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12/07/2017 Salasar Techno Engineering IPO Review: Techno viable?

- IPO Central

Salasar Techno Engineering IPO Review:
Techno viable?
By Krishna Bagra - July 10, 2017

Salasar Techno Engineering IPO opens next week and it will be interesting to see this public
offer which is among the smallest IPOs in recent times. In many ways, this is a reminder to
the numerous IPOs in the decade of 90s. Priced at INR108 per share, Salasar Techno
Engineering IPO aims to raise INR35.86 crore. The IPO will open on 12 July and investors
can place their orders till 17 July. The IPO will be managed by Sarthi Capital Advisors while
Bigshare Services will be the registrar. Through Salasar Techno Engineering IPO review, we
try to find out if throwback to the bygone era deserves a serious consideration.

Here are some essential details about the IPO.

Salasar Techno Engineering IPO details

Subscription Dates 12 – 17 July 2017

Price Band INR108 per share

Fresh issue 3,321,000 shares (INR35.86 crore)

Offer For Sale Nil

Total IPO size 3,321,000 shares (INR35.86 crore)

Minimum bid (lot size) 125 shares

Face Value INR10 per share

Retail Allocation 50%

Listing On NSE, BSE

http://ipocentral.in/salasar-techno-engineering-ipo-review-techno-viable/ 1/4

12/07/2017 Salasar Techno Engineering IPO Review: Techno viable? . galvanization and deployment of these products. the upcoming IPO will raise just INR35. Out of the total. Once again.86 crore and this entire money will go to the company. high-quality material and the company’s service suit includes engineering.6 crore in the latest year.IPO Central Salasar Techno Engineering IPO Review: Use of funds As mentioned above. designing.9 crore in FY2013 to INR384. As one can imagine. Viom Networks Ltd. and Welspun Renewables Energy Pvt Ltd are some of its prominent clients. Bharti Infratel Ltd. http://ipocentral.87 crore will go towards working capital requirement while INR2. Salasar Techno Engineering recently increased its installed annual manufacturing/fabrication capacity from 50. Salasar Techno Engineering IPO Review: Financial performance As the description above indicates.9 crore in FY2013 to INR20.in/salasar-techno-engineering-ipo-review-techno-viable/ 2/4 . ATC Telecom Infrastructure Pvt Ltd. Earnings grew from INR4. Tower Vision India Pvt Ltd. Tata Power Delhi Distribution Ltd. The company has negligible long-term debt and this has helped in shoring up profits in these years. the company offers customised steel fabrication and infrastructure solutions for Telecommunication Towers. this requires supply of customized.000 MT to 100. Jakson Engineers Ltd. a wholly-owned subsidiary. UP Power Transmission Corporation Ltd. INR31. Indus Towers Ltd. fabrication. Salasar Techno Engineering: Business background Established in 2001. Transmission Towers & Substation Structures and Solar Module Mounting Structures. Salasar Techno Engineering is into a business that is not easily scalable. the company has managed to grow its revenues from INR212. commendable job! As a result of growing profits and a strong control on costs. Prayatna Developers Pvt Ltd. Reliance Jio Infocomm Ltd.000 MT with the installation of new galvanizing plant at Salasar Stainless Limited. The company commenced its manufacturing/fabrication activities in the FY2006/07 and its second unit became operational in FY2008/09. ATC India Tower Corporation Pvt Ltd. Yet.7 crore in FY2017. This is quite impressive as majority of the growth has come from the single activity of erecting telecom and transmission towers.5 crore have been earmarked for general corporate purposes. Unitech Power Transmission Ltd.

IPO Central margins have been improving after hitting a low of 1.1 292. the absence of private equity investors shows that the business doesn’t hold promise of providing outsized returns in future and thus. Salasar Techno Engineering’s financial performance (in INR crore) FY2013 FY2014 FY2015 FY2016 FY2017 Total revenue 212.9 6. In the latest year ended 31 March 2017. valuations look very attractive for Salasar Techno Engineering.8 354.8 282.3 2. Without doubt.0 20. net margin stood at solid 5. This is much lower than comparable figures of 18. However. However. it is worth noticing that this small IPO will be eventually listed in the T group which effectively means more restrictions on price movements and less attractiveness for investors.3 6.3 318.6% which is higher than most of its listed peers. Past http://ipocentral. the issue price of INR108 per share and its consolidated EPS of INR20. In terms of valuations. However.83 mean that the P/E ratio is an attractive 5.1 and 19. what’s not attractive for private equity investors may be lucrative for retail investors.9 292.4%.5 5.6 330.4 310.12/07/2017 Salasar Techno Engineering IPO Review: Techno viable? .1 Profit after tax 4.2 1. it is clear what the company has achieved in its 16 years of business is phenomenal. respectively.7 Net profit margin (%) 2.4 Salasar Techno Engineering IPO Review: Should you subscribe? Salasar Techno Engineering belongs to the core industrial activity sector where economies of scale are essential but doesn’t ensure success alone.5 for Kalpataru Power Transmission and KEC International.9% in FY2015.in/salasar-techno-engineering-ipo-review-techno-viable/ 3/4 . isn’t particularly attractive to them.2 384. Salasar Techno Engineering also boasts of a strong return on net worth (RONW) of 21.2.3 11.6 Total expenses 205.9 3. As a result.

REVIEW OVERVIEW Salasar Techno Engineering IPO Review      3 SUMMARY Salasar Techno Engineering IPO Review reveals that the company has witnessed strong growth in its operations and improving margins also strengthen its case. Salasar Techno Engineering IPO Review reveals that the company has witnessed strong growth in its operations and improving margins also strengthen its case.12/07/2017 Salasar Techno Engineering IPO Review: Techno viable? .      OVERALL SCORE http://ipocentral.in/salasar-techno-engineering-ipo-review-techno-viable/ 4/4 . However. there is nothing wrong with low-margin businesses provided there is scale to be leveraged. In absence of economies of scale. All in all. small operations and listing in T group mean a longer term perspective is required. Another question investors need to ask is if they want to own a low-margin business which has limited scope for further growth. Once again.IPO Central listings in this group have been mixed with GNA Axles making a strong debut but Pennar Engineered Building Systems ended in a soup. a business may be good for promoters but not necessarily for small shareholders. small operations and listi ng in T group mean a longer term perspective is required. However.