Spectrum Electrical Industries Limited

Started in 2008, Spectrum Electrical Industries Limited is Jalgaon - Maharastra based company engaged in the business of designing and manufacturing of electrical, automobile and irrigation components as contract manufacturers and as component suppliers to leading industry players on Business-to-Business (B2B) model. Company offers end-to-end product solutions to our customers under the B2B model wherein we provide services ranging from global sourcing, manufacturing, quality testing and packaging to logistics. We also offer products in the intermediate stages to many of our customers. Company's manufacturing unit(s) are located at Jalgaon & Nashik in Maharashtra. Company manufactures following products:1. Distribution Boards & Metal Junction Boxes2. AC Box3. Modular Electric Board Panels4. Other Electrical Components            a. Mini MCB Base & Cover            b. Fancy Angle Holders5. Auto and Irrigation Components (Caliper, Filter Pumps, Carrier, Filter Tank) Company presently have 370 employees comprising of administrative, skilled, semi- skilled and unskilled and 676 labours on contractual basis. As per the financial performance, SEIL has posted turnover/net profits of Rs. 0.14 cr. / Rs. 0.12 cr. (FY15), Rs. 2.16 cr. / Rs. 0.30 cr. (FY16), Rs. 6.59 cr. / Rs. 0.53 cr. (FY17) and Rs. 119.83 cr. / Rs. 5.90 cr. (FY18). Thus it has posted gradual growth in top and bottom lines, but in FY18 there is very very sharp increase in both top-line and bottom-line which may be due to merging of all group companies. Issue is priced at a P/BV of 1.65 on the basis of its NAV of Rs. 39.42 post issue. For last three fiscals, it has posted an average EPS of Rs. 3.11 and an average RoNW of 12.77%. If we take into account latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 16.65 and there is no listed peers as per RHP. So issue looks fully priced. On BRLM's front, for Arihant Capital Markets Limited this is the 2nd IPO and the only IPO listed below issue price and also trading below issue price. ( As on 17.09.18 ) As per financials, company's performance is consistent, RoNw is 12.77% for last three fiscal and issue is fully priced as per latest earnings. If company can maintain its FY18 performance, its big concern and competition in this sector is very high. Performance of BRLM is poor. So we give NEUTRAL rating to this SME IPO as per current market situation.

• 1 Mr. Deepak Chaudhari