Saakshi Medtech and Panels Limited IPO

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i. Saakshi Medtech and Panels is a diversified company engaged in manufacturing of:
i) Electrical Control Panels and Cabinets used in elevators, air compressors, renewal energy industry, oil & gas exploration industry, electrical vehicle charging stations etc,
ii) Medical X Ray System used in healthcare industry
iii) Fabrication works for locomotives and
iv) wire harness division for our captive consumption in electrical control panels and for supply to air compressor industry.

ii. Their in-house engineering and design capabilities help us offer diversified products and solutions to the customers in each of the product categories in which we operate. Their comprehensive solutions include design, process engineering and manufacturing including fabrication, assembly and testing facilities. The hardware components are imported or sourced from local suppliers which are then programmed and assembled at our manufacturing facilities.

iii. They design, program and assemble Electrical Control Panels and Cabinets comprising of micro controller, programmable logic controllers and SCADA system. These Electrical control panels are essential for industrial automation. They provide higherlevel monitoring and control various functions of machines to define, organize, and meet production objectives. The end users for their products in this category include OEMs producing elevators, wind turbines, air compressors, oil & gas exploration equipment, electrical vehicle charging stations or diesel generators. These panels direct input and output of equipment in which they are installed like: monitoring directional movement of wind turbines, bi-lateral movement of elevators, set automatic load and unload of pressure in air compressors used in CNG petrol pumps, metal industry, forging industry, chemical industry, aviation industry and allied industries, vibration and temperature monitoring in oil and gas exploration equipment, for charging of EV batteries and alarming of DG sets.

Company’s major clientele in this product category include: Atlas Copco (India) Ltd and Ge India Industrial Pvt Ltd, OTIS Elevator Company (India) Ltd, GE Oil & Gas India Pvt Ltd, Kirloskar Oil Engines Ltd, Kirloskar Pneumatic Co.Ltd. Their company has entered into a long-term supply agreement with OTIS Elevator Company (India) Ltd for supply of electrical control panels for controlling of lift movement valid upto June 30, 2024.

iv. Medical X Ray System manufactured and assembled by them comprises of X Ray machine, Imaging system, Generator and mechanics. The company is certified manufacturer of medical diagnostic X-Ray equipment by AERB since 2018. With the research and development initiatives our company has recently ereceived Licence to Manufacture Medical Devices for the purpose of Testing from The Central Drugs Standard Control Organisation (CDSCO). We have recently also got their testing lab certified by NABL for testing of medical diagnostic x-ray equipment. Their major clientele in this product category include: Wipro GE Healthcare Pvt. Ltd, Philips India limited and BPL Medical Technologies Private Limited.

v. Furthermore, they are also involved in Fabrication of High level Assembly (HLA) to be installed in locomotives which include manufacturing and assembly of sensor box, battery boxes, sand boxes, dynamic brake weldments, resistor boxes, oil tank assemblies, snow plow etc.

vi. The company also has a wire harness division where wiring assembly or cable assembly is undertaken for transmission of signals or electrical power in the electrical cables or wires. Majority of our harnessed wire is used for captive consumption in manufacturing activities of Medical X-Ray system or Electrical Control Panels and Cabinets.

vii. They have diversified their products under various business verticals, mainly due to their research and development (“R&D”) and technological capabilities. Their R&D capabilities include product design, product engineering, product simulation, prototyping and testing. Their R&D activities are mainly undertaken at the manufacturing facilities.

Competitive Strengths

i. We offer a diversified range of products.
ii. Engineering expertise with complex product manufacturing capability
iii. Long term and well-established relationships with OEM customers

Objects of the Saakshi Medtech and Panels Limited IPO:

The Net Proceeds are proposed to be used in accordance with the details as set forth below: i. Funding capital expenditure towards civil construction work in the existing premises of factory unit II. ii. Repayment in full or in part, of certain of the company's outstanding borrowings. iii. Funding Capital Expenditure towards the installation of additional plant and machinery. iv. Funding to meet working capital requirements. v. General Corporate Purpose.
DRHP of Saakshi Medtech and Panels Limited IPO
RHP of Saakshi Medtech and Panels Limited IPO

Saakshi Medtech and Panels Limited IPO Details:

Open Date: Sep 25 2023
Close Date: Sep 27 2023
Total Shares: 4,656,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 45.16 Cr.
Lot Size: 1200 Shares
Issue Price: ₹ 92 - 97 Per Equity Share
Listing At: NSE Emerge
Listing Date: Oct 06 2023

Promoters And Management:

i. Aniket Vijay Latkar aged 41 years is the chairman and Managing Directorand promoter of the Company. He has been on the board of Directors from April 21, 2011. He holds the degree in Bachelor of Engineering in Mechanical from University of Pune and has completed his Master of Science in Engineering Business Management from the University of Warwick, United Kingdom in 2007. He has an overall experience of around15 years in the production, marketing and engineering divisions. He has played a significant role in the growth of the company. ii. Chitra Vijay Latkar aged 66 years is the Non-Executive Director and promoter of the Company. She has been associated with the company since October 26, 2010. She has an experience of around 12 years. She holds the degree in Bachelor of Home Science from Nagpur University in the year1977. She is responsible for Corporate Social Responsibility related activities. iii. Mayuri Aniket Latkaraged 38 yearsis the Whole TimeDirector and CFO of the Company. She has completed her Post Graduation Diploma in Management in Finance from Welingkar Institute of Management, Mumbai in 2009. She also holds a degree in Bachelor of Engineering in Electronics & Telecommunication from University of Pune in 2006.She has a work experience of around 13 years in finance and administrative sector.

