(i) Saketh Exim Limited was founded in the year 2010. The company is managed and promoted by a group of individuals and is led by Mr. Sanjay Patel who has an approximate 36 years of experience in managing a business.
(ii)The Company manufacture and fabricate various steel products which are meant for its application in Pipe hangers, Support Systems, HVAC Systems, Anti-vibration System and Equipment for construction Industrial, Commercial, Utility, and OEM Installations.
(iii) The Company also manufacture metal and base metal products like G. I. nuts, various types of Bolts, Clamps, Hangers etc. Further, the Product Portfolio includes all types of Bathroom pipes, Fittings, Bathroom accessories and Sanitary wares.
(iv) The company’s Revenue from Manufacturing and Trading is stood at 61.29% and 38.78% in FY18 respectively.
(v) Their Certain manufactured products are certified by Underwriter’s Laboratory Inc. (U.S.A) and FM Global Approved (U.S.A) which are meant to be used for Fire Sprinklers System Installations.
(vi) The company has 3 manufacturing units located at Vasai near Mumbai. The Company has installed various plant and machinery for manufacturing and fabrication of the various products. SAKETH has developed a favorable position in the Middle Eastern and Gulf market. Their products are marketed through a dealer network in various Companies in Gulf countries like United Kingdom, UAE, Oman, Qatar, Kuwait, Jordan, Bahrain, Saudi Arabia, Bahrain, and Egypt.
Objects of the Saketh Exim Limited IPO:
Objective of Saketh Exim Limited IPO are:
(i) The Offer for Sale of 2,45,000 EQUITY SHARES BY THE PROMOTER GROUP. The Company will not receive any proceeds of the Offer for Sale by the Selling Shareholder.
(ii)The Fresh Issue of 11,23,000 EQUITY SHARES. The funds raised will be utilized for .
(a) Funding Long-Term Working Capital Requirements
(b) Funding Expenditure for General Corporate Purposes
Promoters of Saketh Exim Limited Company are:
1. Mr. Sanjay J Patel
2. Mrs. Smita S Patel
3. Mrs. Taruna P Patel
4. Mrs. Fatema S Kachwala
Capital Structure:
(i) Authorized Share Capital
55,00,000 Equity shares at FV@10)
5.5 Cr
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue
(39,00,000 Equity Shares at FV@10)
3.9 Cr
(iii) Present Issue
( 13,68,000 Equity Shares at FV@10)
1.368 Cr
(iv) Reservation for Market Maker [72000] Shares at FV@10)
7.2 Lac
(v) Reservation for QIB & HNI 6,48,000 Equity Shares at FV@10)
50%
(vi) Reservation for Retail 6,48,000 Equity Shares at FV@10)
50%
(vii) Paid Up Share Capital after the issue
5.023 Cr
Financials of Saketh Exim Limited IPO as per DRHP:
1. Assets and Liabilities Key Parameters
Year
Asset(lacs)
Liabilities(lacs)
Net Worth(lacs)
Book Value
D/E [<1.5]
RONW
Debtor days
FY14
1,550.80
1,417.05
133.75
27
10.6
10%
84
FY15
1,812.55
1,488.49
324.06
16
4.6
12%
103
FY16
1,562.01
1,160.93
401.08
20
2.9
19%
76
FY17
2,445.78
1,949.14
496.64
25
3.9
19%
98
FY18
3,717.27
2,958.41
758.86
19
3.9
14%
124
Post Issue
1533.73
31
1.9
2. Profit n Loss Key Parameters
Year
Revenue(lacs)
PAT(lacs)
EBITDA Margins
Profit Margins
Outstanding Shares(lacs
EPS
FY14
3,321.15
13.31
3%
0.4%
5
2.66
FY15
3,749.45
40.31
4%
1.1%
20
2.02
FY16
4,672.11
77.02
5%
1.6%
20
3.85
FY17
5,140.47
95.55
7%
1.9%
20
4.78
FY18
6,199.76
107.12
6%
1.7%
39
2.75
Post Issue
50.23
2.13
3. Cash Flow Statement(all figures in lacs)
Particulars
FY18
FY17
FY16
FY15
FY14
(i) Net Cash Generated from Operation
-621.86
224.64
-84.62
-12.52
-35.13
(ii) Net Cash Generated from Investment
-132.13
-148.97
-6.52
-121.9
-7.58
(iii) Net Cash Generated from Financing Activity
821.74
-55.77
114.96
140.1
42.5
(iv) Total[ (i)+(ii)+(iii) ]
67.75
19.9
23.82
5.68
-0.21
(v) Cash and Cash Equivalents at the Beginning of the Year
52.1
32.2
8.38
2.7
2.91
(vi) Cash and Cash Equivalents at the end of the Year
119.85
52.10
32.20
8.38
2.70
Key Notes:a) The Revenue is growing at CAGR of 16.89% from FY14 to FY18. [ Excellent Growth]b) The PAT is growing at CAGR of 68.43% from FY14 to FY18.[ Excellent Growth].
