Started in 2005, Pulz Electronics is involve in development and manufacturing of high quality audio system and solution using Co-Axial technology and line array based speaker systems for the cinema, Pro Audio, Studio and Home Audio Industries such as Co-Axial Surround Speaker, Hi Power and in wall Subwoofers, Hi Power Co-Axial Speakers etc. Pulz Electronics manufactures sound systems, which predominantly includes speakers and amplifiers. Company also imports from China and sell certain special types of amplifiers. Company also undertakes annual maintenance contract for audio systems. Pulz Electronics have a manufacturing facility located in the outskirts of Mumbai at Palghar, along with a large warehousing facility which is well stocked with off-the-shelf pulz products. The warehouse enables ultra-fast turnaround times for projects that require equipment at a shorter notice. On performance front, Pulz has reported turnover/net profits of Rs. 9.26 cr. / Rs. 0.10 cr. (FY14), Rs. 11.91 cr. / Rs. 0.01 cr. (FY15), Rs. 13.07 cr. / Rs. 0.30 cr. (FY16) and Rs. 13.85 cr. / Rs. 1.34 cr. (FY17). For Q1 of current fiscal, it has posted net profit of Rs. 0.40 crore on a turnover of Rs. 3.86 crore. Sudden jump in bottom lines for FY17 is surprising even when top line remained at the same level that of FY16. It has reported average EPS of Rs. 3.86 and average RoNW of 21.60% for last three fiscals (on a weighted average basis on paid up equity capital base of Rs. 2.00 crore) . Issue is priced at a P/BV of 2.55 (based on valuations as on 30.06.17). However, believing company’s performance if we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 9.22 which is reasonably priced. It has no listed peers to compare with as per DRHP. On merchant banker's front, this is the 36th mandate (including 1 main board IPO of Salasar) from its stable so far. Out of last 10 listings, 2 IPOs opened at discount, one at par and the balance 7 with a premium ranging from 3% to 131% premium on offer price on the day of listing. 131% rewards were from its main line IPO. As per financials, company's growth in top-line is good, but same is not being reflated in bottom-line for some years and then there is sudden jump in bottom line, RoNW is 21.60% for last three fiscals and issue is very reasonably priced at P/E of 9.22. So we give SUBSCRIBE rating to this SME IPO.
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