Promax Power Limited

Promax Power Limited, started in FY 17 and taking EPC projects (Engineering, Procurement and construction) of Electric substation & Transmission line, Power distribution, Hydro, Solar power stations etc. In the year 2020, Promax Power has taken over the Project management and execution business undertaking of M/s. Promax technologies as a going concern on a slump sale 'as is where is' basis vide Slump Sale Agreement dated March 31, 2020 at a value of Rs. 1.82 crores.. The main sources of work tend to be complete electrification of high-rise buildings, industrial houses, hotels, multiplexes and the commercial complexes. We undertake electrification works of all kinds, from complete installation to new additions to circuits, from mains distribution (220 KV) to lighting installations. All works carried out by PROMAX will be provided with the necessary paperwork such as risk assessments and method statements which brings them in line with health and safety at work. On the financial performance front, Promax Power Limited reported turnover/net profits (loss) of Rs.7.76 Cr. / 0.3 Cr. (FY20), Rs. 36.88 cr./ 0.1 Cr. (FY21). So company has shown improvements in results, but sudden rise in bottom-line in FY21 is surprising. For the last two years, company has posted average EPS of Rs. 105.01 and RoNW of 34.10%. The issue is priced at a P/BV of 0.92 based on its NAV of Rs.10.82 post issue. As per FY21 earnings on post issue equity, IPO is valued at P/E of around 34, which looks aggressively priced. As per RHP, there is no listed peers. On BRLM's front, Finshore Management Services limited associated with this SME IPO and handled 16 IPOs in last 3 years. From last 10 IPOs, two opened below issue price and remaining above issue price. As of now from 10 IPOs, six are trading below and remaining are trading above issue price or at par As on 27.09.21 ) For Promax Power Limited, financials are improving, RoNW is 3.65% and P/E is around 34 for FY21 earnings. So issue looks aggressively priced. The EPC sector is highly competitive and unorganised, but also has high growth opportunities. Performance of BRLM is poor. So we give AVOID rating to this SME IPO.

• 1  Mr. Vishal Bhardwaj
• 2 Mrs. Shweta Bhardwaj