Here are the Brokerage and Research Reports
Recommendation on the IPO of Power Mech ProjectsAmbit Capital Said,
Power Mech (PMPL) is a market leader (38% share over FY11-15) in the erection, testing and commissioning of BTG; it is a favoured sub-contractor of BHEL . PMPL’s key competitive edge is its expertise in erecting super-critical equipment, which is complex in nature, given the high number of components to be assembled. BHEL and other large players do not enter this niche Rs80bn opportunity as matching costs will be difficult; PMPL’s FY15 per employee cost was Rs0.5mn vs BHEL’s Rs1.3mn. PMPL’s revenue CAGR of 29% over FY11-15 and average EBITDA margin/RoE of 14.0%/30% are impressive. Revenue visibility is high due to the book-to-bill ratio of 2.9x as of FY15 and rising share in O&M (high margin and high ROIC) of operational power plants. Valuation of 13.2x FY15 P/E at the upper band of Rs640 is attractive, given high RoE and strong order book. Compared with its peers, it is priced at a 43% discount despite its superior FY15 RoE of 23% vs peers’ 9% and FY13-15 EPS CAGR of 18% vs peers’ -14%. Recent worsening in cash conversion remains a key risk.
Hem securities Analyst Vineeta Manhot recommends,
The company is bringing the issue at price band of Rs.615-640 at price-earnings multiple of 12.6-13.1 on post issue FY15EPS of Rs.48.54. Considering the strong client base, robust order book, efficient execution and firm fundamentals; the issue looks attractively priced. Hence we recommend investor to SUBSCRIBE the issue.
CanBank Securities has the following Recommendation,
At the IPO price band of Rs.615-640, the stock is available at 12-13x on FY15 on EPS of 48.1. Company is fairly valued as compared to its peers at the current IPO price. However, investors may apply for a good return in the long term or buy on dips after listing as it is basically low risk & low to moderate return kind of stock based on the valuations as above.
