Started in 1998, MILLTEC Machinery Limited is a Bengaluru - Karnataka based diversified agro-processing equipment manufacturer in India, with a sales and distribution network in India and overseas. Company's portfolio includes equipment to facilitate the processing of rice, pulses, wheat, seeds, and maize. They have an estimated market share of 10% in the total rice processing equipment industry and are the most preferred brand in the milling segment (as per CRISIL Report). MILLTEC is an ISO 9001:2015 and ISO 14001:2015 certified company with four manufacturing facilities in Bengaluru, Karnataka, and Chennai, Tamil Nadu. From a single equipment manufactured to facilitate the whitening and polishing of rice grains in 1998, they have expanded the equipment portfolio to over 200 different types of grain processing equipment, as on March 31, 2018. The product portfolio includes equipment for parboiling and drying, pre-cleaning, de-stoning, de-husking, thickness grading, polishing, length grading, sorting, and packaging, which cater to customers who have mills with throughput capacities ranging from two MTPH to 20 MTPH. They also offer end-to-end turnkey solutions for rice processing activities, as well as solutions to facilitate ancillary grain processing activities such as yield management. MILLTEC has a strong research and development team comprising 22 engineers as on March 31, 2018, who have developed several innovative new products. The research and development team has also been instrumental in enabling them make applications for the registration of seven trademarks, 12 designs, 28 copyrights, and five patents. As on March 31, 2018, Company's distribution and sales network, comprising 34 employees and 57 agents, was spread across 19 states in India, and seven countries overseas. This network is also backed by an after-sales service team of 111 employees. Company has also established a call centre consisting of eight employees in order to promote the sales of spare parts for their equipment, and also address post-sales requirements of the customers. As of March 31, 2018, company had a total work force of 821 individuals comprising of 396 employees and 425 individuals engaged on a contractual basis. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
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