What you must know about Winsol Engineers IPO?

Winsol Engineers Ltd was incorporated in 2015 to leverage the  science to deliver unmatched performance of natural resources and build the future of the next generation with energy sustenance. Winsol Engineers Ltd is a technology driven organization, that combines deep market sector insights and the ability to integrate safety and sustainability into the design and delivery of innovative solutions. Winsol Engineers Ltd is a leading EPC, Operations, and Consultancy company that is working in partnership with clients to deliver sustainable outcomes. The consultancy business focuses on design, engineering, project, consultancy, and management services.

Winsol Engineers Ltd has already completed over 490 projects till date and has over 2,000 MW of BOP (balance of plants) executed till date. It has an operational presence in 7 Indian states as of date. Some of the marquee clients of Winsol Engineers Ltd include Adani Power, Suzlon Energy Ltd, KP Energy Ltd, ReNew Power, Powerica, Sembcorp, INOX Wind, SETCO, NTPC Renewables (the renewable energy arm of NTPC), Aditya Birla Renewables, Envision, Terraform Global, Adani Renewables and many more. The company is based out of Jamnagar in the state of Gujarat.

Key terms of the Winsol Engineers IPO

Here are some of the highlights of the Winsol Engineers IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 06th May 2024 and closes for subscription on 09th May 2024; both days inclusive.
   
• The stock of the company has a face value of ₹10 per share and it is a book built issue. The price for the book building issue is set in the price band of ₹71 to ₹75 per share. Being a book built issue, the final price will be discovered within this band.
   
• Winsol Engineers IPO has only a fresh issue component and no offer for sale (OFS) portion. It must be remembered that the fresh issue portion is EPS dilutive and equity dilutive, but OFS is just a transfer of ownership and  hence it is not EPS or equity dilutive.
   
• As part of the fresh issue portion of Winsol Engineers IPO will issue a total of 31,15,200 shares (31.15 lakh shares approximately), which at the upper band IPO price of ₹75 per share aggregates to fresh fund raising of ₹23.36 crore.
   
• Since there is no offer for sale (OFS) portion, the fresh issue size will also double up as the overall IPO size. Therefore, the overall IPO size will also comprise of the issue of 31,15,200 shares (31.15 lakh shares approximately) which at the upper band IPO price of ₹75 per share will aggregate to overall IPO size of ₹23.36 crore.
   
• Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 1,58,400 shares. Spread X Securities Private Ltd will be the market maker to the issue. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs, post listing.
   
• The company has been promoted by Ramesh Pindariya, Amri Pindariya, Kashmira Pindariya Kashmira, Kashish Pindariya and Kishor Pindariya. The promoter holding in the company currently stands at 100.00%. However, post the fresh issue of shares in the IPO, the promoter equity holding share will get diluted to 72.99%.
   
• The fresh issue funds will be used by the company towards working capital requirement and for general corporate purposes. There are no capex requirement that the company is looking to fund at this point of time.
   
• Beeline Capital Advisors Private Ltd will be the lead manager to the issue, and KFIN Technologies Ltd will be the registrar to the issue. The market maker for the issue is Spread X Securities Private Ltd.

IPO allocation and minimum lot size for investment

Winsol Engineers IPO has already announced the market maker allocation at 1,58,400 shares as inventory for market making. Spread X Securities Private Ltd will be the market maker for the IPO. The net offer (net of market maker allocation) will be divided between the QIB investors, retail investors and the HNI / NII investors. The breakdown of the overall IPO of Winsol Engineers Ltd in terms of allocation to various categories are captured in the table below.

The minimum lot size for the IPO investment will be 1,600 shares. Thus, retail investors can invest a minimum of ₹120,000 (1,600 x ₹75 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 3,200 shares and having a minimum lot value of ₹240,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

Key dates to be aware of in the Winsol Engineers IPO

Winsol Engineers IPO opens on Monday, 06th May 2024 and closes on Thursday, 09th May 2024. The Winsol Engineers Ltd IPO bid date is from 06th May 2024 at 10.00 AM to 09th May 2024 at 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is 09th May 2024.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account. The credit of shares to the demat account on May 13th 2024, will be visible to investors under the ISIN Code – (INE0S3D01016). This allocation to the demat account is only applicable to the extent of the allocation of shares and if no allocations are made in the IPO, then no credit would be visible in the demat account.

Financial highlights of Winsol Engineers Ltd

The table below captures the key financials of Winsol Engineers Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

Here are some of the key takeaways from the financials of the company for the last 3 years.

• The revenues have grown at a robust pace in the last 2 years and in the latest year, the total sales has nearly tripled over FY21. That is robust growth in top line over the last two years. More importantly, this has been accompanied by sharp growth in the net profit levels as well as the net profit margins (PAT margins).
   
• While net margins of the company have been relatively volatile, they have stabilized in the latest year at close to 8%. PAT margins were subdued in the previous two years, but has reached a mor respectable level this year. The return on equity (ROE) has grown sharply to over 59.3% in the latest year, while the ROA is robust at 18.14% in FY23.
   
• The asset turnover ratio or the sweating ratio has been above 2.20X and that is a good sign that sales have picked up to cover the asset outlays. That is not surprising considering the low asset intensity of the business. However, this sweating ratio also gets magnified by the robust levels of return on assets (ROA).

The company has latest year EPS of ₹6.15 and we have not included the weighted  average EPS, since the previous year data is not exactly comparable. The latest year earnings are being discounted by the IPO price of ₹75 per share at 12-13 times P/E ratio. One has to look at the P/E ratio from two perspectives. Firstly, the 9-months EPS for FY24 is much higher at ₹8.04, which translates into full year extrapolated EPS of ₹10.72 per share, which now makes the valuation more compelling at around 7X P/E ratio. This makes the valuations look a lot more reasonable. The other story one must understand here is that Winsol Engineers Ltd provides services to the green energy sector where the demand is likely to grow at a geometric pace. It is an asset-light business model, so the investor does not have to worry much about dilution of margins. One must look at a time frame of around 1 year for this IPO to yield returns; and also, be willing to take on the novelty risk in this case.