EKI Energy Services Limited

Incorporated in 2011, EKI Energy Services Limited is in the business of Climate Change Advisory Services, Carbon Credits Trading, Business Excellence Advisory and Electrical Safety Audits. The company offering its services to various clients in the government and private sectors like power generation, waste management, clean development mechanism, airports and many more industries. The company focus on client centric services particularly in the field of energy conservation, climate change advisory & business excellence sector domain, where the clients can get services like: consultancy, advisory, compliance, audits, trading & training services to become more profitable and sustainable. Furthermore The company has a broad client base in India and various countries like Australia, USA, Germany, Europe and many more. On the financial performance front, EKI Energy has reported turnover/net profits (loss) of Rs. 7.01 cr. / Rs. 0.26 cr. (FY18), Rs. 19.88 Cr. / Rs. 0.68 Cr. (FY19) and Rs. 66.01 Cr. / Rs. 4.47 Cr in FY20. For FY21, company has posted 59.96 Cr total income and 5.38 Cr net profit. So, company has shown very exceptional growth since last few years. For the last three years, company has posted average EPS of Rs. 5.15 and RoNW of 39.82%. The issue is priced at a P/BV of 4.48 based on its NAVs of Rs. 22.78 (As on 30.09.2020). As on date of RHP, order-book of company is around 126.64 Cr. As per FY20 earnings, on fully diluted equity post issue, IPO is priced at P/E of around 16. If we annualise latest earnings of FY21 on fully diluted equity, then P/E is around 7. So issue looks very reasonably priced as per FY21 annualised earnings and comparison between peers is shown in above table.  On BRLM's front Hem Securities Limited has handled 10 IPOs in last three fiscals. From 10 IPOs, 1 is opened below price and remaining are opened above price. As of now from 10 IPOs, 4 are trading below issue price and remaining are trading above issue price. For EKI Energy Limited, company has shown good growth, RoNW is 73.11% for FY20, P/E is around 16 for FY20 and 7 for annualised FY21. So issue looks reasonably priced. In BHARAT, environmental and carbon credit related services is expected to grow at good rate. Performance of BRLM is average. So we give SUBSCRIBE rating, based on unique business segment and reasonable valuation, to this SME IPO, but one should keep in mind risk of SME sector and low volume.

• 1 Mr. Manish Kumar Dabkara