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Review By Dilip Davda on August 2, 2017
Servotech Power Systems Ltd (SPSL) that initially started manufacturing Inverters, UPS and Servo Stabilizers under the brand name “SERVOTECH” ventured in the production of LED products in the year 2011. SPSL is selling LED products under the brand 'SAARA'. It manufactures energy efficient luminaries for residential, industrial, and commercial applications. Company’s products include LED light bulbs, LED down lights, LED flood light, LED panel lights, LED tube lights, LED bay lights, outdoor lights (street lights, floodlights).
As a professional LED lighting supplier and manufacturer, SPSL strictly adheres to the concept that “Customers are our first priority” henceforth promises to take care and fulfill every requirement of its customers. Company’s mission is to build-up a cleaner, greener and healthier environment for the present and upcoming generations by developing more and more energy efficient and eco-friendly LED light fixtures. SPSL is also manufacturer and supplier of a comprehensive range of Solar Products that includes Solar BLDC Fan, Solar Home Light systems, Solar PWM Charge Controller, Solar MPPT Charge Controller, Solar water pump etc. The company also provides turnkey services which involve supply, installation, commissioning, testing and comprehensive maintenance of upto 5 years of LED products. Thus company’s vision is to Produce Green to Live Green with cost effective products.
To part finance its working capital and general corpus fund needs, SPSL is coming out with a maiden IPO of 4880000 equity shared at a fixed price of Rs. 31 per share to mobilize Rs. 15.13 crore. Issue opens for subscription on 09.08.17 and will close on 14.08.17. Issue constitutes 26.65% of the post issue paid up capital of the company. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment shares will be listed on NSE SME Emerge. Most of the equity is issued at par except raising fresh equity in a price range of Rs. 22.5 to Rs. 173.64 during March 2008 and June 2017. It has also issued bonus shares in the ratio of 2 for 1 in May 2007, 1 for 2 in Dec 2011, 1.5 to 1 in August 2013 and 4 for 1 in May 2017. Post issue company’s paid up equity capital will stand enhanced from Rs. 13.43 crore to Rs.18.31 crore.
On performance front, the company has reported turnover/net profits of Rs. 33.96 cr. / Rs. 0.84 cr. (FY14), Rs. 32.18 cr. / Rs. 0.81 cr. (FY15), Rs. 51.71 cr. / Rs. 1.17 cr. (FY16) and Rs. 83.21 cr. /Rs. 5.06 cr. (FY17). While it suffered a setback for FY15, it outperformed for FY17 with higher top and bottom lines. For FY17 it reported higher other income of Rs. 2.25 crore. With a paid up equity capital of Rs. 2.56 crore as on 31.3.2017, it has reported an EPS of Rs. 4.94 with an average EPS of Rs. 3.11 for last three fiscals. It issued bonus (4 for 1) and fresh equity at a price of Rs. 31 in May and June 2017. If we attribute latest earnings on fully diluted equity post issue then asking price is at a P/E of 11 plus. Last three fiscals average RoNW is 26.44%. Issue price is at a P/BV of 2.76. Its peer it trading at a P/E of around 10 (as on 02.08.17) and thus issue appears to be fully priced. However, company’s major thrust for LED segment augurs well with bright prospects ahead.
On merchant banker’s front, this is the 30th mandate. Out of recent 10 listings, one opened negative, one at par and the rest on a positive note on the day of listing with the last listing of Salasar Tech creating record of opening at 140% premium. Total Transport that is set for listing in near term is expected to create fancy.
Conclusion: Although issue appears fully priced, considering prospects for LED segment, investors may consider for medium to long term investment.
Review By Dilip Davda on August 2, 2017
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Servotech Power Systems Ltd offers an early investment opportunity in Servotech Power Systems Ltd. A stock market investor can buy Servotech Power IPO shares by applying in IPO before Servotech Power Systems Ltd shares get listed at the stock exchanges. An investor could invest in Servotech Power IPO for short term listing gain or a long term.
Read the Servotech Power IPO recommendations by the leading analyst and leading stock brokers.
Servotech Power IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Servotech Power IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Servotech Power IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Servotech Power IPO.
The Servotech Power IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Servotech Power IPO allotment status to check.
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