Supreme Power Equipment Limited

Supreme Power Equipment Limited is currently engaged in the areas of manufacturing, up-gradation, and refurbishment of transformers ranging from Power Transformer, Generator Transformer, Windmill Transformer, Distribution Transformer, Isolation Transformer, Solar Transformer, Energy Efficient Transformer, Converter and Rectifier Transformer. Company has various categories of customers, including public sector undertakings, and have a strong and cordial relationship with these clients. They are generating a significant part of the revenue from operations by subscribing to and fulfilling government tenders. Company has one manufacturing facilities spread over an area. of 17,876 sq. feet located at Plant Situated at No.55, SIDCO Industrial Estate, Thirumazhisai, Thiruvallur Chennai Tamil Nadu- 600124. Manufacturing facilities are well equipped with requisite machineries and technologies. They also have in-house testing facilities. The infrastructural capabilities enable them to manufacture qualitative products. Current installed capacity for the plant is 2500 MVA and capacity utilisation for past periods FY21, FY22, FY23 and upto 31.07.23 FY24 were respectively 9.81%, 7.70%, 30.33% and 24.12%. As per financial performance, Supreme Power Equipment Limited has posted total income / net profits of Rs 35.46 Cr / Rs 0.26 Cr (FY21), Rs 46.70 Cr / Rs 0.51 Cr (FY22), Rs 99.90 Cr / Rs 11.07 Cr (FY23) and Rs 39.27 Cr / Rs 5.03 Cr (upto 31.07.23 FY24). So as per previous financials data, company has shown good growth, but sudden rise in net profit  Company has posted an average EPS of Rs 3.01 and average RoNW of 28.36% for last three fiscals. Issue is priced at a P/BV of 3.48 as per NAV of 18.68 as on Post Issue. 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 313.60, 14.66 and 10.76 respectively, which looks fairly priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Narnolia Financial Services Limited is associated with this SME IPO and handled 5 SME IPOs in last 1 years. From last 5 IPOs, all opened above issue price or at par on the day of listing. As of now from last 5 IPOs, one IPO is trading below issue price and remaining are trading above issue price. ( As on 18.12.23 ) As per financials, Supreme Power Equipment Limited has shown good growth, RoNW is 59.88% and P/E is respectively 313.60, 14.66 and 10.76 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced as per FY23 earnings. Company is in business of manufacturing, up-gradation, and refurbishment of transformers, which is highly competitive and fragmented segment. Performance of BRLM is good. So, we give "SUBSCRIBE FOR LISTING GAINS" rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Mr. Vee Rajmohan
• 2 Mr. K V Pradeep Kumar