Bondada Engineering Limited IPO

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i. Bondada Engineering is engaged in the business of providing engineering, procurement and construction (“EPC”) services and operations and maintenance (“O&M”) services to their pan India customers operating in telecom and solar energy industry.

ii. Their expertise lies in providing core design and engineering services and O&M services in infrastructure space with proven multiple projects execution track record with our knowledge-based approach and an experienced team of 550+ employees. They are awarded for their excellence as a “Telecom Infrastructure Services Provider” for the year 2021 by Economic Times and “Company of the Year” for the year 2023 by Global India Business Forum

iii. They provide passive telecom infrastructure services which include turnkey services for cell site construction, erection, operation and maintenance of telecom towers with civil, electrical, and mechanical works; supply of poles and towers, laying and maintenance of optical fiber cables, supply of power equipment and other telecom infrastructure related services to major telecom companies and telecom tower operators in India. Till date, they have installed over 11,600 telecom towers and poles out of which, they have installed over 7,700 telecom towers and poles in last three fiscals.

iv. They also provide O&M services to telecom and tower operating companies such as cell site maintenance with preventive and corrective maintenance of passive infrastructure and equipments, backup power systems, manning services and supply of riggers, surveillance, and corrective maintenance of optical fiber cable routes and other maintenance related facilities.

v. They also provide O&M services to our solar energy customers which include testing and cleaning of solar panels, repair and replacement of damaged components and inspection of solar panels.

Competitive Strengths

i. Strong project management and execution capability
ii. Long term contracts for telecom and solar projects providing visibility on future revenues.
iii. Managing diverse business operations amidst growing demand

Objects of the Bondada Engineering Limited IPO:

The company intends to utilize the net proceeds from the issue towards the funding of the following objects: i. To meet long-term working capital requirements, and ii. General corporate purposes.
DRHP of Bondada Engineering Limited IPO
RHP of Bondada Engineering Limited IPO

Bondada Engineering Limited IPO Details:

Open Date: Aug 18 2023
Close Date: Aug 22 2023
Total Shares: 5,696,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue IPO
Issue Size: 42.72 Cr.
Lot Size: 1600 Shares
Issue Price: ₹ 75 Per Equity Share
Listing At: BSE SME
Listing Date: Aug 30 2023

Promoters And Management:

Raghavendra Rao Bondada is Chairman and Managing Director of the Company. He is also one of the Promoters of the Company. He holds a bachelor’s degree in Technology (Civil) from Nagarjuna University, Andhra Pradesh. He has been associated with the Company since incorporation. He possesses over 25 years of experience in Telecom and Power industry. He is actively involved in the strategic decision making, pertaining to corporate and administrative affairs, expansion activities, business development and management of overall business of the Company Satyanarayana Baratam is a Whole time Director and CFO of the Company. He is also one of the Promoters of the Company. He is a Member of the Institute of Chartered Accountants of India. He has been associated with the Company since November 15, 2012. He possesses over 20 years of experience in Corporate Financing, Accounting and Taxation. He is presently looking after Finance, Accounts, Taxation, Internal controls and Budgetary Controls in the Company. He has been instrumental in developing various processes and framework in the Company which contributed towards growth and future prospects of the Company. Neelima Bondada is a Non-Executive Director of the Company. She is also one of the Promoters of the Company. She holds a bachelor’s degree in Science from Nagarjuna University, Andhra Pradesh. She has been associated with the Company since incorporation.

Financials of Bondada Engineering Limited IPO:

