Power Mech Projects (PMPL), an integrated power infrastructure services company, will open its initial public offering (IPO) on Aug. 7, 2015. The company is offering 4.27 million equity shares of face value of Rs 10 each under the public issue. It has fixed the price band at Rs. 615 to Rs. 640 a share. The issue comprises a fresh issue of 2.13 million equity shares.
The issue will constitute 29.02% of the fully diluted post issue paid-up equity share capital of the company. The bid will close on Aug. 11, 2015. The minimum bid lot is 20 shares and in multiples of 20 equity shares thereafter. The issue will be through the book building process.
ICICIdirect has recommended 'Subscribe' to IPO of Power Mech Projects. Commenting on the investment rationale, the stock broker said, ''PMPL is engaged in providing; comprehensive erection, testing and commissioning (ETC) of boilers, turbines and generators (BTG), balance of plant (BOP) works; civil works and (iii) operation & maintenance (O&M) services for thermal & hydro power plants in India and abroad. The topline has grown at a CAGR of 29.1% in FY11-15 to Rs 13.66 billion in FY15. In FY15, PMPL realised ~67% revenue from the ETC segment (Rs 9.10 billion), ~20% from the O&M segment (Rs 2.76 billion) and 13% from the civil works segment (Rs 1.75 billion).
On the bottomline front, the PAT has grown at a CAGR of 17.4% in FY11-15 to Rs 714 million in FY15 with five year average EBITDA margins at 14%. PMPL has strong experience of executing ETC projects with power majors like Bhel, NTPC, Tata Power and Adani Power among others. The company is also one of the prominent players in the O&M segment for private power producers including Adani, Tata and Vedanta group among others.
The company has priced its issue at a reasonable valuations of 13.2 x P/E on FY15 post issue diluted EPS of Rs 48.6. The debt gearing at PMPL is relatively lower with FY15 debt: equity at 0.7x and average cash flow from operations at ~ Rs 227 million over FY12-15. Recommend SUBSCRIBE for listing gains.''
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