Konstelec Engineers Limited was incorporated on December 05, 1995 as a Design Engineering Company. Over the years, they have expanded the services, constantly upgraded the technologies, systems, and processes and diversified the business operations. As an EPC company, they specialize in delivering full-scale project management, procurement support, and detailed engineering services for various kinds of electrical infrastructure projects across India and abroad. At present, they are in the business of Engineering, Procurement, and Construction/ Commissioning (EPC) contractors and are engaged in the business of offering full range of EPC services in India and abroad. The services find applications across several processing and various kinds of manufacturing industries such as oil & gas, refinery, steel, cement, pharmaceuticals, textile, hospital, health care and commercial complexes, domestically and internationally. They have designed, developed, and executed several complex and integrated projects requiring cutting-edge electrical, instrumentation and automation systems. The expertise includes Electrical Installation, Solar Power Plant Setup, Instrumentation & Automation. They acquire direct infrastructure project contracts through tender biddings or direct orders from the clients. For any contract they procure the products on behalf of the client and provide design, construction and allied services to the clients, as a bundle. The adaptability to market demands and technological advancements enable to tackle projects of varying sizes and complexities. They are a licensed electrical contractor and have successfully completed over more than 200 Project of various size and complexities of which there were 47 Major Projects worth more than Rs 400 Crores in India and abroad. As on November 30, 2023, they have an order book of more than 57 Major Projects worth around Rs 573 Crores from the major projects suggesting strong order book which are at different stages of implementation. They possess the requisite resources of DG sets, hydra/crane, testing equipment's for civil/electrical/instruments, commercial vehicles, manpower strength etc. to execute the projects successfully. Among the distinguished clientele, they have the privilege of serving a number of esteemed clients such as Reliance Industries Limited, Engineers India Limited, JSW Steel, Indian Oil, BPCL, HPCL, CPCL, MRPL, ISRO, ACC, BARC, Dangote Industries Limited, Adani, NTPC, Tata Steel Ltd, Navin Fluorine International Ltd and IGPL, etc. As per financial performance, Konstelec Engineers Limited has posted total income / net profits of Rs 106.17 Cr / Rs 1.90 Cr (FY21), Rs 109.02 Cr / Rs 3.52 Cr (FY22), Rs 155.00 Cr / Rs 7.78 Cr (FY23) and Rs 94.34 Cr / Rs 4.56 Cr (Q2 FY24). So as per previous financials data, company has shown good growth, but sudden rise in net profit just before IPO raises doubts. Also trade receivables are above 34% of FY23 revenue. Company has posted an average EPS of Rs 4.89 and average RoNW of 9.07% for last three fiscals. Issue is priced at a P/BV of 1.16 as per NAV of 60.43 as on 30.09.23. 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 30, 13.59 and 11.58 respectively, which looks fairly 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 27 SME IPOs in last 2 years. From last 13 IPOs, all opened above issue price or at par on the day of listing. As of now from last 13 IPOs, one is trading below issue price and remaining are trading above issue price. ( As on 16.01.24 ) As per financials, Konstelec Engineers Limited has shown good results, RoNW is 12.56% and P/E is respectively 30, 13.59 and 11.58 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced. But sudden rise in net profit just before IPO and higher value of trade receivables raises doubts. Company is in EPC business of various electrical infrastructure projects, 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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