Started in 1990, Benara Bearings & Pistons Ltd, is Agra UP based company and engaged in the manufacturing of engine bearings, bushes, pistons, piston pin, piston rings, cylinder liners and sleeves and engine valves. Additionally, Company is also engaged in the marketing of products like ball bearings, spark plugs, rocker arms, timing chains, connecting rods, valve guides, valve seals & batteries (Motorcycle / Inverter /E Rickshaws) under its own brand which it sources through third party contract manufacturing. Company owns BP, BENARA, BENARA POWER and PHB brands for marketing of its products. Company markets its product in OEM and Replacement market. Company majorly focus on two wheeler parts replacement market. Currently, BBPL has two manufacturing facilities, which are situated at A3/ A4,Site B, Industrial Area, Sikandra, Agra ("Unit I") and at 15 K.M Milestone, Artoni, Agra-MathuraRoad, Agra, Uttar Pradesh 282007 ("Unit II"). Company manufactures piston pin, piston ring and engine bearing and bushes in Unit I and piston, cylinder block / liner and engine valve in Unit II. Company currently operates around 30% to 40% capacity utilisation. As of December 31, 2017, company's work force consisted of around 184 full time employees at Unit I, 86 full time employees at Unit II, 41 employees in marketing department and 6 directors. Its subsidiary, Benara Solar Private Limited, is engaged in the business of development and deployment of solar energy technologies including inter-alia planning and execution of solar power projects. Further, it has another subsidiary Securitrans Trading Private Limited, which is engaged in trading of various types of goods and materials. On financial performance front, BBPL has posted turnover/net profits of Rs. 49.87 cr. / Rs. 0.23 cr. (FY13), Rs. 51.88 cr. / Rs. 0.03 cr. (FY14), Rs. 71.81 cr. / Rs. 0.46 cr. (FY15), Rs. 80.24 cr. / Rs. 0.76 cr. (FY16) and Rs. 122.63 cr. / Rs. 4.22 cr. (FY17). For H1 of FY18, it has earned net profit of Rs. 4.09 cr. on a turnover of Rs. 67.25 cr. From financials, top-line has shown good growth over the years, but bottom-line remained weak. For FY17 and H1 of FY18, it has shown very high growth in bottom-line, that is very much surprising. Issue is priced at a P/BV of 3.35 on the basis of NAV of Rs. 15.12 as on 30.09.17. For last three fiscals, it has posted an average EPS of Rs. 3.3 and an average RoNW of 17.52%. If we annualise latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 14 against industry composite of 32. As per offer documents, it has indicated listed peers as Shriram Piston, Federal Mogul and Samkrg Piston that are trading at a P/E of around 39, 31 and 13 respectively. So issue is reasonably priced as per latest earnings. On merchant banker's front, this is the 64th IPO in last three fiscals. Out of last 10 listings, 1 opened at discount, 1 opened at par and the rest with premiums ranging from 4% to 130% on the day of listing. (Listing at premium of 130% was for main board IPO of Astron Paper) As per financials, growth in top-line is very good, but there is sudden jump in bottom-line for FY17 and H1 of FY18, RoNW is 17.52% for last three fiscals and issue is reasonably priced as per latest earnings. Company currently operates around 30% to 40% capacity utilisation, so it has good scope of growth without further capacity expansion. So we give NEUTRAL rating to this SME IPO.
✍️ Post a Comment