Emmforce Autotech Limited is engaged in the business of manufacturing niche automotive drivetrain parts like Differential Housings, Differential Lockers, Differential Covers, 4WD Locking Hubs, Spindles, Axles & Shafts, Gear Shifters, Yokes, Differential Spools, Differential Tools and various differential forged / cast parts primarily for 4-wheel Drive and performance racing vehicles. The company has been engaged in exports ever since its inception. They have established itself as a manufacturer of Drivetrain Parts in India and is one stop shop for quality cost competitive drivetrain parts and providing out-of-the-box solutions to its customers through designing and development of complex / special parts. Huge inventory of tooling for forging and machining, jigs and fixtures for machining, extra focus on engineering gives Emmforce an edge over the competition to develop new parts in a much faster time than competition. The company help to accelerate performance and improving profitability through faster product development, shorter lead time, on time delivery, comprehensive product range and competitive pricing. They offer fully integrated engineering solutions from conceptualization, development and validation to implementation and manufacturing of the products. The conceptualization stage involves acquiring market intelligence, assessing customer requirement and formulating customized strategy for individual customers. The development phase includes product designing, material procurement and processing. This is followed by the validation phase, which involves prototyping, testing and feasibility analysis. The in-house manufacturing and implementation competencies include forging, machining, fabrications, heat treatment, surface finish, logistics, quality and testing, design and validation. Emmforce has recently invested in Emmforce Mobility Solutions Pvt. Ltd. (EMSPL) by buying 80% of its shareholding from Emmbros Automotives Pvt. Ltd. at book value thus making it subsidiary of Emmforce on December 19, 2023. EMSPL is actually situated in the premises of Emmforce only and was setup last year for manufacturing of forgings and Rotary Tiller Blades. The rotary tiller blade plant highly automated through robots and transfer presses and is one of its kind wherein majority of the key equipment are Japanese and being procured from the industry leaders. The plant is going to be in commercial production before February, 2024. As per financial performance, Emmforce Autotech Limited has posted total income / net profits of Rs 51.85 Cr / Rs 5.09 Cr (FY21), Rs 71.38 Cr / Rs 7.33 Cr (FY22), Rs 48.75 Cr / Rs 4.39 Cr (FY23) and Rs 47.90 Cr / Rs 5.12 Cr (upto 31.10.23 FY24). So as per previous financials data, company has shown zig-zag results. Company has posted an average EPS of Rs 3.66 and average RoNW of 26.39% for last three fiscals. Issue is priced at a P/BV of 9.52 as per NAV of 10.29 as on 31.10.2023. 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 27.43, 45.78 and 22.90 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Beeline Capital Advisors Private Limited is associated with this SME IPO and handled 33 SME IPOs in last 2 year. From last 10 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 10 SME IPOs, two are trading below issue price and remaining trading above or at par issue price. ( As on 16.04.24 ) As per financials, Emmforce Autotech Limited has shown zig-zag results, RoNW is 18.71% and P/E is respectively 27.43, 45.78 and 22.90 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. Company is in the business of manufacturing niche automotive drivetrain parts, which is highly competitive and fragmented segment. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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