Started in 2009, Mumbai based Artemis Electricals Limited is engaged in manufacturing and trading of LED lights and LED lighting accessories. The company manufactures and trades indoor and outdoor LED luminaries. The company manufactures LED drivers at its manufacturing facility located in Vasai. They use third-party manufacturing facilities for manufacturing of LED bulbs. The finished products are delivered to Original Equipment Manufacturer (OEM) who in terms apply-in their brand and sale to the retail customers. As of Jan 2019, the company has 32 employees and 11 contractors. Two of the company employees are in R&D. ProductsThe company manufactures products in 2 categories; Indoor Lighting and Outdoor Lighting. The product line of the company includes LED Panel Lights, LED Street Lights, Solar LED Street Lights, LED Down Lights, LED Surface Down Lights, Pendant Downlights, LED Spot Lights, LED Batten Lights, LED Architectural Lights, LED Focus Lights, LED Bulbs. The company also manufactures and trade in Solar charge controllers, Solar powered LED Batten Lights, Solar powered LED Down Lights, Solar powered LED Street Lights, Solar powered LED Bulbs, Solar powered Fans, Solar powered LED Lanterns etc. Manufacturing PlantThe company has a manufacturing plant in Vasai, from where it supplies the products to OEM's for further selling and branding. RevenueAs on 31st Oct 2018, the revenue of the company from the selling of LED lighting products and other LED accessories was Rs 5,241.26 Lakhs. Company doesn't provide a clear distinction between manufacturing and trading revenue. The competitive strengths of the company are:1. Complete value chain in-house2. Manufacturing unit at Vasai3. Time-bound execution4. Strong client base5. Government contracts On the financial performance front, Artemis has posted turnover/net profits of Rs. 45.33 cr. / Rs. 1.55 cr. (FY16), Rs. 47.24 cr. / Rs. 1.77 cr. (FY17), Rs. 89.51 cr. / Rs. 9.52 cr. (FY18). For the upto 31.10.18 of FY19, it has earned a net profit of Rs. 5.92 cr. on a turnover of Rs. 52.41 cr. Sudden jump in top-line and bottom-line since FY18 is very surprising. Trade receivables for company in FY18 is around 25.02 Cr which is around 28% of total income, which is very high. Artemis has posted an average EPS of Rs. 3.18 and an average RoNW of 37.36% for last three fiscals. The issue is priced at a P/BV of 4.44 on the basis of its NAV of Rs. 13.50 as on 31.10.18. If we annualise latest earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 14.59 thus issue appears fully priced and if we take FY18 earnings, then P/E is around 15.55. As per RHP, there is no listed peers. On BRLM's front, for Fedex Securities Limited this is the 7th SME IPO. From last 6 IPOs, 1 opened below issue price and remaining all opened above issue price with 1% to 40% gains. As of now from last 6 IPOs, 4 are trading below or at issue price and remaining above. ( As on 22.04.19 ) Company has shown very high growth since FY18, RoNW is 37.36% for last three fiscals and issue looks fully priced with respect to current earnings with P/E of 14.59. Two major concerns are high value of trade receivables and super performance of FY18 and FY19. Performance of BRLM is poor after listing. So we give NEUTRAL rating to this SME IPO.
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