Shradha Infraprojects (Nagpur) Limited

Started in 1997, Shardha Infraprojects (Nagpur) Private Limited is a Nagpur based real estate development company, engaged in the business of development and sale of residential as well as commercial properties and the development and leasing of commercial properties. Company is primarily operating in Nagpur focused on premium developments with presence in residential, Commercial and hospitality in mixed-use and single-segment developments. Shardha Infra is primarily engaged in 2 business segments:1. Development Business: The Development Business includes activities related to residential real estate development, from the identification and acquisition of land through to the planning, execution and sales of the development projects. The residential properties include plotted developments, houses and apartments of varying sizes. The Development Business also consists of the development and sale of certain commercial properties.2. Lease Business: The Lease Business involves leasing of the commercial properties. The commercial properties include corporate offices and educational institutions. On performance front, SINL has (on consolidated basis) posted turnover/net profits of Rs. 27.87 cr. / Rs. 8.71 cr. (FY16), Rs. 42.55 cr. / Rs. 4.74 cr. (FY17). For Q1 of current fiscal, it has posted net profit of Rs. 1.49 crore on a turnover of Rs. 5.98 crore. It shows, no consistency in its performance and there is jump in bottom line, which is surprising. It has posted an average EPS of Rs. 8.01 and RoNW of 21.42% for last two fiscals on an equity base of Rs. 0.29 crore. Asking price is at a P/BV of 1.44 on the basis of post issue NAV. If we annualize latest earnings and attribute it on post issue paid up equity capital, then asking price is at a P/E of around 11 against peers trading at a P/E ranging from 13 to 18. So issue looks fully priced. On merchant banker’s front, this is the 19th mandate from its stable in past three years. Out of last 10 listings, 2 IPOs opened at a discount to offer price, 1 at par, 5 with premium ranging from 0.15% to 2% and the balance 2 with a premium ranging from 8 to 20%. Thus it has poor track record. As per financials, company's growth is inconsistent, RoNW is 21.42% for last two fiscals and issue is fully priced as per latest earnings, but there is big jump in FY18 earning when comparing with FY17. Company is focused on one particular region that may be harmful in long run, so we give NEUTRAL rating to this SME IPO.

• 1 Mr. Sunil Raisoni
• 2 Riaan Diagonistic Private Limited