Rulka Electricals Limited

Rulka Electricals Limited is in business of turn key projects contractor engaged in offering solution for all types of Electrical & Fire Fighting Turnkey Projects. The company offers wide range of services like Electrical Solutions, Electrical Panels, Solar EPC Contracts, Turn Key Electrical Warehousing Projects, Electric Commercial Industrial Services, Maintenance Services, Electrical Contracting and Data & Voice Cabling Installation across the Industrial Sector, Commercial, Retail and Theatre sector. They offer electrical contracting services for all types of industrial plants.  They have integrated operations which involve Designing, Supplying, Installation, Testing & Commissioning of the project. They also maintain the projects as per the Requirements. They have completed Warehouses projects across country. Also, they have completed Retail Stores projects, theatres project across country & many more Hospitals & Hospitality.  The O&M and AMC services contribute 1.21%, 2.33%, 5.64% to the total revenue for the year ended March 31, 2023, March 31, 2022 and March 31, 2021. As per financial performance, Rulka Electricals Limited has posted total income / net profits of Rs 19.60 Cr / Rs 0.54 Cr (FY21), Rs 36.27 Cr / Rs 1.12 Cr (FY22), Rs 46.90 Cr / Rs 2.81 Cr (FY23) and Rs 65.28 Cr / Rs 5.66 Cr (upto 29.02.24 FY24). So as per previous financials data, company has shown good growth, but sudden rise in net-profit just before IPO raises doubts. Company has posted an average EPS of Rs 5.65 and average RoNW of 44.09% for last three fiscals. Issue is priced at a P/BV of 6.22 as per NAV of 37.77 as on 29.02.24. 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 89.27, 35.68 and 16.21 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 34 SME IPOs in last 3 year. From last 10 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 10 SME IPOs, all are trading above issue price. ( As on 11.05.24 ) As per financials, Rulka Electricals Limited has shown good growth, RoNW is 50.33% and P/E is respectively 89.27, 35.68 and 16.21 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced, but sudden rise in net-profit just before IPO raises some doubts. Company is engaged in offering solution for all types of Electrical & Fire Fighting Turnkey Projects, which is highly competitive and fragmented business segment. BRLM performance is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Mr. Rupesh Laxman Kasavkar
• 2 Mr. Nitin Indrakumar Aher