Anlon Technology Solutions Limited is primarily engaged in the business of providing engineering services for engineering systems, built on automotive chassis and allied areas, majorly for airports, high rise buildings and refineries. The Company also sells spare parts for performing engineering services which is ancillary part of the engineering services. In FY22, the company has entered into a contract for fabrication and installation of airport interior equipment where they did sourcing, supervising & quality control of the manufacturing process, and did safe transportation & installation of the end product to the installation site, overseeing safe installation, and have supplied conveyer belt systems in airports for air cargo handling companies and have also been providing equipment and services for runway maintenance. There are two primary segments for bifurcation of revenue as per accounting standard, which are: 1. Engineering services a. Commissions from Sale of Equipmentb. Spare Parts Tradingc. Maintenance and Service 2. Designing, Fabrication and Installation Services The Company business operations are broadly divided into two categories : (1) Mobile Fire Fighting, Rescue and Evacuation Equipment and allied services - Airport Rescue and Fire Fighting vehicles (ARFF) - High rise building rescue, evacuation and fire fighting equipment - Industrial Fire Engines (2) Other Airport Services - Runway Rubber removal and paint removal machines- Runway sweeping and Bay cleaning- Disabled Aircraft Recovery Kit (DARK)- Supply of Airport interior components Company provides services to the clients spread across the country, namely in cities like Mumbai, Bangalore, Thane, Delhi, Hyderabad, Kurnool, Kannur, Jamnagar, Kolkata, Barmer, Ahmedabad, Lucknow, Guwahati, Mangalore and Chennai. At present, they have 92 employee in different departments. As per financial performance, Anlon Technology Solutions Limited has posted total income/net profits of Rs 13.81 Cr / Rs 0.69 Cr (FY20), Rs 14.44 Cr / Rs 0.74 Cr (FY21) and Rs 19.59 Cr / Rs 2.43 Cr (FY22) and Rs 13.42 Cr / Rs 2.39 Cr (H1FY23). So company has shown good results, but just before IPO net profit is increased multifold. Company is paying total Rs 1.14/- Cr as salary to its promoters and trade receivables of company in FY22 is above 26%. Company has posted an average EPS of Rs 3.93 and average RoNW of 41.45% for last three fiscals. Issue is priced at a P/B of 4.99 as per NAV of Rs 20.05 as on 30.09.2022. As per annualized FY23 earnings on fully diluted equity post issue, asking price is at P/E of around 11.72 and as per FY22 earnings P/E is 23.16. As per RHP, there is no listed company. On BRLM's front, GYR Capital Advisors Private Limited, is associated with this SME IPO and handled 9 IPOs in last 2 years. From last 9 IPOs, all opened above issue price or at par. As of now from last 9 IPOs, one is trading above issue price and remaining are trading below issue price or at par. ( As on 26.12.22 ) As per financials Anlon Technology Solutions Limited, has good results, RoNW is 49.71% and P/E is respectively 23.16 and 11.72 as per FY22 and annualized FY23 earnings, which looks fully priced and trade receivables are above 26% in FY22. Also sudden jump in net profit in IPO year raises questions. Company is in business of providing Engineering Services which is highly competitive and it will be difficult to maintain similar margins in future. Performance of BRLM is poor post listing. So we are giving AVOID rating to this SME IPO.
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