Trident Techlabs Limited offers custom-built technology solutions to corporates in the aerospace, defence, automotive, telecom, semiconductor and power distribution sectors. They have two business verticals i.e. Engineering Solutions and Power System Solutions. They deliver winning business outcomes through the deep industry experience and a 360-degree view of 'Business through Technology' helping clients in creating successful and adaptive businesses. The Engineering Solutions portfolio of products and related services encompass a diverse spectrum of solutions viz. system-level electronics design, chip-level electronics design, embedded design, hydraulics/ pneumatics system, system modeling, reliability and quality, design automation, power electronics, PCB designing and electromagnetic simulations. The design services include consulting and engineering services that help companies innovate better, with services spanning the entire product development lifecycle, including strategy and user research, design and engineering, pre-launch testing and post-launch maintenance, and service delivery and optimization. The Power Solutions portfolio of products and related services help power distribution utilities who face new challenges due to the ever-changing nature of the industry and the increasing pressure on network reliability. Power distribution utilities need to constantly focus on (i) maximizing the capacity of aging transmission infrastructure; (ii) managing increasing amounts of intermittent, renewable generation; and (iii) deployment of Smart Grid technologies leading to increasing complexity in transmission investment decisions. The Power Systems Solutions division has developed expertise in the areas of transmission planning and operations, power distribution solutions, integration and energy storage solutions, substation design solutions and power cable ampacity solutions. Tangible schemes for improved management of transmission networks and optimized strategies for future financial investments are prepared using the customized solution based on power distribution network analysis software. The Company provides technical education to (i) the technology teams of the customers; (ii) certain institutions with whom they have tied-up and (iii) other trainings to newly qualified engineers on specific on the job-related aspects. This activity is not a high revenue generating activity for the Company and is usually provided as a support service to customers or to generally impart knowledge to aspiring technicians. As per financial performance, Trident Techlabs Limited has posted total income / net profits of Rs 28.33 Cr / Rs (0.32) Cr (FY21), Rs 29.87 Cr / Rs 0.64 Cr (FY22), Rs 68.24 Cr / Rs 5.54 Cr (FY23) and Rs 21.14 Cr / Rs 2.66 Cr (upto 31.10.23 FY24). So as per previous financials data, company has shown zig-zag results and sudden jump in sales and profit just before IPO is very surprising. Also trade receivables are very high, more than 50% of FY23 total revenue. Company has posted an average EPS of Rs 3.24 and average RoNW of 29.36% for last three fiscals. Issue is priced at a P/BV of 0.52 as per NAV of 67.56 as on 31.03.23. 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 93.79, 10.90 and 13.26 respectively, which looks fairly priced. As per RHP, there is no listed peers. On BRLM's front, GYR Capital Advisors Private Limited is associated with this SME IPO and handled 17 SME IPOs in last 3 years. From last 10 IPOs, all opened above issue price or at par on the day of listing. As of now from last 10 IPOs, two IPO are trading below issue price and remaining are trading above issue price. ( As on 15.12.23 ) As per financials, Trident Techlabs Limited has shown zig-zag result, RoNW is 29.36% and P/E is respectively 93.79, 10.90 and 13.26 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced. But sudden jump in sales and profit just before IPO is very surprising. Company is in business of end-to-end technology and technology related services including IT Infrastructure and Software Development Services, 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.
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