Incorporated in 1982, Gwalior, Madhya Pradesh based Aartech Solonics Limited is a system solution oriented R&D enterprise in the field of specialized and selected energy appliances. It is involved in the manufacturing of electricity distribution & control apparatus [electrical apparatus for switching or protecting electrical circuits (e.g. switches, fuses, voltage limiters, surge suppressors, junction boxes etc.) for a voltage exceeding 1000 volts; similar apparatus (including relays, sockets etc.) for a voltage not exceeding 1000 volts; boards, panels, consoles, cabinets and other bases equipped with two or more of the above apparatus for electricity control or distribution of electricity including power capacitors. Some of the company's popular products and services include1. BTS - 2000.2. Kranking Ultra Capacitors.3. Control Rely Panels.4. Load Checkers. The company also provide solutions and services for products of other companies like-1. GSUN Innovations2. Bestcase Enclosures The company's client base includes businesses from various industries like Defense, Railways, Power Generation, Heavy Earth Moving Equipments and Oil & Gas etc. Aartech's Innovations Lab is a 1000 sqft facility with all modern amenities required for laboratory operations. In November 2013, it was recognized by the Department of Science and Technology for its contribution in the field for R&D activities. The company has 55 full-time employees excluding 10 contract employees. On the financial performance front, Aartech has posted turnover/net profits of Rs. 9.54 cr. / Rs. - (0.70) cr. (FY14), Rs. 9.94 cr. / Rs. 1.13 cr. (FY15), Rs. 10.26 cr. / Rs. 0.23 cr. (FY16), Rs. 13.42 cr. / Rs.0.30 Cr. (FY17) and Rs. 12.09 cr. / Rs. 1.18 cr. (FT18). For the H1 of FY19, it has earned net profit of Rs. 0.60 cr. on a turnover of Rs. 4.17 cr. Sudden jump in bottom-line for last one and half years is bit surprising and raises concerns. For last three fiscals, Aartech has posted (on a standalone basis) an average EPS of Rs. 1.47 and an average RoNW of 4.11%. The issue is priced at a P/BV of 0.96 on the basis of its post issue NAV of Rs. 35.41. If we annualize latest earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 40 for consolidated earnings and at a P/E of around 20, thus issue appears aggressively priced and if we take FY18 earnings, then P/E is around 31.72 for standalone basis. Comparison between peers are shown in above table. On BRLM's front, for Swastika Investmart Limited this is the 18th SME IPO. From last 10 IPOs, 2 opened below issue price and 8 above issue price with 1% to 20% gains. As of now from last 10 IPOs, 4 are trading below or at issue price and remaining above. ( As on 12.03.19 ) Company has shown improvements in bottom-line with almost similar top-lines, RoNW is 4.11% and issue looks aggressively priced with respect to current earnings. Performance of BRLM is average. So we give AVOID rating to this SME IPO.
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