of rich market experience and currently..

View Full Profile
OUR EXPERT BLOGGERS
636362323634331715_Optimized-rekha_maam.jpgMrs. Rekha NagraniPrincipal Officer - Insurance
636359828397832919_Optimized-S.T_Gerela.pngMr. S.T GerelaDirector
636356465507572141_sumit.jpgMr. Sumit SrivastavaFundamental Analyst
636356367407637596_naresh1.jpgMr. Naresh TejwaniDirector
Categories
Equity1Mutual Fund1Commodity0Outlook Of The Week2Investment1Insurance1
Prevent Unauthorised transactions in your account. Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile/email at the end of the day.....Issued in the interest of investors.  |  No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account. |  KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
Dear Client, Pursuant to SEBI regulation, update your KYC details through KRA form with supporting documents at earliest to complete KYC-KRA requirement. If already submitted, kindly ignore. For any information, in this regard, please contact to our KYC Department on 022-66556772/73/74 or email at kyc@satco.co.in.
  • NSE - INZ 230012635 | 
  • BSE - INZ 010012839 | 
  • MCX - IN2000026431 / FMC : MCX/TCM/CORP/0598  | 
  • NCDEX - IN2000026431 / FMC : NCDEX/TM/CORP/1138 | 
  • CDSL – IN-DP-CDSL-727-2014  | 
  • PMS - INP000003492  | 
  • RESEARCH – INH000002343
  • SATCO CAPITAL MARKETS LTD. All rights reserved. || Designed Developed & Content Powered By Accord Fintech Pvt.Ltd.
VISIT COUNT     868