Ahlada Engineers Limited IPO

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(i) Business Overview

Ahlada Engineers Limited
is in the business of manufacturing Steel doors and Windows (steel-frame) and cater to customers across various segments and industries. They currently have facilities spread across 3 manufacturing units in addition to one assembling unit and stockyard, with an area admeasuring 34,211 square yards on the outskirts of Hyderabad. Additionally, they are also in the business of manufacturing cleanroom equipment for customers in the Pharmaceutical, Biotechnology and Food industries.

(ii) Journey of Ahlada

a)
 In 2005, the Company started commercial operations with manufacturing of cleanroom equipment and furniture.

b) Further, in the year 2008, they started manufacturing steel doors which catered to the then existing customers of clean-room equipment and furniture. Gradually they started expanding the customer base for the products manufactured to healthcare, entertainment and real estate vertical as well.

(iii) Expansion

(a)
The Company has been gradually expanding their manufacturing facilities and has over the past decade, expanded the facilities to its current form and capacity. Presently, they have an installed capacity to manufacture 11,000 doors per month. The facilities to manufacture clean room equipment and furniture and windows are inter-operable, and hence, capacities for the same cannot be conclusively determined.

(b) In order to expand Company business and customer base, the Company has on August 22, 2017, entered into a Master Manufacturing and Supply Agreement (MMSA) with Tata Steel Limited (TSL), whereby TSL has assured offtake of doors manufactured and shall work with them to improve the process and line efficiency. They consider this alliance with Tata as one of our biggest strengths.

(iv) Products of the Company

a) Steel doors
b) Double Doors
c) Single Doors
d) Stainless Steel Doors
e) Scientific Doors
f) Fire Rated Doors
g) Duct/ Shaft/ Access Doors
h) Windows

(v) Impressive Clientle

a) TCS
b) Pfizer
c) Nestle
d) BHEL
e) ITC
f) Apollo
g) Hyatt

Ahlada Engineers Limited IPO Stock Quote & Charts

137.35

-1.61%

  • Open: 140.00
  • High - Low: 140.00 - 137.00
  • Previous Close: 139.60
  • Total Traded Volume: 7000
  • Updated On: 17-Oct-2018

Objects of the Ahlada Engineers Limited IPO:

Objective of

Ahlada Engineers Limited IPO

are: 1. Repayment of certain identified loans availed from lenders and directors 2. Purchase of Machinery/Equipment 3. Funding of Working Capital Gap 4. General Corporate Purposes

Ahlada Engineers Limited IPO Details:

Open Date: Sep 11 2018
Close Date: Sep 18 2018
Total Shares: 3,404,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue IPO
Issue Size: 51.06 Cr.
Lot Size: 1000 Shares
Issue Price: ₹ 147-150 Per Equity Share
Listing At: NSE Emerge
Listing Date: Sep 27 2018

Promoters And Management:

Promoters of Ahlada Engineers Limited Company are: (i) Chedepudi Suresh Mohan Reddy, aged 50 years, is the Managing Director of the Company. He holds a bachelor’s degree in engineering (mechanical) from University of Mysore. In the past, he has worked with M/s Nova Pan India Limited as a trainee engineer and with SAB NIFE Power Systems Limited. He is experienced in cost control, production, and finance. He is responsible for the overall in-charge of our Company and controls and oversees the manufacturing and related line functions of the Company. He has been instrumental in signing up with Tata Steel Limited for the supply of doors and has been associated with our Company in the capacity of a director since its incorporation in 2005.

Capital Structure:

(i) Authorized Share Capital (150,00,000 Equity shares at FV@10) 15 Cr
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue (95,16,000 Equity Shares at FV@10) 9.516 Cr
(iii) Present Issue ( 34,04,000 Equity Shares at FV@10) 3.404 Cr
(iv) Reservation for Market Maker (171000 Shares at FV@10) 17.4 Lacs
(v) Reservation for QIB (1294000 Equity Shares at FV@10) 40%
(vi) Reservation for HNI( 808000 Equity Shares at FV@10) 25%
(vii) Reservation for Retail( 1132000 Equity Shares at FV@10) 35%
(viii) Paid Up Share Capital after the issue 12.92 Cr

Financials of Ahlada Engineers Limited IPO:

