Synergy Green Industries Limited

Started in 2010, Kolhapur based Synergy Green Industries Limited (SGIL) is a company engaged in the business of foundry and manufactures castings, industrial castings, metal castings, turbine castings, steel castings and Windmill Parts. It is a Ugar Sugar group company. The manufacturing Unit of the company is located in Kolhapur. It is ISO 9001:2015 certified for Manufacture of Graded Grey Iron, Spheroidal Graphite Iron and Steel Casting and Machined Components for Non-Automotive and Industrial Applications. The company is capable of handling castings ranging from 500 Kg to 17 MT single piece in ductile iron and grey iron. Some of the major customers of the company are M/s GE Renewable, M/s Vestas, Denmark, M/s Gamesa, M/s Enercon Germany, M/s ZF, and M/s, Siemens. The company has 133 employees on its payroll. As per financial performance, company has posted total income/net profits of Rs. 37.24 cr. / Rs. – (9.02) cr. (FY14), Rs. 63.85 cr. / Rs. – (6.85) cr. (FY15), Rs. 82.60 cr. / Rs. 1.55 cr. (FY16), Rs. 120.67 cr. / Rs. 4.86 cr. (FY17) and Rs. 103.13 cr. / Rs. 4.66 cr. (FY18). Company’s earnings turned positive from FY16, as on 31.03.18 it still has negative reserves due to losses of FY14 and FY15. For FY18 it suffered a setback in top and bottom lines. For last three fiscals it has posted an average EPS of Rs. 7.24 and an average RoNW of 26.01%. Issue is priced at a P/BV of 5.24 on the basis of its NAV of Rs. 13.37 as on 31.03.18 and at a P/BV of 2.79 on the basis of post issue NAV of Rs. 25.07. If we consider latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 21 plus. Thus issue is fully priced on the basis of its track record so far. Although the industry average P/E is around 37, this issue with negative reserves as on 31.03.18 sounds expensive. On BRLM's front, for Swastika Investmart Limited this is the 17th SME IPO. For last 10 IPOs, 2 opened below issue price and remaining above issue price. Currently from last 10 IPOs, 4 is trading below issue price and remaining 6 above issue price. ( As on 30.08.18 ) Although company has shown progress in top and bottom lines, but it has carried forward losses in the balance sheet. As per latest earnings, issue is fully priced. Performance of BRLM is also not so good. So we give NEUTRAL rating to this SME IPO.

• 1 Mr Sachin Rajendra Shirgaokar
• 2 Mr Sohan Sanjeev Shirgaokar
• 3 Mr Vendavagali Srinivasa Reddy
• 4 S. B. Reshellers Private Limited