Based at Ahmedabad, Pratham EPC Projects Limited is an integrated engineering, procurement, construction and commissioning company being in business of end-to end service providers to Oil & Gas distribution companies in India. The company has been executing various gas pipeline project handling all pipeline activities like, mainline welding, tie-in, coating, hydro testing, pipeline commissioning etc. Pratham specialize in oil & gas pipelines for cross country distribution and city gas distribution. It also undertakes offshore projects for water distribution specifically project bidding & project management. They are an Oil & Gas pipeline infrastructure service provider in India, focused on laying pipeline networks along with construction of associated facilities; and providing Operations & Maintenance services to the City Gas Distribution ('CGD') Companies in India. They are an integrated EPC company offering a diversified range of pipeline and allied services for oil & gas industry. They provide the services for cross country pipeline projects for different applications viz. Oil, gas & water etc. and also undertake Pipeline laying work on Turnkey basis including engineering, procurement, pipeline construction for city gas distribution, horizontal direction drilling, stations including civil, electromechanical and instrumentation for the clients. Over the years, they have successfully executed more than 12 projects with the major completed projects quantifying to approximately Rs 13,184.10 Lakhs. The execution capabilities have grown significantly with time, both in terms of the size of projects that they bid for and execute, and the number of projects that they execute simultaneously. As at February 23, 2024, they have 8 major on-going projects out of which 7 projects worth approximately Rs 29,666.33 Lakhs has been confirmed based on Letter of Allocation / Purchase Order for which Rs 24,015.61 Lakhs worth project execution is pending and 1 project has been finalized with Purchase Order, which is worth approximately Rs 40,667.29 Lakhs, based on management estimates, suggesting the strong order book. They derive the revenue from following two business verticals: a) Gas & Oil Pipeline Projects b) Water Pipeline Projects The company has a 52% subsidiary namely Pipeflow Integrity India Private Limited (“PIIPL”). The Company was holding 50% shares of PIIPL till March 31, 2023. They acquired additional 2% stake of PIIL on May 26, 2023 making its the subsidiary as on date. Considering this, they have disclosed all the financial matters, herein below, based on standalone restated financial statements. As per financial performance, Pratham EPC Projects Limited has posted total income / net profits of Rs 30.85 Cr / Rs 1.13 Cr (FY21), Rs 50.63 Cr / Rs 4.42 Cr (FY22), Rs 51.69 Cr / Rs 7.66 Cr (FY23) and Rs 36.30 Cr / Rs 5.24 Cr (upto Q2 FY24). So as per previous financials data, company has shown good growth, but sudden increase in net profit, just before IPO generates doubts. Company has posted an average EPS of Rs 4.23 and average RoNW of 38.66% for last three fiscals. Issue is priced at a P/BV of 4.19 as per NAV of 17.91 as on 30.09.2023. 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 30.17, 17.40 and 12.70 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 30 SME IPOs in last 2 year. From last 14 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 14 SME IPOs, three are trading below issue price and remaining opened above or at par issue price. ( As on 04.03.24 ) As per financials, Pratham EPC Projects Limited has shown zig-zag results, RoNW is 42.50% and P/E is respectively 30.17, 17.40 and 12.70 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced and sudden rise in net-profit is very surprising. Company is in business of end-to end service providers to Oil & Gas distribution companies in India, which is highly competitive and fragmented segment. The order-book is very strong. 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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