Kay Cee Energy & Infra Limited is an Engineering, Procurement and Construction ('EPC') company providing specialized services of construction and commissioning of power transmission and distribution system including overhead and underground lines, substation construction, automation etc. to various government authorities and private entities. The service portfolio includes handling, erection, testing, commissioning of equipment and materials for power transmission & distribution System including lines, substation construction, automation, augmentation/ modification and extension of existing power system. The service portfolio of the Company also includes the Operation and Maintenance of 132 kV Substations, Maintenance of substations up to 400 kV Level and Maintenance of EHV Lines up to 765 kV Level including deployment of Emergency Restoration System (ERS) for breakdown maintenance etc. They undertake turnkey, partial turnkey and labour contract jobs for supply, civil, erection, testing & commissioning of all types of electrical system works for government and private entities. As on September 30, 2023, the Company has 15 projects in hand with an aggregate order book value of approximately Rs 54,990.27 lakhs. The Company, with the vision of becoming a fully integrated unit is proposing to diversify its business activities to manufacture materials required for EPC Contract of EHV transmission lines, and sub-stations, namely, line and substation hardwares accessories/ items/ fittings along-with clamps and connectors up-to 765 kV, Bird Flight Diverters, Structures for Substation/ Lines and Solar Plants, Electrical Panels etc. in phased manner. The Company shall be setting up its manufacturing unit at B-16, Road No.2, IPIA, Kota -5, Rajasthan, India and is proposing to commence commercial product during the Fiscal 2025. In addition to independently undertaking projects, they have also entered into a collaboration with other engineering companies such as Sterlite Power Transmission Limited, Jost Engineering Limited, in the industry to jointly bid and execute larger projects. As of September 30, 2023, they have been awarded three projects by Rajasthan Rajya Vidyut Prasaran Nigam Limited having an aggregate value of Rs 36,296.34 lakhs which shall executed in collaboration with Jost’s Engineering Company Limited as other partner, wherein the Company shall be acting as the lead partner. As per financial performance, Kay Cee Energy & Infra Limited has posted total income / net profits of Rs 35.59 Cr / Rs 1.87 Cr (FY21), Rs 50.13 Cr / Rs 3.10 Cr (FY22), Rs 61.32 Cr / Rs 5.51 Cr (FY23) and Rs 9.64 Cr / Rs 1.21 Cr (upto Q2 FY24). So as per previous financials data, company has shown good growth. Company has posted an average EPS of Rs 5.29 and average RoNW of 21.21% for last three fiscals. Issue is priced at a P/BV of 0.06 as per NAV of 924.83 as on 30.06.23. 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 19.09, 10.75 and 12.26 respectively, which looks fairly priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, GYR Capital Advisors Private Limited is associated with this SME IPO and handled 18 SME IPOs in last 3 years. From last 17 IPOs, all are opened above issue price or at par on the day of listing. As of now from last 17 IPOs, four are trading below issue price and remaining are trading above issue price. ( As on 21.12.23 ) As per financials, Kay Cee Energy & Infra Limited has shown good growth, RoNW is 25.13% and P/E is respectively 19.09, 10.75 and 12.26 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced and current order book value is Rs 54,990.27 lakhs. Company is in business of EPC specialised in power transmission and distribution system, which is highly competitive and fragmented segment. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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