Sunrise Efficient Marketing Limited

Sunrise Efficient Marketing Limited engaged in the business as traders, distributors, super stockiest, retailers, wholesalers, importers, exporters, agents, dealers, buyers, sellers, fabricators, assemblers, fitters, installers, repairers of all types of Industrial machineries, its spare parts, electrical items, electronic items, mechanical and engineering items, pipes, pipe fittings, sanitation parts, all types of machined and un-machined castings, industrial valves and its spares, Oils, lubricants, all types of motors, pumps, generator sets, batteries and all types of electrical, mechanical, electromechanical & electronic items, and spare parts, accessories used for industrial, domestic and agricultural purposes. They are also distributor for FMCG products. The Company distributes Automation Parts, Drive, Gear Box, Motors, Pumps, Oils and FMCG Products and aids to manage complete supply chain right from the manufacturers and end user. Currently, they are authorised dealer of 138 manufacturers. They follow B2B and B2C business model. As on date of Prospectus, they have employed 53 full-time employees. As per financial performance, Sunrise Efficient has posted total income/net profits of Rs 39.59 Cr / Rs 0.06 Cr (FY19), Rs 41.90 Cr / Rs 0.36 Cr (FY20), Rs 21.83 Cr / Rs 0.75 Cr (FY21), Rs 26.18 Cr / Rs 0.18 Cr (FY21), and Rs 30.06 Cr / Rs 3.12 Cr (H1FY22). So company has shown average results, over last couple of years and sudden rise in net profit in IPO year generates doubts. Company has posted EPS of Rs 0.61 and RoNW of 15.52% for last fiscal. Issue is priced at a P/B of 8.79 as per NAV of Rs 13.77 as on 30.09.21. As per FY21 earnings on fully diluted equity post issue, asking price is at P/E of around 329 and as per annualised FY22 earnings P/E is 9.68. As per RHP, there are no listed peers.     On BRLM's front, Fedex Securities Limited associated with this SME IPO and handled 11 IPOs in last 3 years. From last 10 IPOs, two opened below issue price and remaining above issue price or at par. As of now from last 10 IPOs, four are trading below and remaining are trading above issue price or at par. ( As on 26.03.22 ) As per financials SEML, has shown average results, RoNW is 15.52% and P/E is respectively 329 and 9.68 as per FY21 and annualised FY22 earnings, which looks very aggressively priced and sudden rise in profit in H1 result for current FY raises concerns. So we are giving AVOID rating to this IPO.

• 1 Lejas Hemantrai Desai