1. Our Business: Spend 15 mins grasping the complexity, barriers, uniqueness, order book & capacity utilization
Eg. Atmastco: Specialized steel structures for power, mining, infra sectors with ₹740 Cr OB. A proxy to Thermal & Mining sectors, and not just any EPC player
Eg. Atmastco: Specialized steel structures for power, mining, infra sectors with ₹740 Cr OB. A proxy to Thermal & Mining sectors, and not just any EPC player
2. Objects of Issue: Look for planned capex & timeline, WC calculations (trade receivables hint at revenue growth). Debt repayment boosts bottomline
Eg. 1 Alpex: Capex to 1.2 GW from 450 MW
Eg 2. WTI Cabs Receivables suggested 401 Cr topline in FY24 which mgmt then delivered
Eg. 1 Alpex: Capex to 1.2 GW from 450 MW
Eg 2. WTI Cabs Receivables suggested 401 Cr topline in FY24 which mgmt then delivered
3. Risk Factors: Prioritize top 7-8 risks like material litigations, concentration risk, related party transactions. Assess in sector context—might already be priced in.
Eg. Tunwal: Potential ₹90 Cr litigation risk from Import Tax issue, though related to Group Co
Eg. Tunwal: Potential ₹90 Cr litigation risk from Import Tax issue, though related to Group Co
4. Financial Metrics: Evaluate Rev & PAT growth, Op cashflow, receivables (% of sales, ageing), ROE, ROCE vs peers
Eg. VVIP: Strong rev, bottomline, Op cashflow growth. High receivables, but as % of sales, better than larger peers like EMS, Wabag, indicating solid operations
Eg. VVIP: Strong rev, bottomline, Op cashflow growth. High receivables, but as % of sales, better than larger peers like EMS, Wabag, indicating solid operations
5. Basis for Issue Price: Compare PE, EBITDA & Sales multiple with peers
Eg 1 Aesthetik: At 20 PE, peers at 20-26 PE = capped upside
Eg 2 Aimtron: At 27 PE, peers at 70 PE; priced in rapidly
Eg 3 Firstcry: Nykaa at 8x Sales, FC at 3.5x
Valuation gap with growth is deadly combo!
Eg 1 Aesthetik: At 20 PE, peers at 20-26 PE = capped upside
Eg 2 Aimtron: At 27 PE, peers at 70 PE; priced in rapidly
Eg 3 Firstcry: Nykaa at 8x Sales, FC at 3.5x
Valuation gap with growth is deadly combo!
6. Promoters: Review their educational background, experience, and previous companies to gauge leadership quality
Eg. Aelea: Promoter is ex-Tata Agri CFO with deep sector experience. Sometimes this info lies on Linkedin / company's About Us page
Eg. Aelea: Promoter is ex-Tata Agri CFO with deep sector experience. Sometimes this info lies on Linkedin / company's About Us page
7. Extra Items: Check capital structure, pre-IPO investors, acquisitions, financial debt, and LM history
Eg. 1 Bansal Wires: Acquisition not fully reflected in FY24, indicating easy upside in FY25
Eg. 2 Prizor Viztech: Ace investor Gunaji as significant shareholder
Eg. 1 Bansal Wires: Acquisition not fully reflected in FY24, indicating easy upside in FY25
Eg. 2 Prizor Viztech: Ace investor Gunaji as significant shareholder
8. Final Touch: Listen to interviews—are promoters passionate, visionary, or aggressive? What revenue & PAT guidance do they provide?
Eg. ABS Marine: Promoters forecast 40% topline growth, plus extra 10-15% EBITDA growth in FY25, suggesting good value on FY25E projections
Eg. ABS Marine: Promoters forecast 40% topline growth, plus extra 10-15% EBITDA growth in FY25, suggesting good value on FY25E projections
Hope this helps you get started. It might take 1.5-2 hrs initially, but you'll get the hang of it.
Alternately, join our weekly Chatter with @manishlalwani9 and @tanmay_31_ where we covered the above topic, and break down RHPs of upcoming IPOs :)
Alternately, join our weekly Chatter with @manishlalwani9 and @tanmay_31_ where we covered the above topic, and break down RHPs of upcoming IPOs :)
Loading suggestions...