Ultra Wiring Connectivity System Limited

Started in 2005, Ultra Wiring Connectivity System Limited is engaged in the business of manufacturing of Couplers, Connectors and allied products forautomobiles. Company has Manufacturing Plant situated near Delhi at HSIDC Industrial Area, Faridabad. The plant has total capacity of 120-135 lacs couplers per month on 24 hours 3 shift basis presently, being producing 100-110 lacs couplers per month. Company owned a Godown in Pune and an under-construction unit in 'Industrial Model Town' of Faridabad. Company is supplying Couplers to almost all the automobile manufacturers in India. They are approved source for Tata Motors, Bajaj Auto Ltd., Maruti Udyog Ltd, TVS Motors, Kinetic Engg, etc. They are supplying the Connectors to many valued customers all over India manufacturing wiring harnesses, switches, lights, etc. for Auto-industries such as Tyco Electronics Ltd., Tata Yazaki Autocomp / Yazaki India Ltd, Minda Group of Industries, Lumax Group of Industries, Fiem Industries Ltd and also exporting to M/s Thai Summit Harmess, Thailand and Fujikura Automotive, Paraguary (SA) etc. As on August 31, 2018, company has 83 employees including key managerial persons. As per financial performance, Company has posted total income/net profits of Rs. 11.26 cr. / Rs. 0.27 cr. (FY14), Rs. 12.34 cr. / Rs. 0.40 cr. (FY15), Rs. 13.94 cr. / Rs. 0.57 cr. (FY16), Rs. 15.18 cr. / Rs. 0.75 cr. (FY17) and Rs. 17.87 cr. / Rs. 1.18 cr. (FY18). For upto 31.05.18 of FY19, company has posted net profit of 0.24 Cr on total revenue of 3.49 Cr. So company has shown consistent growth. Trade receivables are above 50% of FY18 revenue from operations and as per company its due to GST implementation, but all these years it remained above 50%, which is very high. In FY18, company has paid around 0.44 Cr as renumeration to its promoters, around 37% net profit of FY18, which looks very much for SME. For last three fiscals it has posted an average EPS of Rs. 2.44 and an average RoNW of 17.43%. Issue is priced at a P/BV of 1.69 on the basis of NAV of Rs. 20.74 post issue. If we annualise FY19 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 13 and So issue looks reasonably priced with respect to current earnings. On BRLM's front, for D & A Financial Services (P) Limited this is the 2nd IPO in last 3 years. Last IPO opened below issue price and currently trading below issue price. Company has shown consistent growth over the years, RoNW is 17.43% for last three fiscals and issue looks reasonably priced with respect to current earnings. Company is planning for expansion and after new plant starts commercial production, company may see further growth, but high trade receivables is thing to concern and renumeration for promoters looks very high compared to profit. So we give NEUTRAL rating to this SME IPO.

• 1 Mr. Sanjay Mathur
• 2 Mrs. Archana Mathur