Incorporated in the year 2004, Uravi T and Wedge Lamps Limited, is a Mumbai based company engaged in manufacturing and distribution of lamps and lighting products with core focus on automotive lamps and instrument cluster lighting. The company specializes in manufacturing and distributing Stop and Tail Lamps /Signal Lamps /Indicator Lamps and Wedge Lamps for Two-wheelers, Fourwheelers, Tractors and Industrial applications for various Indian automobile manufacturers. It is ISO/TS certified and hold certifications from the Automotive Research Association of India and E-mark for the products manufactured. Uravi has recently entered into a co-operation agreement with a Philippines based company named Global Lighting Phils. Inc for developing LED lighting products vertical of our company. The LED lamps are manufactured by Global Lighting Phils. Inc. under the brand name “UVAL” and are imported, distributed and sold in India by the company. The company began its operations with a rented manufacturing unit at Navi Mumbai in Maharashtra and subsequently purchased manufacturing units at Bhiwandi, Thane and shifted the manufacturing operations to this unit. Recently it acquired a factory premises on a long lease basis in Kathua, situated in the State of Jammu and Kashmir. As on September 30, 2017, the Company had 105 employees on payroll and 180 employees on contract basis. On performance front, UTWL has posted turnover/net profits of Rs. 25.85 cr. / Rs. 0.58 cr. (FY14), Rs. 27.36 cr. / Rs. 0.83 cr. (FY15), Rs. 29.60 cr. / Rs. 0.94 cr. (FY16) and Rs. 29.16 cr. / Rs. 1.05 cr. (FY17). Thus is has shown gradual increase in turnover and net profits. For the first half of current fiscal, it has earned net profit of Rs. 1.56 cr. on a turnover of Rs. 16.45 cr. which is a bit surprising. For last three fiscals, it has posted an average EPS of Rs. 1.95 and RoNW of 9.64%. Issue is priced at a P/BV of 4.05 on the basis of its NAV of Rs. 24.68 as on 30.09.17 and at a P/BV of 3.19 on the basis of its post issue NAV of Rs. 31.35. If we annualise latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/ E of around 17 against industry composite of 47. As per offer documents it has shown Autolite India, Fiem Ind., Jagan Lamps as its peers and are trading at a P/E of around –(20), 31 and 23 (as on 12.03.18). Thus pricing appears reasonable. On merchant banker's front, this is 28th mandate from its stable in the past three years (includes 1 main board IPO and the rest SME). Out of last 10 listings, 4 opened at discount, 1 at par, 4 with the premium ranging from 1% to 20%. The only main board listing (Apollo Micro) opened at a premium of around 73.8% on the day of listing. As per financials, company has shown gradual growth, RoNW is 9.64% for last three fiscals and issue looks reasonably priced as per latest earnings. But the sudden jump in bottom for H1 of FY18 is surprising and if company would be able to maintain same growth in bottom line is major concern. So, we give AVOID rating to this SME IPO.
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