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Review By Dilip Davda on April 21, 2018
Softtech Engineers Ltd. (SEL) started in 1996 as a software product innovation company which caters to the Architecture, Engineering and Construction (“AEC”) verticals. ‘Innovation’ is the key to any business and its products are innovative across the entire value chain in the construction industry. SEL is partnering the government in its mission - “Ease of Doing Business” by associating ourselves as a “Smart City Solution Provider” meeting the requirements of the automation in Architecture, Engineering & Construction (AEC) verticals using its expertise in IT. It has been specializing in developing product for e-governance and construction ERP products for smart city projects, municipal corporations, urban local bodies, development authorities and work organizations. The Company also offers 2D and 3D CAD based intelligent and machine learning driven technology which eliminates entire human intervention along with providing Cloud Technology enabled products offered as “SaaS”. SEL’s products which were marketed under the names of STRUDS and ESRGSR are acquired by CSC (UK) Ltd. in 2011. SEL has also launched products under names PWIMS, AutoDCR and OPTICON that are now flagship products of the company. Company is certified and ascertained as an ISO 9001:2008 and ISO 9001:2015 for development and marketing of software products and IT solutions and has strategic business alliances with key organizations such as – Microsoft and Autodesk. All these partnerships help SEL to provide integrated and seamless solutions to customers and boost the solutions through technological advancements. Company has a human capital asset of 433 and with their consistent and sustained effort ensures positive business outcomes for its clients through constant innovation in products. Currently SEL is working on new products called BIMDCR, RuleBuddy and IBPS.
To part finance its product development and enhancement costs, repayment/pre-payment of certain unsecured debts, funding for the domestic and international product penetration and marketing, and general corpus fund needs, SEL is coming out with a maiden IPO of 2851200 equity shares of Rs. 10 each via book building route with a price band of Rs. 78- Rs. 80 to mobilize Rs. 22.24 cr. – Rs. 22.81 crore (based on lower and upper price bands). Issue opens for subscription on 27.04.18 and will close on 03.05.18. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is jointly lead managed by Pantomath Capital Advisors Pvt. Ltd. and Small Industries Development Bank of India. Link Intime India Pvt. Ltd. is the registrar to the issue. Issue comprises of fresh equity issue of 2371200 shares and offer for sale of 480000 shares. Issue constitutes 30.25% of post issue paid up capital of the company. Average cost of acquisition of shares by the promoters is Rs. 1.98 per share. Having issued initial equity at par, it raised further equity in the price range of Rs. 88.12 to Rs. 385 per share. It has also issued bonus shares in the ratio of 1300 for 499 shares (March 2003), 5 for 1 share (February 2010) and 1 for 1 share (February 2018). Post issue, its current paid up equity capital of Rs. 7.05 crore will stand enhanced to Rs. 9.42 crore.
On performance front, SEL has posted turnover/net profits of Rs. 25.68 cr. / Rs. 2.54 cr. (FY14), Rs. 35.94 cr. / Rs. 2.12 cr. (FY15), Rs. 44.33 cr. / Rs. 3.81 cr. (FY16) and Rs. 47.12 cr. / Rs. 6.17 cr. (FY17). For first seven months of FY18 it has earned net profit of Rs. 2.60 cr. on a turnover of Rs. 23.75 cr. It suffered a setback for FY15 in bottom line. For last three fiscals it has posted an average EPS of Rs. 6.99 and an average RoNW of 16.77%. Issue is priced at a P/BV of 1.71 on the basis of its NAV of Rs. 46.80 as on 31.10.17. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 17 against industry average of 21. As per offer documents, it is considering Ramco Syst., Ceinsys Tech., Cyber Tech and Newgen Soft as its listed peers that are trading at a P/Es of around 96, 13,29 and 32 (as on 20.04.18). Thus issue pricing appears reasonable.
On merchant banker’s front, this is 70th mandate from Pantomath in last four fiscals. Last 10 listings opened at a premium ranging from 1.6% to 20% on the offer price on the day of listing. This is the 6th mandate from SIDBI in last four fiscals and out of last 5 listings, 1 opened at discount, 1 just around par and the rest with a premium ranging from 12.5% to 20% on the day of listing.
Investment for short to long term may be considered in this reasonably priced issue.
Review By Dilip Davda on April 21, 2018
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 SoftTech Engineers Limited offers an early investment opportunity in SoftTech Engineers Limited. A stock market investor can buy SoftTech Engineers IPO shares by applying in IPO before SoftTech Engineers Limited shares get listed at the stock exchanges. An investor could invest in SoftTech Engineers IPO for short term listing gain or a long term.
Read the SoftTech Engineers IPO recommendations by the leading analyst and leading stock brokers.
SoftTech Engineers IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the SoftTech Engineers IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for SoftTech Engineers IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the SoftTech Engineers IPO.
The SoftTech Engineers IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit SoftTech Engineers IPO allotment status to check.
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