BEW Engineering Limited

BEW Engineering limited, started in 2011 and Maharashtra based company, is engaged in design and manufacture of Pharmaceutical & Chemical plants and process equipment. They design and manufacture special range of filtration, mixing and drying equipments specifically used in Pharmaceuticals, Sterile Applications, Intermediate Compounds, Fine Chemicals, Chemicals, Agro Chemicals, Pesticides, Insecticides, Dyes and Food Products. These equipments are manufactured from material such as Stainless Steel, Alloy Steel, Hastelloy etc. with various linings as per International Codes : a) IS b) BS c) ASME d) TEMA e) DIN f) CE Marks etc.. Mild steel, Stainless Steel, Gear box, motor, Hastelloy plates, MS Pipes, Hydraulic Power Pack, Control Panel, Mechanical Seal etc. are the major raw material used by the company in manufacturing of the products. The same is sourced from various suppliers in domestic markets ( more than 95% ) as well as imported ( less than 3% ). Company has total 39 employees as on 31st July 2021. On the financial performance front, BEW reported turnover/net profits (loss) of Rs.63.84 Cr. / 0.62 Cr. (FY19), Rs. 67.71 cr./ 0.32 Cr. (FY20), Rs.73.54 Cr. / Rs. 2.87 Cr. (FY21).  So company has shown improvements in results, but sudden rise in bottom-line in FY21 is surprising. For the last three years, company has posted average EPS of Rs. 10.93 and RoNW of 18.58%. The issue is priced at a P/BV of 1.09 based on its NAV of Rs. 53.03 post issue. As per FY20 earnings and on post issue equity, IPO is valued at P/E of around 47.08 and for FY21 annualised then PE of around 5.22, which looks reasonably priced. Comparison between listed peers is shown in above table, but it can't be compared apple to apple basis. On BRLM's front First Overseas Capital Limited has handled 8 IPOs in last three fiscals. From last 6 IPOs, all opened at par or above issue price. As of now from 6 IPOs, four are trading below and remaining are trading above issue price. ( As on 28.08.21 ) For BEW Engineering limited, financials are improving, RoNW is 29.48% and P/E is around 5.22 for FY21 super earnings. So issue looks reasonably priced. But company has high debt and if company is able to repeat FY21 performance, is big concern. Performance of BRLM is poor. So we give AVOID rating to this SME IPO.

• 1 PRAKASH BHALCHANDRA LADE
• 2 ROHAN PRAKASH LADE