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Review By Dilip Davda on December 19, 2023
• TTL is a niche player in custom built technology solutions.
• It provides tailor made engineering and power system solutions to its customers.
• The sudden growth in its top and bottom lines from FY23 onwards raise concern.
• Based on its FY24 annualized super earnings, the issue appears fully priced.
• Well-informed investors may park funds for the medium to long term rewards.
ABOUT COMPANY:
Trident Techlabs Ltd. (TTL) offers custom-built technology solutions to corporates in the aerospace, defence, automotive, telecom, semiconductor and power distribution sectors. It has two business verticals i.e. Engineering Solutions and Power System Solutions. The company delivers winning business outcomes through its deep industry experience and a 360-degree view of "Business through Technology" helping clients in creating successful and adaptive businesses.
Its engineering Solutions portfolio of products and related services encompass a diverse spectrum of solutions viz. system-level electronics design, chip-level electronics design, embedded design, hydraulics/ pneumatics system, system modeling, reliability and quality, design automation, power electronics, PCB designing and electromagnetic simulations. Its design services include consulting and engineering services that help companies innovate better, with services spanning the entire product development lifecycle, including strategy and user research, design and engineering, pre-launch testing and post-launch maintenance, and service delivery and optimization.
TTL's Power Solutions portfolio of products and related services help power distribution utilities who face new challenges due to the ever-changing nature of the industry and the increasing pressure on network reliability. Power distribution utilities need to constantly focus on (i) maximizing the capacity of aging transmission infrastructure; (ii) managing increasing amounts of intermittent, renewable generation; and (iii) deployment of Smart Grid technologies leading to increasing complexity in transmission investment decisions.
Its Power Systems Solutions division has developed expertise in the areas of transmission planning and operations, power distribution solutions, integration and energy storage solutions, substation design solutions and power cable ampacity solutions. TTL's solutions and services dwell on the latest technology to enable clients in maximizing the reliability of their electric power facilities in the most economical manner. Tangible schemes for improved management of transmission networks and optimized strategies for future financial. As of the date of filing this offer document, it had about 84 employees on its payroll.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden book building route IPO of 4580000 equity shares of Rs. 10 each. It has announced a price band of Rs. 33 - Rs. 35 per share and mulls raising Rs. 16.03 cr. at the upper cap. The issue opens for subscription on December 21, 2023, and will close on December 26, 2023. The minimum application to be made is for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.50% of the post-IPO paid-up equity capital of the company. From the net proceeds of the IPO funds, it will utilize Rs. 12.00 cr. for working capital, and the rest for general corporate purposes.
The issue is solely lead managed by GYR Capital Advisors Pvt. Ltd. and Maashitla Securities Pvt. Ltd. is the registrar of the issue. Giriraj Stock Broking Pvt. Ltd. is the market maker for the company.
Having issued initial equity shares at par value, the company issued further equity shares at a fixed price of Rs. 33 per share in September 2023. 2023. It has also issued bonus shares in the ratio of 3.5 for 1 in March 2006, and 16 for 5 in August 2023. The average cost of acquisition of shares by the promoters is Rs. 1.87, and Rs. 1.99 per share.
Post-IPO, company's current paid-up equity capital of Rs. 12.70 cr. will stand enhanced to Rs. 17.28 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 60.48 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit/ -(loss) of Rs. 28.34 cr. / Rs. - (0.33) cr. (FY21), Rs. 29.88 cr. / Rs. 0.65. (FY22), and Rs. 68.24 cr. / Rs. 5.55 cr. (FY23). For M7 of FY24 ended on October 31, 2023, it earned a net profit of Rs. 2.66 cr. on a total income of Rs. 21.14 cr. The sudden boost in top and bottom lines from FY23 onwards raise concern over its sustainability going forward.
For the last three fiscals, the company reported an average EPS of Rs. 3.24 and an average RoNW of 16.47%. The issue is priced at a P/BV of 0.52 based on its NAV of Rs. 67.56 as of March 31, 2023, and at a P/BV of 1.48 based on its post-IPO NAV of Rs. 23.57 per share at the upper cap. The offer document is missing NAV data as of October 31, 2023.
If we attribute super annualized earnings of FY24 on post-IPO fully diluted paid-up equity capital of the company, then the asking price is at a P/E of 13.26. The issue appears fully priced based FY24 earnings.
For the reported periods, the company has posted PAT margins of 0.59% (FY21), 2.20% (FY22), 8.24% (FY23), 12.66% (M7-FY24), and RoCE margins of 8.85% 8.25%, 23.67% and 10.50% for the said periods respectively.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per offer document, the company has no listed peers to compare with.
MERCHANT BANKER'S TRACK RECORD:
This is 18th mandate from GYR Capital in the last three fiscals. Out of the last 10 listings, all listed with premiums ranging from 3.79% to 179.38% on the date of listing.
Review By Dilip Davda on December 19, 2023
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 Trident Techlabs Limited offers an early investment opportunity in Trident Techlabs Limited. A stock market investor can buy Trident Techlabs IPO shares by applying in IPO before Trident Techlabs Limited shares get listed at the stock exchanges. An investor could invest in Trident Techlabs IPO for short term listing gain or a long term.
Read the Trident Techlabs IPO recommendations by the leading analyst and leading stock brokers.
Trident Techlabs IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Trident Techlabs IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Trident Techlabs IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Trident Techlabs IPO.
The Trident Techlabs IPO allotment status will be available on or around December 27, 2023. The allotted shares will be credited in demat account by December 28, 2023. Visit Trident Techlabs IPO allotment status to check.
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