c) The Annualized EPS[Post Issue] is 2.13d) P/E(post issue)= 32.39[ Very High]e)P/B(post issue)= 2.225[High]f) The company in FY18 has a huge long-term and Short Term debt of 5.06 Cr and 12.88 Cr respectively against the equity of 7.58 Cr only.[ Red Flag]g)Mcap/Sales(ideally <2)=.55 on FY18 sales( Ideally valued).
h) The Company has EBITDA margins in the range of 5-7% in the last 3 years which is quite low considering they are financing their business through a debt of 17.9 Cr in FY18 where they need to pay high finance cost.[Red Flag]
i) The Company has negative cash flows from operations in the last few years. [Red Flag]j) The Trade Receivables have suddenly gone up to 21 Cr in FY18 as compared to 13 Cr last year. The company sometimes do this to improve sales before IPO.[ Red Flag]
k) The Inventories too has gone up to 6.98 Cr in FY18 as compared to 4.86 Cr last year. This shows that the company is not able to sell their products on time and inventories are pilling up.[ Red Flag]
l) The Debtor days has also gone up to 124 Days in FY18 as compared to 98 Days last year. The increase in debtor days means the company will take more days to get their credit from their suppliers which in turn may seriously affect their day to day operation.[Red Flag]
Comparison With Peers:
The company believe that there is no other listed company which is specifically comparable to them w.r.t. their business model, size and financials.
Recommendation on Saketh Exim Limited IPO:
Saketh Exim Limited IPO Rating by InvestorZone team = 3/10
The Company Issue price is aggressively priced at P/E of 32.
1-5: Fair
5-7: Good
7-10: Excellent
Next Upcoming IPO > Lodha Developers
Many times companies show their peer from the mainline board and try to justify their valuation. I think in the first instance we should not compare any SME to mainline company as their scale of operation is very small to have a meaningful comparison.
The company faces competition from players in the global market, since they are an export-oriented unit for the goods manufactured. Further, they are also engaged in Trading of Fabric and other Textile products, which is largely unorganized and fragmented industry.
In FY18, the company has done a sale of 37.84 Cr in the manufacturing segment and 23.97 Cr in Trading of Fabrics of and Textile Material. The total sales of FY18 were stands at 61.82 Cr out of which 25.87 Cr was from Domestic operations and 35.95 Cr from Export.
OFS from the promoters group in SME companies is a joke. How can someone sell their shares in the company which was formed just 6 years back.
Business is ok but priced issue expensive. It should have priced it lower to attract investors.
Many times companies show their peer from the mainline board and try to justify their valuation. I think in the first instance we should not compare any SME to mainline company as their scale of operation is very small to have a meaningful comparison.
As on FY18, the company owes 9.18 Cr from the creditors.
The company faces competition from players in the global market, since they are an export-oriented unit for the goods manufactured. Further, they are also engaged in Trading of Fabric and other Textile products, which is largely unorganized and fragmented industry.
Costly issue at P/E of 32.
In FY18, the company has done a sale of 37.84 Cr in the manufacturing segment and 23.97 Cr in Trading of Fabrics of and Textile Material. The total sales of FY18 were stands at 61.82 Cr out of which 25.87 Cr was from Domestic operations and 35.95 Cr from Export.