Saakshi Medtech and Panels IPO Review: Saakshi Medtech and Panels is coming up with its Initial Public Offering. The IPO will be open for subscription on September 25, 2023, and closes on September 27, 2023. This is an SME (Small and Medium-sized Enterprise) IPO, and the company is going to be listed on the NSE SME platform.
In this article, we will look at Sakshi Medtech and Panels IPO Review, analyze its strengths and weaknesses and see what unfolds.
Saakshi Medtech and Panels IPO – About the Company
Saakshi Medtech and Panels Limited was incorporated in 2009, the company provides comprehensive solutions i.e., design, process engineering and manufacturing including fabrication, assembly and testing facilities. The company has 3 manufacturing units situated in Pune with a total built-up area of approx. 9600 sq mtr.
The company is engaged in manufacturing Electrical Control Panels and Cabinets, Medical X-ray Systems, Fabrication works for locomotives, Wire harness division for electrical control panels and supply to the air compressor industry.
Electrical Control Panels: It designs, programs and assembles Electrical Control Panels and Cabinets comprising of microcontrollers, programmable logic controllers and SCADA systems, it is used in elevators, air compressors, the renewable energy industry, the oil & gas exploration industry, electrical vehicle charging stations etc. Major clientele for this product category include Atlas Copco (India) Ltd and Ge India Industrial Pvt Ltd, OTIS Elevator Company (India) Ltd, GE Oil & Gas India Pvt Ltd, Kirloskar Oil Engines Ltd, Kirloskar Pneumatic Co.Ltd.
Medical X-ray System: It comprises X-ray machine, Imaging system, Generator and mechanics. The major clientele for this product category includes Wipro GE Healthcare Pvt. Ltd, Philips India Limited and BPL Medical Technologies Private Limited.
Fabrication works for locomotives: Fabrication of High-level Assembly (HLA) is installed in locomotives which includes manufacturing and assembly of sensor boxes, battery boxes, sand boxes, dynamic brake weldments, resistor boxes, oil tank assemblies, snow plows etc. The main clientele is the Wabtec group of companies.
Wire Harness Division: wiring assembly or cable assembly is undertaken for transmission of signals or electrical power in the electrical cables or wires. The Majority of harnessed wire is used for captive consumption in manufacturing activities of Medical X-Ray systems or Electrical Control Panels and Cabinets.
The revenue breakdown of the company is as follows, Electrical Control Panel and Cabinets 69.75%, Fabrication Works 19.10%, Trading Components 6.21%, Medical X-ray System 2.63%, Wire Harness Division 1.56%, Others 0.72%. Out of total sales, Domestic sales were 97.42% and Export sales were 2.57%.
Saakshi Medtech and Panels IPO Review – Industry Overview
Indian Electrical equipment is the largest sub-sector followed by Plant equipment and earthmoving/ mining machinery. The electrical equipment market share in India is expected to increase by US$ 33.74 billion from 2021 to 2025, and the market’s growth momentum will accelerate at a CAGR of 9%.
The Government’s ‘Vision Plan 2030’ proposed an action plan to become a manufacturing and export hub for construction equipment and propel the development of world-class infrastructure in the country.
The Indian machine tool market size reached US$ 1.4 billion in 2022. The market is expected to reach US$ 2.5 billion by 2028, exhibiting a growth rate (CAGR) of 9.4% during 2023-28.
There are 750-800 domestic Medical Devices manufacturers in India, with an average investment of US$ 2.3-2.7 million and an average turnover of US$ 6.2-6.9 million. India is the 4th largest market for medical devices in Asia, among the top 20 markets for medical devices worldwide. India’s expected export of medical devices will reach ~ US$10 billion by 2025.
The Indian auto components industry, which accounts for 2.3% of India’s GDP currently, is set to become the 3rd largest globally by 2025. The electric vehicle (EV) market is estimated to reach Rs. 50,000 crore (US$ 7.09 billion) in India by 2025. The Indian market for medical equipment is predicted to increase to US$ 50 billion by 2025.
Saakshi Medtech and Panels IPO Review – Financials
If we look at the financials of Saakshi Medtech and Panels, it has reported assets worth 55.91 Cr in FY21 and 93.24 Cr in FY23, the company’s assets have grown by ~70% over the last 3 years, but a major part of its current assets consists of trade receivables and inventory which is not a good sign.
In FY21 and FY23 the company reported revenue of 60.22 Cr and 122.20 Cr, its revenue has more than doubled, accompanied by profits which have increased from 2.20 Cr to 12.38 Cr. Though the company can generate good revenue, it is only able to maintain net profit margins of ~10%.
In terms of return ratios, in FY23 it had a ROCE of 28.57% and a RoNW of 29.32%, these ratios indicate a good return and efficient use of the invested capital and resources of the company.
The company reported a Debt-to-equity ratio of 0.48 in FY23, which is good as the company has lower leverage in proportionate to its equity.
(Source: RHP of the company)
Competitors of Saakshi Medtech and Panels
The company has no listed peers as mentioned in the RHP of the company.
Strengths of the company
- The company offers a diversified range of products catering to various industries.
- The company has long-term and well established relationships with its customers.
- The company has in-house capabilities for designing and manufacturing precision engineering products.
- The company ensures quality assurance and is accredited by various agencies for its products.
- The company has a strong client base.
Weaknesses of the company
- Its business is dependent on sale of its products to certain key customers, loss of any key customers can affect its operations and profitability.
- The sector in which the company operates has low entry barriers, thereby increasing the competition in the market.
- The company’s manufacturing facilities are concentrated in one region and any adverse effects in the region can impact its operations.
- Inventories and trade receivables form a major part of the current assets.
- Pricing pressure from its customers can adversely affect its profitability.
Saakshi Medtech and Panels IPO Review – GMP
The shares of Saakshi Medtech and Panels traded at a premium of 30.93% in the grey market on September 22nd, 2023. The shares traded at ₹127. This gives it a premium of ₹30 per share over the cap price of ₹97.
Saakshi Medtech and Panels IPO Review – Key IPO Information
|IPO Size||₹45.16 Cr|
|Fresh Issue||₹45.16 Cr|
|Opening Date||September 25, 2023|
|Closing Date||September 27, 2023|
|Face Value||₹10 per share|
|Price Band||₹92 to ₹97 per share|
|Lot Size||1200 shares|
|Listing Date||October 6, 2023|
Promoters: Aniket Vijay Latkar and Chitra Vijay Latkar
Book Running Lead Managers: Hem Securities Limited
Registrar to the Issue: Bigshare Services Pvt Ltd
Objects of the Issue
The company intends to utilize the proceeds of the Issue to meet the following objects
- Repayment in full or in part of certain outstanding borrowings
- To meet working capital requirements
- General Corporate Purpose
In this article, we looked at the Saakshi Medtech and Panels IPO Review, through this article, we can see that the company has a diversified portfolio with a good client base and even though the company is generating good revenue it is not able to maintain good profit margins.
Saakshi Medtech and Panels IPO is an SME(Small and Medium-sized Enterprise) IPO, The minimum investment required and the Minimum/Maximum lot size for this IPO is ₹1,16,400(1200 shares).
What do you think the future holds for the company, do you believe it can shine in the future, Are you applying for this IPO? Let us know in the comments below.
Written By Bharat
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