Electro Force (India) Limited are an ISO 9001:2015-certified company that designs and manufactures electrical components, metal / plastic contact parts, and supplies these products to the industry players via a business-to-business (B2B) model. The company started in the year 2010 as Electro Force (India) Pvt Ltd. Since inception, the Company has been a supplier of high grade precision metal electrical contact parts and components, connectors and assemblies for applications in electronics, lighting, switchgear and allied industries in India. The manufacturing unit is located at Vasai in Maharashtra with installed capacity of 15,00,00,000 Units (No's). They offer end-to-end product solutions to the customers under the B2B model wherein they provide services ranging from designing, manufacturing, quality testing and packaging to logistics. They also offer products in the intermediate stages to many of the customers. The main focus has been on offering integrated services, mostly to Indian manufacturers of electrical components. They have the ability to perform precision metal stamping, assembly, and moulding. Capacity utilisation of plant is 42%, 48%, 54% and 70.74% for FY21, FY22, FY23 and upto Q2 FY24. They believe that they specialize in designing and manufacturing of precision sheet metal components, high speed metal stamping components, plastic injection mouldings, insert and over moulding, sub-assemblies and value added services for diverse industries like electronics, lighting and other engineering industries in India. They believe that they have well-known and reputed customers based in India. As per financial performance, Electro Force (India) Limited has posted total income / net profits of Rs 15.87 Cr / Rs (2.23) Cr (FY21), Rs 34.43 Cr / Rs 8.64 Cr (FY22), Rs 30.28 Cr / Rs 7.99 Cr (FY23) and Rs 23.14 Cr / Rs 7.11 Cr (upto Q2 FY24). So as per previous financials data, company has shown zig-zag results, and sudden rise in net profit is very surprising. Company has posted an average EPS of Rs 3.74 and average RoNW of 27.86% for last three fiscals. Issue is priced at a P/BV of 2.68 as per NAV of 34.73 as on post issue. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 25.18, 27.22 and 15.30 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, First Overseas Capital Limited is associated with this SME IPO and handled 20 SME IPOs in last 3 years. From last 10 IPOs, one opened below issue price and remaining above issue price or at par on the day of listing. As of now from last 10 IPOs, four IPO are trading below issue price and remaining are trading above issue price. ( As on 14.12.23 ) As per financials, Electro Force (India) Limited has shown zig-zag results, RoNW is 43.57% and P/E is respectively 25.18, 27.22 and 15.30 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. But sudden rise in net profit and higher issue expenses raises doubts. Also maintaining such high margins in future may not be possible. Company is in business of manufacturing electrical components and metal / plastic contact parts with B2B model, which is highly competitive and fragmented segment. Performance of BRLM is average. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
✍️ Post a Comment