IPO Note - SoftTech Engineers Ltd - Arihant Capital Markets Ltd

Incorporated in 1996, Pune based SoftTech Engineers Limited is software company which caters to the Architecture, Engineering, and Construction ("AEC") verticals.

The Company specializes in developing the product for e-governance and construction of ERP products for smart city projects, municipal corporations, urban local bodies, development authorities and work organizations. It also offers 2D and 3D CAD based intelligent and machine learning driven technology which eliminates entire human intervention along with providing Cloud Technology enabled products offered as "SaaS".

SEL is Leader in Construction Company's services business.

Total order book is Rs 80 Cr, it takes 2 years to complete the order and total pipeline is around Rs 90 Cr.

Products of Company:

PWIMS: Launched in year 2004, PWIMS provides a complete online solution to Public Works Department (PWD) for e-procurement and work management.

AutoDCR: Launched in year 2005, AutoDCR is software for automation of building layout plan approvals which is used by the government authorities in scrutinizing and automating the building permits based on the CAD based building plan which works on an online system and environment.

Opticon: Launched in year 2010.It caters to the needs of construction contractors and real estate companies by helping them in cost estimating, construction management and overall automation.

SEL has posted total revenue of 47.11Cr (FY17) and 23.75Cr (6 month ended FY18) and company is expecting good growth on YOY basis.

SoftTech Engineers received VC funding from Rajasthan Venture Capital Fund in the year 2014.It holds 26.77% stake in the company.

Objectives of Issue:

- Product development and enhancement costs - INR 6.62 crore
- Funding of the domestic and international product penetration and marketing costs - INR 5.98 crore
- Repayment/Pre-payment of certain unsecured borrowings - INR 2.03 crore
- General corporate purposes - INR 4.33 crore

Valuation:

The issue has been offered at a price band of Rs 70-80 per equity share. At the upper price band of Rs 80, the stock is available at price-to-earnings multiple of 14.55(x) to its FY18 annualized EPS of Rs 5.5 and stock is available at price-to-earnings multiple of 9.15(x) to its FY17 EPS of Rs 8.75.We have a "3 star" rating for the issue.

Source : Equity Bulls

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