Financials of Saakshi Medtech and Panels Limited IPO:

Particulars ( In Lakhs )
2021
2022
2023
Revenue from Operations 5,977 9,158 12,206
Other Income 45 12 14
Total Revenue 6,022 9,169 12,220
Cost of materials consumed 3,605 5,716 7,393
Purchase of Stock in Trade 533 368 741
Change In Inventory -81 -60 -194
Employee benefits expenses 752 923 1,324
Other Expenses 581 654 889
EBITDA 633 1,568 2,068
Depreciation & Amortisation 170 172 265
Finance Cost 148 131 146
EBIT 463 1,396 1,802
OPM (%) 10.51% 17.10% 16.92%
PBT 315 1265 1656
Tax 95 327 418
PAT 220 938 1238
NPM (%) 3.65% 10.23% 10.13%
No.of Shares 176.56 176.56 176.56
EPS 1.24 5.31 7.01

Comparison With Peers:

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

Recommendation on Saakshi Medtech and Panels Limited IPO:

Review And Recommendation of Saakhsi Medtech and Panel Limited SME IPO by IZ team is 6/10

A) Understanding Business Segment of Saakhsi Medtech i) Electrical Control Panels and Cabinets

1. Industries Served: Elevators, air compressors, renewable energy, oil & gas exploration, electric vehicle charging stations, etc. 2. Components they make: Microcontroller, Programmable Logic Controllers (PLCs), and SCADA systems. 3. Functionality: These panels are essential for industrial automation and control various aspects of machinery to meet production objectives. 4. Major Clients: Atlas Copco, GE India, OTIS Elevator Company, Kirloskar Oil Engines, etc. 5. Contracts: Long-term supply agreement with OTIS Elevator Company until June 2024.

ii) Medical X-Ray Systems

1. Industries Served: Healthcare. 2. Components they make : X-Ray machine, Imaging system, Generator, and mechanics. 3. Certifications: AERB certified since 2018, CDSCO, and NABL accredited lab. 4. Major Clients: Wipro GE Healthcare, Philips India, BPL Medical Technologies.

iii) Fabrication Works for Locomotives

1. Products: High Level Assembly (HLA) including sensor boxes, battery boxes, sand boxes, etc. 2. Major Clients: Wabtec group. 3. Contracts: Long-term supply agreement with Wabtec India until 2027. 4. Expansion: Recently initiated operations in the aerospace industry with AS 9100D and ISO 9001:2015 certifications.

iv) Wire Harness Division

1. Functionality: Wiring assembly or cable assembly for signal or electrical power transmission. 2. Usage: Majority used for internal consumption in manufacturing activities of Medical X-Ray systems and Electrical Control Panels.

B) Manufacturing Facilities

1. Location: Three manufacturing units in Pune. 2. Area: Approximately 9600 sq m. 3. Facilities: Engineered layout with automated process controls for quality and productivity. 4. Testing Laboratory: NABL accredited for additional quality assurance.

C) Research and Development (R&D)

1. Capabilities: Product design, engineering, simulation, prototyping, and testing. 2. Team: Supported by 37 engineers.

D) Financial Performance

1., The company's revenue has shown consistent growth, increasing from ₹59.77 Cr in FY 20-21 to ₹122.06 Cr in FY 22-23. 2. EBITDA has almost quadrupled over three years, rising from ₹5.88 Cr in FY 20-21 to ₹20.53 Cr in FY 22-23, indicating healthy operational performance. 3. The net profit has seen a substantial increase, from ₹2.20 Cr in FY 20-21 to ₹12.38 Cr in FY 22-23, showcasing improved profitability. 4. OPM has improved from 9.84% in FY 20-21 to around 16.82% in FY 22-23, indicating better operational efficiency. 5. Net Profit Margin has also improved significantly, from 3.68% in FY 20-21 to 10.14% in FY 22-23. 6. The D/E ratio has been progressively decreasing, indicating reduced dependency on debt. 7. Interest coverage ratio has increased over the years from 4x to 14x, indicating a stronger ability to meet interest obligations. 8. The cash flow from operations has dramatically improved from 28 lac in Fy21 to 10 Cr in Fy23. 9. Capex has risen, in the last 3 years total capex done is ~18 cr. 10. Receivables Days: The number of days to collect receivables has decreased, improving cash management.

E) Growth Drivers

Saakshi Medtech, a diversified company with a significant presence in the Medical X-Ray Systems space, has charted a strong growth story across multiple verticals. However, it's the medical devices sector that stands out as an area ripe for exponential growth, particularly given the company's recent improvements in meeting international standards.

The Past Hurdle: Quality Standards

Initially, growth in the medical devices segment was stymied due to the company's products not meeting international standards. This limitation not only restricted the company's market penetration but also impacted its overall profitability.

The Turning Point: Meeting International Standards

The company has addressed this challenge head-on. With its R&D initiatives and recent certifications, Saakshi Medtech is now a certified manufacturer of medical diagnostic X-Ray equipment, aligning its products with international standards. This change positions the company favorably for not just domestic growth but also for global market penetration.

F) Valuation of Saakshi Medtech SME IPO

The IPO is coming at Mcap of INR 170 Cr and with PAT of INR 12 in Fy23, the P/E is 14x. The valuation seems to be reasonable.

Lead Manager of Saakshi Medtech and Panels Limited IPO:

  1. Hem Securities Limited

Registrar of Saakshi Medtech and Panels Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Saakshi Medtech and Panels Limited Plot No. EL-23, J Block, MIDC Industrial Area, Bhosari, Pune- 411026 Phone: +91- 02039854400 Email: info@smtpl.co Website: https://www.smtpl.co/index.html

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