What You Must Know About Sathlokhar Synergys IPO: Price Band ₹133 to ₹140 Per Share

About Sathlokhar Synergys E&C Global Ltd

Sathlokhar Synergys E&C Global Limited, established in 2013 and formerly known as Lohats Ventures Private Limited, specializes in engineering, procurement and construction (EPC) services. They work on building and infrastructure projects,  warehousing, including industrial, solar projects, commercial, institutional, hotels, pharmaceutical, hospitals, resorts and villas. They also handle mechanical, electrical and plumbing installations.  They also bid for government EPC projects and are authorized dealers of TATA Power Solar Systems Ltd., offering installation, sales, commissioning, and maintenance services for solar power projects.

Objective of the Issue

The funds raised from the IPO will be used for:

•    Working Capital

•    General Corporate Purposes

Financial Highlights of Sathlokhar Synergys E&C Global IPO

Here are some of the highlights of the Sathlokhar Synergys E&C Global IPO

•    The subscription period for Sathlokhar Synergys E&C Global's issue opens on 30 July 2024 and closes on 1 August 2024.

•     Sathlokhar Synergys E&C Global is offering ₹10 face value shares. The price for these shares will be between ₹133 - ₹140.

•    Sathlokhar Synergys E&C Global IPO includes a fresh issue of 66.38 lakh new shares at ₹140 per share, raising ₹92.93 crores, with no Offer for Sale.

•     The company has been promoted by Ms. Sangeethaa Thiyagu, Mr. G Thiyagu and Mr. Dinesh Sankaran Currently Sathlokhar Synergys E&C Global promoters hold 86.49% of the company's shares. After issuing new shares, their ownership percentage (%) will drop.

•    The company will use fresh issue funds for general corporate needs and working capital requirements.

•     GYR Capital Advisors is the lead manager for Sathlokhar Synergys E&C Global IPO. Purva Sharegistry India is the registrar and Giriraj Stock Broking is the market maker.

Key Dates of Sathlokhar Synergys E&C Global IPO

The IPO for Sathlokhar Synergys E&C Global will be open for subscription from July 30, 2024, to August 1, 2024. The allocation of shares to investors will be finalized on 2 August 2024. Refunds for unsuccessful applications will be processed on August 5, 2024, and shares will be credited to the investor’s demat accounts on the same day. The shares will start trading on the NSE SME Platform on August 6, 2024.

Sathlokhar Synergys E&C Global Issue Details/ Capital History

Sathlokhar Synergys E&C Global is launching its maiden book-building IPO of 6,638,000 equity shares at a price band of ₹133 - ₹140 per share, aiming to raise ₹92.93 crores. The issue opens on July 30, 2024, and closes on August 01, 2024. The minimum application is for 1,000 shares. After allotment shares will be listed on NSE SME. IPO constitutes 27.50% of the post IPO paid up capital. Proceeds will be used for ₹73.00 crores in working capital and the remainder for general corporate purposes. GYR Capital Advisors Pvt. Ltd. is the lead manager, Purva Sharegistry (India) Pvt. Ltd. is the registrar, and market makers Giriraj Stock Broking Pvt. Ltd. and Intellect Stock Broking Ltd. will subscribe to 9.04% of the total issue size.

IPO Allocation and Minimum Investment Lot Size

Net offer from Sathlokhar Synergys will be distributed among Qualified Institutional Buyers (QIBs), retail investors, and High Net Worth Individuals (HNIs) / Non-Institutional Investors (NIIs). The breakdown of the overall IPO of Sathlokhar Synergys E&C Global in terms of allocation to various categories are captured below.

Data Source: RHP

Retail investors can invest in the IPO by purchasing a minimum of 1,000 shares which requires an investment of ₹1,40,000. The maximum investment for retail investors in this IPO is capped at this amount. HNIs and NIIs are required to invest in a minimum of 2 lots, equating to 2,000 shares with a minimum investment of ₹2,80,000. Qualified Institutional Buyers and High Net-Worth Individuals (HNIs/NIIs) have no maximum limit and can invest any amount. The table below outlines the various lot sizes available for different investor categories.

About Sathlokhar Synergys E&C Global

Sathlokhar Synergys E&C Global Limited, established in 2013 and formerly known as Lohats Ventures Private Limited, specializes in engineering, procurement and construction (EPC) services. They work on building and infrastructure projects,  warehousing, including industrial, solar projects, commercial, institutional, hotels, pharmaceutical, hospitals, resorts and villas. They also handle mechanical, electrical and plumbing installations.  They also bid for government EPC projects and are authorized dealers of TATA Power Solar Systems Ltd., offering installation, sales, commissioning, and maintenance services for solar power projects. The company employs 118 people across accounting and finance, human resources, administration, engineering and operations, procurement and material management, and safety and security departments.

Strengths

•    Experienced Leadership: The company's promoters have over 20 years of infrastructure experience, supported by a strong management team of qualified professionals.

•    EPC Turnkey Projects: With over 11 years in EPC turnkey projects, the company has successfully completed projects in construction, solar, and MEP works.

•    Strong Order Book: As of April 2024, the company’s order book is valued at ₹669.78 crores, reflecting its ability to secure projects and future revenue potential.

•    Timely Execution: The company has a solid track record of completing projects on or ahead of schedule, due to skilled manpower, efficient equipment and an integrated in house approach.

Risks

•    Regional Concentration: The company relies heavily on Tamil Nadu and Karnataka for revenue, which exposes it to regional economic and regulatory risks.

•    Working Capital Intensity: The company needs substantial funding for its long working capital cycle due to lengthy project implementation and large margin requirements.

•    Litigation Involvement: Ongoing legal issues involving the company and its key personnel could drain resources and impact operations.

•    Client Concentration: Revenue is dependent on a few major clients losing any could harm financial performance.

•    Supplier Dependency: Heavy reliance on a few suppliers means losing one could disrupt operations and affect profitability.

Financial Highlights: Sathlokhar Synergys E&C Global

The table below captures the key financials of Sathlokhar Synergys E&C Global for the last 3 completed financial years.

Data Source: RHP

Sathlokhar Synergys E&C Global Limited has grown over the past three financial years. In FY24, the company's assets increased to ₹10,482.58 lakh from ₹4,782.28 lakh in FY23 and ₹4,627.77 lakh in FY22. 

Revenue also saw a substantial rise, reaching ₹24,732.09 lakh in FY24, compared to ₹8,715.66 lakh in FY23 and ₹5,851.51 lakh in FY22. This growth is reflected in their Profit After Tax (PAT), which jumped to ₹2,621.43 lakh in FY24, up from ₹545.55 lakh in FY23 and ₹87.87 lakh in FY22. 

The company's net worth also improved rising to ₹4,053.08 lakh in FY24 from ₹1,431.65 lakh in FY23 and ₹886.10 lakh in FY22. Additionally, reserves and surplus increased to ₹3,853.09 lakh in FY24, up from ₹1,231.66 lakh in FY23 and ₹686.11 lakh in FY22. 

The company's total borrowing decreased to ₹7.92 lakh in FY24 from ₹612.19 lakh in FY23 and ₹677.14 lakh in FY22, indicating better financial health and reduced reliance on external debt.