Started in 2012, Banka BioLoo Limited, Hyderabad based company, provides sanitation infrastructure and human waste management solutions and services. They offers innovative and simple bio-digester technology patented by Defense Research and Development Organisation (DRDO), the R&D arm of the Indian Ministry of Defense. They manufactures, supplies, and installs bio-tanks for digestion of human waste. They also provide sanitation operations and maintenance (O&M) services to Indian Railways. The anaerobic bio-digester technology helps users manage waste onsite, without depending on expensive and energy-consuming sewage infrastructure. Thet are involved in the rental and AMC of mobile biotoilets; handling of low cost housing projects for sanitation requirement at rural area; sale of spares of control discharge toilet system to Indian Railways; and provision of consultancy services for development of large bio tanks, as well as waste water treatment and recycling solutions. Banka BioLoo have installed over 6,000 bio-toilet units across India and currently undertake 12 O&M service contracts with Indian Railways. Their solutions can be used for many purposes like Household Bio-toilets, Mobile Bio-toilets, School Bio-toilet Blocks, Bio-toilets at worksites and Bio-digester Tanks for various user groups. Banka BioLoo mainly operates in Rajasthan, Uttar Pradesh, Bihar, Assam, Jharkhand, Odisha, West Bengal, Maharashtra, Telangana, Andhra Pradesh, Karnataka and Tamil Nadu. Company's clients includes Indian Railways, L & T, Shapoorji Pallonji & Co. Ltd., Piramal Realty, etc. On financial performance front, Banka BioLoo has posted turnover/net profits of Rs. 0.43 cr. / Rs. 0.02 cr. (FY13), Rs. 5.30 cr. / Rs. 0.09 cr. (FY14), Rs. 8.20 cr. / Rs. 0.08 cr. (FY15), Rs. 14.33 cr. / Rs. 0.32 cr. (FY16) and Rs. 15.16 cr. / Rs. 1.16 cr. For H1 of FY18, it has reported net profit of Rs. 0.32 cr. on a turnover of Rs. 5.68 cr. So it has shown consistent growth. For last three fiscals it has posted an average EPS of Rs. 2.32 and an average RoNW of 18.82% on an equity base of Rs. 0.13 cr. If we annualise latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 73. Asking price is at a P/BV of 2.79 (on its NAV of Rs.41.16 after issue). As per offer documents, company has no listed peers to compare with. As per latest earnings, issue looks very aggressively priced. On merchant banker's front, this is the 23rd mandate from its stable. Out of last 10 listings, 2 opened at discount, 1 at par and the rest at a premium ranging from 0.2% to 74% on the day of listing. (Listing at premium of 74% was for main board IPO of Apollo Micro System Ltd) As per financials, company's growth is consistent, RoNW is 18.82% for last three fiscals and issue looks aggressively priced as per latest earnings. Company is working in human waste management solutions and services. Push of Government for clean India and Indian railways planning to convert all toilets to Bio Toilets by 2019 will be good for company. So, we give NEUTRAL rating to this SME IPO.
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