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Emmforce Autotech Limited is a manufacturer and exporter of drivetrain parts for niche vehicles. Emmforce Autotech IPO is coming with an issue of Rs 53.90 crores. The issue is entirely a fresh issue of 55 lakh shares.

About Emmforce Autotech

• Emmforce Autotech Limited was founded in 2012 and is a manufacturer and exporter of drivetrain parts for niche vehicles.
• Company is engaged in the business of manufacturing niche automotive drivetrain parts like Differential Housings, Differential Lockers, Differential Covers,4WD Locking Hubs, Spindles, Axles & Shafts, Gear Shifters, Yokes, Differential Spools, Differential Tools and various differential forged / cast parts primarily for 4-wheel Drive and performance racing vehicles.
• The company has been engaged in exports ever since its inception. It has established itself as a manufacturer of Drivetrain Parts in India and is one stop shop for quality cost competitive drivetrain parts and providing out-of-the-box solutions to its customers through designing and development of complex / special parts.
• Plant is located at Baddi, Himachal Pradesh. Majority of raw material is manufactured in India and procured locally. All the raw material, tools and consumables that the company needs are easily available from reliable manufacturers / suppliers.
• Mr. Ashok Mehta, Mrs. Neetu Mehta and Mr. Azeez Mehta are the company’s promoters.

Financials: Emmforce Autotech IPO

Emmforce Autotech IPO: Anchors

Emmforce Autotech IPO: Salient Points

• It enjoys niche place in 4WD locking hub equipments which contributes over 45% in total turnover. 
• Company derives over 98% revenue from exports. 

• Emmforce has recently invested in Emmforce Mobility Solutions Pvt. Ltd. (EMSPL) by buying 80% of its shareholding from Emmbros Automotives Pvt. Ltd. at book value thus making it subsidiary of Emmforce on December 19, 2023. EMSPL is actually situated in the premises of Emmforce only and was setup last year for manufacturing of forgings and Rotary Tiller Blades. The rotary tiller blade plant highly automated through robots and transfer presses and is one of its kind wherein majority of the key equipment are Japanese and being procured from the industry leaders. The plant is going to be in commercial production before February, 2024.

• The Net Proceeds are proposed to be utilized in the manner set forth below for the objectives of the IPO:

• PRODUCT WISE REVENUE DISTRIBUTION

• Company’s Client List includes names like Sonalika International, Dorman., TAFE, Indo Farm, Swaraj, Ford, Yanmar etc.

• Strong R&D and automation capabilities inhouse gives them an edge over competition
• Diverse product range of drivetrain parts manufactured under one roof gives us a market edge from most of the competitors.
• A number of the parts manufactured by them are niche with very limited competition.
• As per management , the passion to develop critical parts drove Emmforce team to develop Hydraulic Gear Pumps for Dump Trucks, Heavy Duty Trucks, Tractors, hydraulic lifting equipment etc. Emmforce today produces hydraulic gear pumps up to 200 LPM in its fully integrated complete CNC controlled manufacturing and automated assembly shop.
• Peers: company has listed Divgi Torq as their listed peer. It is trading at a P/E of 57.7x and market cap/sales of 9.69.
• Emmforce Autotech IPO is being offered at a PE of 46x (2023 earnings) and 23x ( 2024 annualized earning) . Market cap / Sales of 4.1x.
• I intend to apply in Emmforce Autotech IPO. It has strong R&D focus and ability to develop niche automotive components for players in developed countries.
• GMP as reported on social media has been Rs. 60.
• Beeline Capital Advisors Pvt Ltd is the Lead Manager to the issue. It has a fair to good record. Past issues handled by them include TAC Infosec Limited IPO, KP Green Engineering Limited, Pratham EPC Projects, V R Infraspace, Rudra Gas Enterprise Limited, Fonebox Retail Limited, Konstelec Engineers, Australian Premium Solar, Indifra Limited, Benchmark Computer Solutions, Sheetal Universal Limited, Rajgor Castor Derivatives, Arvind and Company Shipping Agencies, Karnika Industries Limited, Hi-Green Carbon Limited, Kody Technolab Limited, Chavda Infra Limited, Vinsys IT Services Limited,Ahasolar Technologies, Pentagon Rubber, Remus Pharmaceuticals, Sotac Pharmaceuticals, RBM Infracon Limited, Transvoy Logistics, Dev Labtech, Viviana Power Tech, Vital Chemtech, Aristo Bio-Tech and Lifescience, Viaz Tyres, Vertexplus Technologies etc
• SME IPO are much more risky and volatile than mainboard IPOs.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.