 
1. Assets and Liabilities Key Parameters
Year Asset(lacs) Liabilities(lacs) Net Worth(lacs) Book Value D/E (<2) RONW Receiveable days
FY14 6084.47 4,137.66 1946.81 44.55 2.13 14% 92
FY15 6912.18 4,706.77 2205.41 50.47 2.13 12% 107
FY16 8386.93 5,875.54 2511.39 57.47 2.34 12% 98
FY17 9785.69 6,947.01 2838.68 64.96 2.45 12% 79
FY18 14562.47 10,914.78 3647.69 41.66 2.99 22% 101
Post Issue 9772.09 75.64 0.90 8%
2. Profit n Loss Key Parameters
Year Revenue(lacs) PAT(lacs) EBITDA Margins Profit Margins Outstanding Shares(lacs) EPS
FY14 7913.5 264.85 15.8% 3.3% 43.70 6.06
FY15 9630.66 258.61 9.5% 2.7% 43.70 5.92
FY16 11147.19 305.98 9.0% 2.7% 43.70 7.00
FY17 11855.26 327.29 10.5% 2.8% 43.70 7.49
FY18 12789.38 809.01 16.3% 6.3% 87.56 9.24
Post Issue 129.2 6.26
3. Cash Flow Statement(all figures in lacs)
Particulars FY18 FY17 FY16 FY15 FY14
(i) Net Cash Generated from Operation 1488.26 465.65 517.3 138.69 -136.47
(ii) Net Cash Generated from Investment -3428.74 -1074.17 -604.63 -83.49 -212.07
(iii) Net Cash Generated from Financing Activity -96.14 -382.6 -136.91 118.62 106.64
(iv) Total[ (i)+(ii)+(iii) ] -2036.62 -991.12 -224.24 173.82 -241.9
(v) Cash and Cash Equivalents at the Beginning of the Year 159.1 186.17 208.03 146.46 105.93
(vi) Cash and Cash Equivalents at the end of the Year -1,877.52 -804.95 -16.21 320.28 -135.97
Key Notes: a) The Revenue is growing at CAGR of 12.75% from FY14 to FY18. b) The PAT is growing at CAGR of 32.31% from FY14 to FY18.[Excellent Growth] c) The Annualized EPS[ Post Issue] = 6.26 d) P/E(post issue)= 23.96 [ No peers to Compare]. e) P/B(post issue)= [ Reasonably Priced] f) D/E(post issue) =0.90 [Manageable] g) Mcap/Sales(ideally <2)= 1.5 on FY18 sales [Reasonable priced]. h) EV/EBITDA(ideally <10)= 11.42

Comparison With Peers:

There are no listed entities similar to the line of business and comparable to the scale of operations of Ahlada Engineers Limited.

Recommendation on Ahlada Engineers Limited IPO:

Review and Recommendation of Ahlada Engineers Limited IPO from IZ team is: 6/10 [ The Company will reduce its debt by 6.5 Cr from the Issue which will reduce the finance cost going forward. The Company is also expanding its existing manufacturing capacity from 1,32,000 doors per annum to 3,40,400 doors per annum from the IPO proceeds. The company doesn't have any listed peer which gives the company a first mover advantage. The Valuation in terms of P/E, P/ B, Mcap/Sales and EV/EBITDA looks reasonable. Their recent type up with TATA will give them a tremendous opportunity both in terms of technology and brand name. ] 1-5: Fair 5-7: Good 7-10: Excellent

Lead Manager of Ahlada Engineers Limited IPO:

  1. Saffron Capital Advisors Private Limited

Registrar of Ahlada Engineers Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Ahlada Engineers Limited Door No 4-56, Survey No. 62/1/A & 67, Tech Mahindra Road, Bahadurpally, Qutbullapur Mandal, Hyderabad 500 043, Rangareddi, Telangana, India Phone No. +91 98 6650 0811/+91 98 6650 0822 E-mail: kodanda.cs@ahlada.com Website: www.ahlada.com

25th Sep 2018 - 27th Sep 2018 => Aavas Financiers IPO

Bid Details of Ahlada Engineers Limited IPO as on
18-Sep-2018 18:00:01 IST

Category No.of shares offered No. of shares bid
1,293,200 1,862,000
808,250 2,135,000
1,131,550 3,612,000
171,000 171,000
3,404,000 7,780,000
QIBs Subscription 1.44X
HNI Subscription 2.64X
Retail Subscription 3.19X
Total Subscription 2.35X

Discussion on Ahlada Engineers Limited IPO:

    Business is good and stock can be applied by people who are ready to hold for long term as chance of huge listing gain is less.
    The stock is slight on expensive side
    wait to look if get anchor investors and check subscription on last day.

