Innovators Facade Systems IPO Review (BSE SME)

Innovators Facade Systems is coming out with anIPO) of 5,660,800 shares of Rs 10 each in a price band Rs 71 – 72 per equity share.The company is engaged in designing, engineering, fabrication and installation of façade systems.Innovators Facade Systems

Innovators Facade Systems IPO: Details

Issue Open: May 14, 2018 – May 16, 2018 \
Issue Size: 5,660,800 Equity Shares , Rs 40.75 Cr 
Retail Portion: 2,686,400 equity shares
Issue Price: Rs 71 – Rs 72 Per Equity Share 
Market Lot: 1600 Shares 
BRLM: Pantomath Capital Advisors Private Limited
Registrar; LINK INTIME 
Listing: BSE SME

About Innovators Facade Systems
  • Facades are those parts of the buildings which comprises both appealing looks and performances. Facades help in temperature management of the buildings owing to which these are popular among the builders and contractors.
  • The company is in the business of designing, engineering, fabrication and installation of façade systems.
  • Innovators Facade Systems executes end to end fabrication of our product i.e. from designing of facades to dispatching. Its product basket ranges from glazing /curtain walls , high end doors & windows , skylights , canopies, louver, stone cladding, metal cladding, roofing, & others. It offer facades which are resistant against UV rays, acidic rain, dust, noise and others.
  • Its manufacturing facility is situated at Wada, Maharashtra and is spread over 1,25,000 square feet. It has  5 branch offices across India to aid its operations.
  • The current manpower strength is 198 employees. 
Innovators Facade Systems : Financials
Rs. In Lacs
9M 2018 2017 2016 2015 2014
Revenues 12,588.61 10,023.51 9,243.30 7,660.97 7,798.01
Profit Bef Tax 872.02 282.6 255.89 473.67 398.1
Profit Aft Tax 575.49 186.01 167.64 316.76 269.24
Share Capital 1,028.58 1,028.58 1,028.58 1,028.58 600
Reserves  3,698.36 3,122.87 2,936.86 2,769.23 1,385.22
Net Worth 4,726.94 4,151.45 3,965.44 3,797.81 1,985.22
RONW % 12.17% 4.48% 4.23% 8.34% 13.56%
NAV 63.64      
Face Value 10
Post Issue Equity 1887
IPO Price 72
Price/Book Value 1.13
EPS Post IPO(ann) 4.07
PE – (ann) 17.71
CAGR Sales 3 Yrs 8.73%
CAGR PAT 3 Yrs -11.60%
Market Cap 13586.40 Lacs
Market cap / Sales 1.36
Innovators Facade Systems IPO: Issue Objectives
  • Upgradation and modernisation of existing manufacturing facility
  • Funding the working capital requirements of the Company
  • General Corporate Purpose
Innovators Facade Systems IPO: Pros
  • Innovators Facade Systems has a high concentration of orders in Maharashtra but has also been  executing projects in various states such as Goa, Haryana, Karnataka, Tamil Nadu and Uttar Pradesh.
  • Innovators Facade Systems has executed around 200 projects and had long standing reputed clients across the construction industry. 
  • Company has Marquee client base and repeat orders. It offers services for varied type of construction projects including residential buildings, commercial complexes, IT Parks, airports, retail and pharma projects. Its  list of clients include M/s. Hiranandani Realtors Pvt. Ltd., M/s. Relcon Infraprojects Limited, M/s. Larsen & Toubro Limited, M/s.Grauer & Weil (I) Limited etc. among others.
  • The company is modernizing  and upgrading its manufacturing facility.
  • The company is well poised to capitalise on growing demand in construction industry
Innovators Facade Systems IPO: Cons
  • Major portion of sales is from  operations in Maharashtra.
  • Company requires significant amounts of working capital.
  • High dependence on select clients. 
  • Any slowdown in the real estate sector could significantly decrease the demand for its products.
Innovators Facade Systems IPO: Assessment 
  • Global Facade market was estimated USD 180 billion in the year 2016. With rising real estate developments along with the introduction of advanced materials with higher strength and visually appealing texture,the global facades market is expected to reach USD 337.8 billion by 2025
  • The key factor that is expected to boost the façade industry is the need to reduce heating and air conditioning costs and achieve energy efficiency. Green buildings offer good prospects for this line of business.
  • After the  IPO, Promoters stake in the company  shall stand at 52.41 %.
  • On the fully diluted post IPO equity shares capital of Rs. 14.25 crore, the stock is being offered at a PE of  around 17 based on annualized 9 month  FY 17-18 earnings. If this rate of profitability can be maintained, the valuations are reasonable.  However it may be noted that in 9 months ended Dec 2017, there has been manifold jump in profits which sometimes can be a matter of concern too.
  • Ace investor Innovators Facade Systems has taken a 6% stake in company. Further Pantomath Sabrimala AIF Pantomath Sabrimala SME Growth Fund Series I and Pantomath Fund Managers LLP have also invested in the company. 
  • I intend to apply in Innovators Facade Systems as the issue is in a sector that has good prospects and the company could be a unique play and has backing of reputed investors.
  • This is  an SME issue that shall be listed on BSE  SME platform and compared to issues that list on BSE/NSE, such issues carry more risk.
Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk. 

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