There are 3 more IPO’s lined-up this week. Pune based, Mitcon Consultancy and Engineering Services (MCES) IPO is going to hit the market today. MCES is going to list on NSE Emerge Index SME platform. Crisil has rated it as 4/5 IPO grade indicating superior fundamentals. In this article, I would help to analyze Mitcon Consultancy IPO and whether it would be good to invest or not?
About Mitcon Consultancy and Engineering Services IPO
Mitcon Consultancy is engaged in the business of providing consultancy in power generation viz. Wind, solar, small hydro, biomass, bagasse, coal and co-generation besides providing consultancy services in carbon credit, energy conservation, industrial infrastructure, environmental engineering, food processing, sugar, textiles, chemicals, market research etc.
Issue details of Mitcon Consultancy and Engineering Services IPO
- IPO opens: 15-Oct-2013
- IPO closes: 18-Oct-2013
- Face value: Rs 10
- Issue price: Rs 61
- Minimum bid: 2,000 shares for retail investors and in multiples of 2,000 shares thereof
- Minimum investment: Rs 122,000
- Lead managers: IDBI Capital Market Services Ltd
- Listing: NSE Emerge Index
- Download Prospectus of Mitcon Consultancy IPO here
The purpose of the IPO: The funds would be used for the following purposes.
- Acquisition of property for setting up new offices in Bangalore, Hyderabad, Chennai, New Delhi and Ahmedabad and environment testing laboratory in Bangalore and Ahmedabad;
- Purchase of office equipment for new offices
- Purchase of furniture and fixtures and carrying out interior designing for the new offices and the environment testing laboratory
- Purchase of equipment for environment testing laboratory at Ahmedabad and Bangalore
- General Corporate Purposes; and
- To meet issue related expenses.
- The company has posted revenue of Rs 4917.89 Lakhs for the year ended Mar-2011 and 4,819.58 Lakhs for the year ended Mar-2013.
- The company has posted profits of Rs 1,090.02 Lakhs for the year ended Mar-2011 and 997.21 Lakhs for the year ended Mar-2013.
Reasons to invest Mitcon Consultancy and Engineering Services IPO
- Crisil has given this IPO grade of 4/5 indicating superior fundamentals.
- High margins of 20% for the year ended Mar-2013. All SME IPO’s which came earlier were earning 2% to 4% margins only.
- Does business in diversified sectors.
Reasons not to invest in Mitcon Consultancy and Engineering Services IPO
- No major growth in revenues in last 3 years.
- Profits are in a declining trend. It posted 22% margins 3 years back and currently the margins are at 20.69%.
- The IPO’s listed on NSE Emerge are yet to create confidence among investors.
- The investment required is Rs 1.22 lakhs.
Recommendation / Investment strategy:
Average EPS for the last 3 years is Rs 12.57. Post this issue, the EPS works out to Rs 8. At issue price of Rs 61, this translates to a P/E ratio of 7.5x. This looks expense for such SME IPO.
Crisil have rated it as 4/5 IPO grade indicating superior fundamentals.
Though there is no major growth in revenues in last 3 years, considering the strong Crisil rating about fundamentals and high margins one can subscribe to this IPO.
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Mitcon Consultancy and Engineering Services IPO
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