    They have signed a contract with Tata Steel for 4 years with extension of 11 months. At present they have manufacturing facility of 11 thousand doors which will reach to 30 thousand by January. After the contract is over Tata will give them first right to refuse. They refused Tata’s offer for selling a 51 percent stake this shows their brand power. They have no competitors. TATA PAYS their rent, steel price fluctuations, dollar price fluctuations. This is a very rare contract.

      hello, so any rise in steel prices will not affect companies margins ? does that mean they get fixed remuneration per door ? and how is this offer on ev/ebidta basis ?

        We don’t have the agreement copy with us. However, as per sourced information from broker meet, the cost of one door is about 13500 with a profit of 1500 per door. They have received a contract for supplying 11 Lakhs doors in four years that means every they are supplying close to 2.75 lakh door to Tata which is close to 80% of the present capacity after expansion. So we can say that the total revenue from Tata every year may be close to 370 Cr. The margin will remain muted for the next four years due to this contract. However, if these Tata Doors gets a good response in the market then Ahlada will definitely be acquired by TATA in future.

      Now this is very exclusive contract reason is TATA pays land rent , steel price hikes or down price in steel, currency fluctations. What more a SME can ask for. Also after the contract is over the company has both right to refusal and right to renew for next 11 months . Icing on the cake is Tata had shown willingness to buy 51 percent stake. The scientist who had sold out his company to Shanta Bio is Chairperson.

    Ahlada Engineers Fact file

    Showcased their steel doors

    Very much impressed

    Tata steel looking inside home products as route to market value added steel.

    For steel doors , ahlada and a subsidiary of bas con

    Ahlada s given order of 1.7mn doors over 4 years.

    Entire cost structure is pass thru

    Rough margin is 15%.

    Last year company did about 90k doors of which supplies to tata was 25k

    By next year it would be 300k p.a.

    Looks interesting.

    Debt Story as on 31st March 18
    a) Debt(Long-term and Short-term) = 46 Cr
    b) Equity= 35 Cr
    c) D/E= 1.31

    As of March 31, 2018, the company has contingent liabilities and commitments aggregated to ₹ 13.68 Cr which is huge for the company which has 8 Cr of Profit in FY18.

    in FY18, Tata Steel is the biggest customer for the company comprising of 26% revenue.

    Key Highlights of the company agreement with TATA Steel for supplying Doors.

    1. The Agreement is valid for an initial term of 48 months from the date of signing and may be
    extended for an additional period of 11 months (Extension Period).
    2. The Agreement may be renewed by executing a fresh agreement on mutually acceptable terms for another 4 years (Renewed Period).
    3. The Company shall provide the Products as per purchase orders issued from time to time and Tata has committed to order a minimum quantity of 11.75 lac doors during the term of the agreement. This is big order considering at present company has a capacity if manufacturing 1.32 lacs Door per year.

    Conclusion: Getting an order from TATA for an SME company itself a great achievement.

    EPS Story based on FY18 Financials Before the Issue
    1. PAT= 8.07 Cr
    2. No. of Outstanding Shares= 87.56 Lacs
    3. EPS= 9.21
    4. P/E= 16.28

    EPS Story based on FY18 Financials After the Issue
    1. PAT= 8.09 Cr
    2. No. of Outstanding Shares= 1.292 Cr
    3. EPS= 6.26
    4. P/E= 24

    Company Snippet:

    (i) The company manufactures a range of Doors and Windows to cater various segments and industries.

    (ii) Ahlada is promoted by young and dynamic entrepreneurs with a valuable engineering background having vast experience in a production backed by a marketing and service team.

    (iii) Ahlada has earned a reputation amongst the best product manufacturers with an equally efficient service-oriented team.

    (iv) Ahlada manufactures the complete line of Modular Clean Room Partitions, Equipment, Furniture catering to the life sciences, Biotechnology, and semiconductor manufacturing Industries and distinctive Steel Doors and Windows catering to the Residential, commercial construction market and industrial sector requirements.

    (v) Last year they had tie-up with Tata Steel Limited (TSL) for Master Manufacturing and Supply Agreement (MMSA).