A. Balance Sheet
Particular (In Lakhs) Mar-21 Mar-22 Mar-23
Equity Share Capital 82.00 82.00 1,590.61
Reserves 4,694 5,707 6,247
Borrowings 4,667 3,803 8,423
Trade Payables 3,653 2,821 4,488
Other Liabilities 3,995 3,348 4,367
Total Liabilities 12,316 9,972 17,278
Net Block 1,174 1,149 1,357
Capital Work in Progress 0 5 0
Investments 0 65 150
Other Assets 243 259 260
Total NC Assets 1,417 1,478 1,768
Receivables 8,461 7,888 12,790
Inventory 5,637 4,449 5,959
Cash & Bank 442 109 126
Other Assets 1,134 1,837 4,474
Face value 10 10 10
B. Profit & Loss Statement
Particular (In Lakhs) Mar-21 Mar-22 Mar-23
Sales 28,709 33,411 37,059
Raw Material Cost 9,229 15,120 19,769
Change in Inventory -1,936 1,159 -1,414
Other Mfr. Exp 12,297 11,505 12,994
Employee Cost 6,947 3,176 1,937
Other Expenses 548 468 692
Other Income 123 10 37
EBITDA 1,747 1,993 3,118
EBITDA Margin 6.08% 5.97% 8.41%
Depreciation 200 181 183
Interest 384 348 557
Profit before tax 1,163 1,464 2,377
Tax 243 451 552
Net profit 921 1,014 1,825
NPM (%) 3.19% 3.03% 4.92%
C. Cash Flow Statement
Particular (In Lakhs) Mar-21 Mar-22 Mar-23
Cash From Operating Activity
Profit From Operation 1,696 1,976 3,025
Receivable -601 573 -4,902
Inventory -2,075 1,188 -1,510
Payable 714 -832 1,668
Loans And Advances 0.22 -1,039 -1,021
Other WC Items 1,116 -453 -76
Working Capital Changes -845 -564 -5,841
Direct Taxes -548 -342 -402
Net Cash Inflow from Operating Activity 304 1,071 -3,239
Cash from Investing Activity
Fixed assets purchased -904 -167 -374
Fixed assets sold 715 7 0
Investments purchased 0 -65 -110
Investment sold 0 0 325
Dividends received 0 0 0.02
Other investing items -31 17 -1,044
Net cash inflow from investing activities -220 -208 -1,203
Cash from Financing Activity
Proceeds from shares 0 0 335
Proceeds/Repayment from Short Term borrowings 512 -558 4619
Proceeds/Repayment from Long Term borrowings 120 -305 0
Interest paid -362 -332 -480
Dividends paid 0 0 -16
Net Cash Flow 354 -333 17
 

Comparison With Peers:

Note: - There is no listed companies related to this company.

Recommendation on Bondada Engineering Limited IPO:

Review and Recommendation of Bonada Engineering SME IPO by IZ team is 5/10

1. Certifications & Overview:

  a) An ISO 9001:2015 certified integrated infrastructure firm. b) Offers both EPC services and O&M services. c) Telecom Infrastructure Services.

2. Comprehensive passive telecom infrastructure services

  a) Turnkey services for cell site construction and maintenance of optical fiber cables. b) Achieved the installation of over 11,600 telecom towers and poles, with 7,700 in the last three fiscal years.

3. Government Projects:

  a) Secured a project from a Government of India enterprise for the supply and erection of Ground Based Towers and IaaSP tasks from BSNL for erecting 4G towers in rural areas. b) Spanning five southern states for a five-year duration, extendable for another five years. c) The project's estimated value is ₹ 1156 Cr, funded by USOF.

4. O&M Services in Telecom:

  a) Comprehensive services include cell site maintenance and maintenance of optical fiber routes.

5. Manufacturing & Infrastructure:

  a) Tower manufacturing facility located in Rampally Dayara Village, Telangana. b) Gross order book stands at ₹ 235 Cr as of March 2023.

6. Solar Energy Services:

  a) End-to-end services for solar power plant construction. b) Installed capacity surpasses 198 MW. c) Gross order book for solar EPC valued at ₹ 102 cr as of March 2023.

7. Solar Energy O&M Services:

  a) Includes the maintenance, repair, and inspection of solar panels.

8. Building Material Business (via SITPL):

  a) Manufacturing facility located in Ramachandrunipet, Andhra Pradesh. b) Certified by leading organizations like CII-Green Products and Services Council, ISO, and ISI.

9. uPVC Product Business (via BAPL):

  a) Supplies an array of uPVC products. b) Facilities located in Vishakhapatnam, Andhra Pradesh, and Rampally Dayara Village, Telangana.

10. Financial Analysis:

  a) Moderate revenue growth with a 13% CAGR, increasing from 288 Cr in FY21 to 370 Cr in FY23. b) Significant growth in EBITDA, rising from 17 Cr in FY21 to 31 Cr in FY23. c) Doubled PAT from 9 Cr in FY21 to 18 Cr in FY23. d) Cash flow concerns in FY23 with negative 32 Cr of CFO. e) Took a short-term working capital loan of ~46 Cr. f) Debt position stands at ~84 Cr as of 31st March 2023 with a D/E ratio slightly above 1. g) After its IPO, the company's market capitalization is 161 Cr with a P/E ratio of 9x, indicating a reasonable valuation.

Conclusion Summary:

  The company has a diversified portfolio, majorly in telecom infrastructure and solar energy. While it has displayed robust growth in operational profitability, there are liquidity concerns to address. The company's achievements, coupled with government contracts and extensive infrastructure, plus healthy order book place it prominently in its sector. The post-IPO valuation seems reasonable, suggesting potential for investors

Lead Manager of Bondada Engineering Limited IPO:

  1. Vivro Financial Services Private Limited

Registrar of Bondada Engineering Limited IPO:

  1. Kfin Technology Private Limited

Company Address:

Bondada Engineering Limited 1-1-27/37, Ashok Manoj Nagar Kapra, Hyderabad - 500062 Phone: +91 72070 34662 Email: cs@bondada.net Website: https://bondada.net/

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