Vruddhi Engineering Works Limited is mainly engaged in offering mechanical splicing solutions to the real estate, construction and infrastructure industry by designing, engineering and supplying of rebar couplers. The Company’s offering under this vertical includes (a) supply of rebar couplers as per the customer needs; (b) on-site threading services of the couplers; and (c) trading in threading machines and spares. The Company believes that it offers an end-to-end mechanical splicing solutions ranging from design, manufacturing, testing, logistics and rebar threading. The products supplied by the Company i.e. rebar couplers and Steel Products finds its application with construction contractors, real estate developers and infrastructure companies and are used in the construction of residential and commercial buildings, steel structures, roads, etc. The Company design and engineer the rebar couplers as per the customers requirement and is manufactured by a third-party manufacturer. As per financial performance, Vruddhi Engineering Works Limited has posted total income / net profits of Rs 0.004 Cr / Rs (0.008) Cr (FY21), Rs 2.21 Cr / Rs 0.09 Cr (FY22), Rs 13.10 Cr / Rs 0.75 Cr (FY23) and Rs 9.35 Cr / Rs 0.41 Cr (upto Q2 FY24). So as per previous financials data, company has shown good growth. But trade receivables is around 40% of FY23 total revenue, which is very high. Company has posted an average EPS of Rs 9.46 and average RoNW of (71.55%) for last three fiscals. Issue is priced at a P/BV of 5.10 as per NAV of 13.73 as on 30.09.2023. 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 187.93, 23.46 and 21.54 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Fedex Securities Private Limited is associated with this SME IPO and handled 26 SME IPOs and 1 Main board IPO in last 3 year. From last 10 SME IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing and from last 1 Main board IPO, that is opened above issue price on the day of listing. As of now from last 10 SME IPOs, six are trading below issue price and remaining are trading above or at par issue price and from last 1 Main board IPO, that is trading above issue price. ( As on 21.03.24 ) As per financials, Vruddhi Engineering Works Limited has shown good results, RoNW is 35.51% and P/E is respectively 187.93, 23.46 and 21.54 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. Company is in business of offering mechanical splicing solutions to the real estate, construction and infrastructure industry, which is highly competitive and fragmented segment. Also company has no own manufacturing unit. Performance of BRLM is good, but post listing its average. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
✍️ Post a Comment