H.M. Electro Mech IPO: Comprehensive Analysis and Investment Insights
H.M. Electro Mech Limited is set to launch its Initial Public Offering (IPO) on 24th January 2025. This IPO has garnered significant attention from investors due to its promising growth trajectory and its listing date, tentatively set for 31st January 2025. With a fresh issue of 36,99,200 shares valued at Rs 27.74 crore, this IPO offers an excellent opportunity for investors to explore the potential of a growing company in the engineering and construction sector. This detailed analysis will provide insights into the company, its financials, risks, and key factors influencing its IPO performance.
Overview of H.M. Electro Mech IPO
Key Dates and Details
The IPO will open for bidding on 24th January 2025 and close on 28th January 2025. The face value of the shares is Rs 10 each, with the price band fixed at Rs 71 to Rs 75 per share. Cameo Corporate Services Limited serves as the registrar for this IPO, overseeing the allotment status and refund process. Investors can access the Red Herring Prospectus (RHP) for further details about the company’s financial position and growth strategies.
Important Dates:
Event | Date |
---|---|
IPO Open Date | 24th January 2025 |
IPO Close Date | 28th January 2025 |
Allotment Date | 29th January 2025 |
Refund Initiation | 30th January 2025 |
Listing Date | 31st January 2025 |
IPO Highlights
- Issue Size: 36,99,200 shares worth Rs 27.74 crore.
- Price Band: Rs 71 to Rs 75 per share.
- Lot Size: 1,600 shares (minimum investment of Rs 1,20,000).
- Issue Type: Book-Built Issue.
- Listing At: BSE & SME.
Reserved Quotas:
Investor Categories | Reserved Quota (%) |
---|---|
Retail Investors | >35% |
Non-Institutional Investors (NIIs) | >15% |
Qualified Institutional Buyers (QIBs) | <50% |
Financial Performance of H.M. Electro Mech Limited
Revenue and Profit Growth
H.M. Electro Mech Limited has demonstrated steady financial growth over recent years. For FY2023-24, the company reported a revenue increase of 15.37%, from Rs 101.67 crore to Rs 117.30 crore. The Profit After Tax (PAT) surged by 26.61%, rising from Rs 6.01 crore to Rs 8.19 crore.
Key Financial Metrics:
Metric | FY2023-24 (in crore) | FY2022-23 (in crore) |
---|---|---|
Revenue | 117.30 | 101.67 |
PAT | 8.19 | 6.01 |
Net Worth | 32.27 | 24.08 |
Total Assets | 85.99 | 64.08 |
Borrowings | 7.33 | 6.40 |
The company’s consistent financial performance suggests strong operational efficiency and growth potential.
Key Technical Indicators
- PE Ratio: 9.16 (pre-IPO) | 15.39 (post-IPO).
- EPS (Earnings Per Share): Rs 8.19 (pre-IPO) | Rs 4.87 (post-IPO).
- PB Ratio (Price-to-Book): 2.32.
- Return on Equity (ROE): 29.06%.
- Debt-to-Equity Ratio: 0.38.
- PAT Margin: 6.99%.
The pre-IPO PE ratio of 9.16 indicates that the company is relatively undervalued compared to its peers, providing an attractive entry point for investors.
Peer Comparison:
Company Name | Revenue (in crore) | PE Ratio | EPS (in Rs) | ROE (%) | NAV (in Rs) |
---|---|---|---|---|---|
H.M. Electro Mech | 117.30 | 9.16 | 8.19 | 25.37 | 32.27 |
HEC Infra Projects | 28.18 | 20.88 | 4.65 | 13.53 | 36.42 |
KSB Ltd. | 544.20 | 52.36 | 12.86 | 17.48 | 77.63 |
Larsen & Toubro Ltd | 68,040.00 | 35.65 | 98.35 | 14.90 | 648.88 |
H.M. Electro Mech exhibits a competitive edge with a lower PE ratio and higher ROE compared to several industry players, making it an attractive investment opportunity.
Strengths and Opportunities
- Engagement in Turnkey Projects: The company specializes in installation, testing, and maintenance of pumping machinery, catering to a diverse clientele, including municipal corporations and government entities.
- Geographical Reach: H.M. Electro Mech operates across multiple states, including Rajasthan, Maharashtra, Karnataka, and Punjab.
- EPC Projects: Entry into EPC (Engineering, Procurement, and Construction) projects, such as water supply and cross-country pipelines, highlights its growth ambitions.
- Order Book: An impressive order book worth Rs 41,034.50 lakh ensures revenue visibility over the coming years.
Risks and Concerns
- Reliance on Rent-Free NOC: The company’s dependence on rent-free NOC for its registered office poses operational risks.
- Inventory Management Issues: A decline in inventory turnover ratio indicates inefficiencies in managing inventory, which could impact profitability.
- Regional Revenue Concentration: Limited diversification in revenue streams may expose the company to geographical risks, particularly in Gujarat and Rajasthan.
- Project Delays: Any delay or cancellation of projects could adversely affect cash flows and profitability.
H.M. Electro Mech IPO Grey Market Premium (GMP)
Grey Market Premium (GMP) provides an estimate of potential listing gains. As of 23rd January 2025, the GMP stands at Rs 25, suggesting an estimated listing price of Rs 100 per share and a potential listing gain of 33.33%.
Date | GMP (in Rs) | Estimated Listing Price (in Rs) | Listing Gain (%) |
---|---|---|---|
23-01-2025 | 25 | 100 | 33.33% |
22-01-2025 | 25 | 100 | 33.33% |
21-01-2025 | 15 | 90 | 20% |
IPO Objectives
The funds raised through the IPO will be allocated as follows:
- Working Capital Requirements: A significant portion will address the company’s working capital needs, ensuring smooth operations and improved inventory management.
- General Corporate Purposes: The remaining funds will be utilized for business expansion, marketing initiatives, and funding subsidiaries.
Should You Invest in H.M. Electro Mech IPO?
Pros:
- Robust financial growth with consistent revenue and profit increases.
- Competitive PE ratio and strong ROE compared to peers.
- Diversified project portfolio and geographical presence.
Cons:
- High reliance on rent-free NOC, posing operational risks.
- Declining inventory turnover ratio indicates inefficiencies.
- Regional revenue concentration may limit growth opportunities.
Investment in H.M. Electro Mech IPO could yield significant returns, especially for long-term investors. However, potential risks should be carefully evaluated before making a decision.
How to Apply for H.M. Electro Mech IPO
Follow these steps to apply:
- Research the IPO details, including price band, lot size, and GMP updates.
- Open a demat account with a broker offering IPO application services.
- Navigate to the IPO section, select H.M. Electro Mech IPO, and place a bid.
- Approve the payment mandate and monitor allotment status.
Final Thoughts
H.M. Electro Mech IPO offers a promising opportunity for investors seeking exposure to the engineering and construction sector. The company’s strong financial performance, robust order book, and growth potential make it an attractive investment. However, risks such as reliance on rent-free NOC and inventory management inefficiencies should be considered.
Conduct thorough research and consult a financial advisor before investing to ensure informed decision-making. With the listing date set for 31st January 2025, this IPO could pave the way for substantial returns in the medium to long term.
Disclaimer: The information provided here is for educational purposes only. Investors should consult financial experts and conduct their own due diligence before making investment decisions.