Cospower Engineering IPO - Grey Market, GMP & Reviews

IPO Details

About Cospower Engineering Ltd

Cospower Engneering is a strong force to reckon in the field of power factor improvement and harmonic mitigation. We have a team of experts who have long experience in this field and are specialized in offering tailor-made solutions to harmonics and power factor related issues in an electrical system. We offer precise solutions taking into consideration both the technical and economical requirements. While reactive power compensation & power quality improvement remains the core competency of our company, we have diversified into related activities of substation construction and non -conventional power generation viz, solar power. We have executed several prestigious projects in these fields.

The company has an impressive reference list and we have earned the goodwill of all our clients. We take pride of having a huge list of repeat clients who have reposed their complete faith and trust in us for offering power factor and power quality management techniques. Since the incorporation of our company, we have supplied our products to various type of industries like Steel, Cement, Textile, Ferro Alloys, Foundries, Chemical & Fertilizer, Oil & Gas, Paper, Sugar, Glass, Infrastructure, OEMs, EPCs, Hospitality & Commercial etc. We are pleased to mention that our products and services have reached the shores of countries in Asia, Africa, America and Europe.

They firmly believe in the principle of ‘value for money’. Our commitment does not stop after satisfactory commissioning of the equipment. We take complete responsibility to ensure that our client enjoys the benefit of power saving and that our systems perform and meet the committed targets. Irrespective of the contractual guarantee, we assure that our products will give satisfactory performance for a period of at least 20 years if not more.Place your complete trust in Cospower Engineering Ltd. to provide you the best solutions in power. Your power problems are ours and we stand by our slogan ‘from engineering to projects”. We cherish taking challenges and you can depend on us for solutions to the most intricate problems pertaining to power.

Incorporated in 2010, Cospower Engineering Limited is engaged in the manufacturing of electrical panels, equipment mounting structure, harmonic filters, and substation. It is also involved in offering turnkey services such as commissioning, installation, comprehensive maintenance, supply, and testing of electric products. The company also purchases a few products from other companies.

Cospower Engineering has a trained team to deal with various turnkey services for safe & proper functioning of electrical distribution equipment. The company manufactures and supplies the products on a contract basis as per customer requirements.

The manufacturing unit of the company is located at Vasai, Maharashtra. The facility is well-equipped with the required machinery and equipment.

Company Promoters

Mr. Oswald Rosario Dsouza and Mr. Felix Shridhar Kadam are the promoters of the company.

Issue Details

To part finance its working capital (Rs. 1.175 cr.) and general corpus fund needs (Rs. 0.38 cr.), CEL is coming out with a maiden IPO of 400000 equity shares of Rs. 10 each at a fixed price of Rs. 51 per share to mobilize Rs.2.04 cr. The issue opens for subscription on 17.03.20 and will close on 19.03.20. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.67% of the post issue paid-up capital of the company. This issue is solely lead managed by Shreni Shares Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Shreni Shares Pvt. Ltd. is also acting as a market maker for this issue. CEL is spending Rs. 0.485 cr. (23.8%) of the total issue) for the entire IPO process. Thus the issue is fully structured with funding arrangements.

Having issued initial equity at par, CEL raised further equity for Rs. 127 per share in February 2020. It has also issued bonus shares in the ratio of 17 for 3 in December 2019. The average cost of acquisition of shares by the promoters is Rs. 12.91 per share. CEL's current paid-up equity capital of Rs. 1.10 cr. will stand enhanced to Rs. 1.50 cr. post this issue. Post this issue, CEL is looking for a market cap of Rs. 7.65 cr.

Financia Performance

For the last three fiscals, as per restated financial data, CEL has posted turnover/net profits of Rs. 9.57 cr. / Rs. 0.28 cr. (FY17), Rs. 8.61 cr. / Rs. 0.19 cr. (FY18) and Rs. 13.03 cr., / Rs. 0.52 cr. (FY19). Thus CEL has shown inconsistency in the top and bottom lines. For the first nine months of FY20, it has earned a net profit of Rs. 0.25 cr. on a turnover of Rs. 7.49 cr. Boost in net profit for pre-IPO year raises concern.

For the last three fiscals, CEL has posted an EPS of Rs. 3.69 and an average RoNW of 27.59%. The issue is priced at a P/BV of 1.81 based on its NAV of Rs. 28.21 as on 20.02.20 and at a P/BV of 1.49 based on post-issue NAV of Rs. 34.29.

If we annualize latest earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 23 making it aggressively priced offer.

Recommendation

CEL's financial performance is showing inconsistency. Thanks to shares issued at Rs. 127 that boosted its NAV. Based on the latest restated financial parameters, the issue is aggressively priced. There is no harm in giving this issue a miss.

Company Financials

Subscription Details

Allotment Status

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