Tunwal E-Motors Ltd, an upcoming force in the electric vehicle (EV) manufacturing sector, stands at the forefront of India's drive towards sustainable and eco-friendly mobility solutions. Established in 2018, the company has rapidly evolved to become a significant player in the market, specializing in the design, development, manufacturing, and distribution of high-quality electric two-wheelers. They have a plot of 8000 sq. meter at E 123-124 RIICO Industrial Area, Palsana, Sikar wherein they have constructed the plant for manufacture/assembly of EV two wheelers. With more than 60000 sq. feet buildup space and with very good connectivity as it is located in an industrial area on the national highway. The infrastructure at the plant is adequate to produce 41,000 units of EV two wheeler on an annual basis and there is space to further increase the production area if required. They also require a large space for maintaining the finished inventory at the plant. Company have more than 23 different models which have been launched in the domestic market catering to the various needs and segments. Low speed bikes do not require any registration and more than 75% of the products they sell fall under this category. The high speed products contribute to around 25% of the sales and require registration. They have 3 high selling products in the low speed category and 3 products in the high speed category which contribute to nearly 91% of the sales presently. They are present in 19 states through a network of more than 256 dealers. This facilitates increased customer accessibility and also ensures efficient service delivery. The dealers further make the products available to the customers spread across the country. As per financial performance, Tunwal E-Motors Limited has posted total income / net profits of Rs 75.66 Cr / Rs 2.33 Cr (FY22), Rs 76.55 Cr / Rs 3.72 Cr (FY23), and Rs 105.53 Cr / Rs 11.81 Cr (FY24). So as per previous financials data, company has shown average growth, but sudden rise in net-profit just before IPO raises doubts. Also inventories increased significantly in FY24 and net cash-flow was negative in FY22 & FY23. Company has posted an average EPS of Rs 2.23 and average RoNW of 53.06% for last three fiscals. Issue is priced at a P/BV of 15.90 as per NAV of 3.71 as on post issue. If we attribute latest earnings of FY22, FY23 and FY24 on fully diluted equity post issue, then asking price is at a P/E of around 139.47, 87.60 and 27.62 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Horizon Financial Private Limited is associated with this SME IPO and handled 5 SME IPOs in last 3 years. From last 5 SME IPOs, two opened below issue price or at par on the day of listing. As of now from last 5 SME IPOs, two are trading below issue price and remaining are trading above issue price. ( As on 10.07.24 ) As per financials, Tunwal E-Motors Limited has shown average growth, RoNW is 57.53% and P/E is respectively 139.47, 87.60 and 27.62 as per FY22, FY23 and FY24 earnings. So, issue looks fully priced, but sudden rise in net-profit just before IPO raises doubts, also inventories increased significantly in FY24 and net cash-flow was negative in FY22 & FY23. Company is in the business of the EV 2-wheeler segment, which is highly fragmented and competitive segment. Performance of BRLM is average. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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