Zodiac Energy Limited

Incorporated in 1992, Zodiac Energy Limited is Ahmedabad, Gujrat based Energy Solution Provider company. Company provides turnkey solutions from concept to commissioning of power plants. The services provided by the company include design, supply, installation, testing and commissioning (EPC) and operation & maintenance (O&M). Zodiac Energy has installed solar power plants for many prominent clients like Sun-Edison India Limited, Adani Group, Torrent Power Limited, Gujarat Energy development Agency, Reserve Bank of India, Directorate of Lighthouse and Lightships Government of India (GoI), Indian Oil Corporation Limited to name a few. The company has installed more than 6,000 KW of Rooftop solar power plants till now and it envisages to reach at 10,000 KW by end of 2017-18. On performance front, SEL has reported total revenue/net profits of Rs.8.86 cr. / Rs. 0.09 cr. (FY13), Rs.9.53 cr. / Rs. 0.11 cr. (FY14), Rs.8.70 cr. / Rs. 0.05 cr. (FY15), Rs. 9.20 cr. / Rs. 0.11 cr. (FY16), Rs. 16.74 cr. / Rs. 0.24 cr. (FY17). For Q1 of current fiscal, it has posted net profit of Rs. 0.49 cr. on total revenue of Rs. 8.25 cr. So company's performance after FY16 outstanding which is surprising. It has reported an average EPS of Rs. 0.46 and average RoNW of 11.30% for last three fiscals. Issue is priced at a P/BV of 2.33 on the basis of post issue NAV. If we annualize latest earnings and attribute it on post issue paid up capital, then asking price is at a P/E of around 19 against peers trading at a P/E ranging from 13 to 138. Thus issue appears to be fully priced. On merchant banker’s front, this is 8th mandate from its stable in last three fiscals. Previous 7 IPOs gave positive returns ranging from 2 to 20% in opening on the day of listing.   As per financials, company's growth is good (specially after FY16), RoNW is 11.30% for last three fiscals and issue is fully priced as per latest earnings, but there is big jump in FY17 and FY18. Company is proving energy solutions, specifically Solar Energy and future of this industry is very bright as Government is focused to provide electricity to every part of country and non traditional energy generation, so we give SUBSCRIBE rating to this SME IPO.

• 1 Mr. Kunjbihari Shah
• 2 Mr. Jugalkishor Shah