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Salasar Techno Engineering Ltd (STEL) is an ISO 9001: 2008, 14001: 2004 and
18001: 2007 certified company addressing the changing needs of the customers in
Infrastructure space. STEL is a provider of customised steel fabrication and
infrastructure solutions in India for Telecommunication Towers, Transmission Towers
& Substation Structures and Solar Module Mounting Structures. The objective of Company is to supply
customized, high-quality material to its impressive and ever-growing clientele. It provides 360 degree
solutions by carrying out engineering, designing, fabrication, galvanization and deployment. Companys
products include Telecommunication Towers, Power Transmission Line Towers, Smart Lighting Poles,
Monopoles, Guard Rails, Substation Structures, Solar Module Mounting Structures and Customized Galvanized
& Non-galvanized steel structures. STELs services include providing complete engineering, procurement and
control for projects such as Rural Electrification, Power Transmission Lines, and Solar Power Plants.
The company recently increased its installed annual manufacturing/fabrication capacity from 50,000 MT to
1,00,000 MT with the installation of new Galvanizing Plant at its wholly owned subsidiary Salasar Stainless
Limited. It has also undertaken EPC Turnkey projects for solar mounting structures for clients.
The Company has a strong customer profile and caters to the leading names in India. These relationships have allowed is to carry out massive touchstone
projects such as establishing Transmission and Substation for U.P. Power Transmission Corporation Ltd, Tata Power Delhi Distribution Ltd., Unitech Power
Transmission Ltd., executing orders of Telecom Towers including erection of towers for ATC India Tower Corporation Pvt Ltd, Indus Towers Ltd, ATC
Telecom Infrastructure Pvt Ltd, Bharti Infratel Ltd, Reliance Jio Infocomm Ltd, Tower Vision India Pvt Ltd, Viom Networks Ltd, and supplying Solar Mounting
Module Structures for Jakson Engineers Ltd, Prayatna Developers Pvt Ltd, Welspun Renewables Energy Pvt Ltd., Insta Power Energy Efficiency Pvt Ltd etc.
The company has two manufacturing units.
To part finance its working capital, margin money and general corpus fund needs, the company is coming out with a maiden IPO of 3321000 equity share of
Rs. 10 each at a fixed price of Rs. 108 per share to mobilize Rs. 35.87 crore. Issue opens for subscription on 12.07.17 and will close on 17.07.17. Minimum
application is to be made for 125 shares and in multiples thereon, thereafter. The net issue will constitute 25.01% of the post issue paid up equity share
capital of the company. Post allotment, shares will be listed on BSE and NSE. Issue is solely lead managed by Sarthi Capital Advisors Pvt Ltd and Bigshare
Services Pvt Ltd is the registrar to the issue. From incorporation till January 2007 it issued equity shares at par. Thereafter it raised further equity in a price
range of Rs. 30 to Rs. 200 per share during February 2007 to March 2015. It has also issued bonus shares in the ratio of 1 for 1 in June 2016. Post issue its
current paid up equity capital of Rs. 9.96 crore will stand enhanced to Rs. 13.28 crore.
On performance front, the company has (on consolidated basis) posted turnover/net profits of Rs. 292.57 cr. / Rs. 6.26 cr. (FY14), Rs. 330..36 cr. / Rs.
6.32 cr. (FY15), Rs. 310.20 cr. / Rs. 11.18 cr. (FY16) and Rs. 384.64 cr. / Rs. 20.74 cr. (FY17). For last three fiscals, it has posted an average EPS of
Rs.15.17. For FY 17 it has posted an EPS of Rs. 20.83. If we attribute latest earnings on fully diluted equity post issue then asking price is at a P/E of 6.8
plus and at a P/BV of 1.12. Last three fiscals average RoNW is 17.36 %. Peers are trading at a P/E of 18 plus. Thus issue is pricing is reasonable.
On merchant bankers front, this is the first IPO for main board from its stable. It brought 28 SME IPOs since 2012 and out of last 10 IPOs listings, only 1
IPO opened below the offer price.
Conclusion: Issue is reasonably priced. But its initial listing (due to offer size below Rs. 250 crore) will take place in T group, which will
remove speculative aspect for the issue. However, investors may consider investment for medium to long term.
Dilip Davda (SEBI registered Research Analyst-Mumbai), a freelance journalist for more than 25 years, is a stock market analyst and
news article writer. Since 1985, he has contributed to print media, electronic media and often appears on TV channels as visiting stock
analyst. His articles are regularly publishes in Corporate India, Smart Investment (English and Gujarati weekly published from Ahmedabad),
Free Press Journal and many other news papers & magazines. He is also a visiting stock analyst on DD News TV Channel.
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