Salasar Techno Engineering Ltd - IPO Note - Hem Securities Ltd

Salasar Techno Engineering Ltd is a provider of customised steel fabrication and in-frastructure solutions in India for Telecommunication Towers, Transmission Towers & Substation Structures and Solar Mod-ule Mounting Structures. The objective of Company is to supply customized, high-quality material to its impressive and ever-growing clientele. Co provide 360 degree solutions by carrying out engineering, designing, fabrication, galvanization and de-ployment. Co's products include Telecommunication Towers, Power Transmission Line Towers, Smart Lighting Poles, Mono-poles, Guard Rails, Substation Structures, Solar Module Mount-ing Structures and Customized Galvanized & Non-galvanized steel structures. Co's services include providing complete engi-neering, procurement and control for projects such as Rural Electrification, Power Transmission Lines, and Solar Power Plants.

The objects of the issue is to meet working capital requirement worth of Rs 31.87 cr, general corporate purpose worth of Rs 2.5 Cr & meet issue expense worth of Rs 1.5 Cr.

Reasons to Subscribe:

Salasar has a strong customer profile and some of its major customers are Bharti Infratel Ltd, Indus Towers Ltd, Huawei Technologies Nepal Company Pvt Ltd, Reliance Jio Infocomm Ltd, Acme Cleantech solution Pvt Ltd, ATC Telecom Infrastruc-ture Pvt Ltd, U.P. Power Transmission Corporation Ltd, Indus Towers Ltd, Prayatana Developers Pvt Ltd, Unitech Power Transmission Ltd, Today Green Energy Pvt Ltd, Viom Networks Ltd, Welspun Renewables Energy (P) Ltd etc.

Co's Promoter and Managing Director, Mr. Alok Kumar has over 41 years of experience in trading, manufacturing and fab-rication of iron & steel and Mr. Shalabh Agarwal, Promoter and Whole-Time Director of company, has over 18 years of experi-ence in sugar industry and trading, manufacturing and fabrica-tion of iron & steel.

Co's order book of Rs. 5,761.16 million as of May 31, 2017, pro-vides it with revenue visibility for the next financial year.

From a mere 44% capacity utilisation in FY 2012-13, co reached a level of 91% capacity utilisation in FY 201617. This necessitated co to increase its capacity further and therefore co successfully completed the expansion plan in its subsidiary by adding another 50000 MTPA galvanization plant.

Valuation

At price of Rs 108/share, co is bringing the issue at p/e multiple of 6.91 on post issue FY17 eps of Rs 15.62.

With decent fundamentals, co's valuation look reasonable at cur-rent level. Hence we recommend "Subscribe" on issue.

Source : Equity Bulls

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