Started in 2014, V-Marc India Limited is engaged in the business of manufacturing and marketing of wires and cables under the brand name of "V-Marc". They manufacture and sell a diverse range of wires and cables and our key products are single & multistrand cables, CCTV cables, LAN cables, coaxial cables, telephone switchboard cables, power cables (LT and HT cables upto 33 KV grade), flexible & control cables, core flat cables, solar cables, wires and aerial bunched cables. The products are also certified as compliant with various quality standards including Bureau of Indian Standards ('BIS') and Certiva Limited ('CE'). The company sells its products through multiple channels1. government tenders to supply products for government projects2. supply to EPC contractors for turnkey projects and 3. dealer and distribution network to directly sell to private companies. It supplies its products across industries i.e. power, real estate, railways, and telecom sector. The company have completed 40, 25 and 19 government contracts during the financial year ended March 31, 2020, 2019 and 2018, respectively. For the nine months period ended December 31, 2020, company's completed and ongoing government contracts totals 26. Over company's operating history of more than a decade, company have supplied company's products for various industries including power, real estate, telecom, and railways. The company have an established supply chain comprising company's network of authorized dealers and distributors. As on December 31, 2020 company have a dealer network of more than 650 dealers who are spread in 12 states. As on December 31, 2020, company have 1 warehouse and 5 sales depots to manage company's supply chain operations. The firm has two manufacturing facilities located at Haridwar, Uttarakhand with an aggregate installed capacity of 71,100 KM p.a and also proposes to set-up a new manufacturing facility with a total capacity of 11,520 km p.a. Capacity utilisation for FY18, FY19, FY20 and 9M FY21 is respectively 46.51%, 52.18%, 41.29% and 39.18% as per RHP. On the financial performance front, V-Marc has reported turnover/net profits (loss) of Rs. 143.51 cr. / Rs. 2.23 cr. (FY18), Rs. 205.25 Cr. / Rs. 4.88 Cr. (FY19) and Rs. 171.66 Cr. / Rs. 4.64 Cr in FY20. For 9 months of FY21, company has posted 130.62 Cr total income and 4.01 Cr net profit. So company has shown average sales growth, but net profit increased despite decline in sales & volume and if company can maintain same margin in future, that is big question. For the last three years, company has posted average EPS of Rs. 2.84 and RoNW of 13.94%. The issue is priced at a P/BV of 1.40 based on its NAVs of Rs. 27.87 post issue. On BRLM's front Pantomath Capital Advisors Ltd has handled 10 IPOs in last three fiscals. From 10 IPOs, 1is opened below price and remaining are above issue price. As of now from 10 IPOs, all are trading below issue price. (As on 25.03.2021) For V-Marc India Limited, financial data is average, RoNW is 13.60%, P/E is around 19 for FY20 and 17 for annualised FY21. As BHARAT is expected grow at good rate, push of Government on Infra and affordable housing, digital BHARAT, this all may drive demand in wires & cables, but this sector is very competitive with presence of lot of local and international players. Performance of BRLM is average. There are many companies listed in market and this one is one of them, So we give NEUTRAL rating to this SME IPO and one should keep in mind risk of SME sector and low volume, before applying.
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