Technofab Engineering is entering the capital market on
The company provides Engineering Procurement and Construction (EPC) services for Balance-of-Plant (BoP) packages for power, oil and gas, water and waste water treatment and other industrial and infrastructure projects. With over 38 years of turnkey engineering and construction experience, it has presence in both domestic and overseas markets.
Overseas business, mainly in
Promoters hold 51% stake in the company, which will reduce to 36.5% post-issue. Gammon
The issue proceeds will be used to fund company's future growth and expansion:
- Rs. 30 crores for long-term working capital needs
- Rs. 16 crores for purchase of construction equipment
- Rs. 5 crores each for establishing storage facility for construction equipment and training centre for employees
A dividend paying company, for FY10, it reported sales of Rs. 201 crores, EBITDA of Rs. 34 crores and net profit of Rs. 19 crores. In the last four years, from FY07 to FY10, sales have grown at a CAGR (compounded annual growth rate) of 49% and net profit at a CAGR of 193%. The EBITDA margin rose to 16.8% in FY10 from 5.1% in FY07, whereas net profit margin improved to 9.5% in FY10 from 1.2% in FY07.
Having achieved critical mass, the company, for FY10, reported an EPS of Rs. 25.5 on equity base of Rs. 7.5 crores. Its networth, as on
It presently has 41 ongoing projects, of which 4 are overseas. The order book, as on
The company is offering shares in single digit PE multiples of 9 and 9.4 times, at the lower and upper end of the price band, respectively. The price to book ratio (P/B) is 3.4 and 3.6 times respectively. Listed EPC players, bigger in size but having lower net profit margins, are presently ruling at PE multiples of 12 and above.
The company though small in size, looks like a good EPC player, which can grow well over the next few years. The issue looks reasonably priced and can be subscribed even at the upper end of the price band, of Rs. 240 per share.