Started in 1951, Mumbai-based Evans Electric Limited works in the area of re-designing, repairing, and re-winding of transformer, generator, and electric motor with in-house manufactured replacement components. Some of the products manufactured by the company for replacement purposes are insulation components, brush holders, coils, slip rings, insulators, retaining rings, allied specialized equipment & tools, wedges, stampings and packers. It has a factory unit covering 30,000 sq. ft area located at Palghar, Maharashtra providing repairing & rewinding services and manufacturing replacement components. The company also provides contract based services for repairing of turbo rotors, low voltage and high voltage electric motors (AC and DC), turbo generator stators, transformers, generators, hydro rotors, hydro generator stators, field poles, high voltage coil manufacturing, diagnostic testing, high voltage coil manufacturing, and vacuum impregnation. The company also provides contract based services to foreign countries and has been successfully executed orders from Sri Lanka, Malaysia and Bangladesh. It has a wide client base covering various sectors including railways, oil & gas refineries, cement, chemicals & fertilizers, shipping, steel plants, offshore gas & oil exploration, renewable energy, gas, diesel, nuclear, & thermal power generation. The competitive strengths of the company are: • Can handle complex machines of different design, size and capacity• Skilled workforce• Factory unit at a good location and in a large area• Quality work at affordable pricing On the financial performance front, Evans Electric has posted turnover/net profits of Rs. 5.12 cr. / Rs. 0.41 cr. (FY16), Rs. 10.72 cr. / Rs. 2.37 cr. (FY17), Rs. 5.87 cr. / Rs. 0.46 cr. (FY18). For the upto 31.10.18 of FY19, it has earned a net profit of Rs. 0.58 cr. on a turnover of Rs. 4.00 cr. So for the company FY17 was exceptionally well, but company wasn't able to repeat the performance. Trade receivables for company in FY18 is around Rs 91.18 lakhs which is around 15% of total income. As per RHP MD and whole time director will get remuneration of around Rs 60 lakh per Annum, which is very high amount as net profit of company is less than this amount. Evans Electric has posted an average EPS of Rs. 10.90 and an average RoNW of 16.66% for last three fiscals. The issue is priced at a P/BV of 0.68 on the basis of its NAV of Rs. 76.53 as on 31.10.18 and at a P/BV of 0.78 on the basis of post issue NAV of Rs 66.57 post issue. If we annualise latest earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 7.16 thus issue appears very reasonably priced and if we take FY18 earnings, then P/E is around 15.40 as per that issue is fully priced. As per RHP, there is no listed peers. On BRLM's front, for Hem Securities Limited this is the 35th SME IPO. From last 10 IPOs, 2 opened below issue price, 1 at part and remaining above issue price with listing gains around 2% - 20%. Currently from last 10 IPOs, 6 are trading below issue price and remaining above issue price. ( As on 26.04.19 ) Company has show zig-zag results, RoNW is 16.66% and issue looks very reasonably priced with respect to current earnings with P/E of 7.16. If company can repeat the same performance in upcoming years, than only it looks good. Performance of BRLM is poor after listing. So we give NEUTRAL rating to this SME IPO.
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