Energy-Mission Machineries (India) Limited IPO Review
Energy-Mission Machineries (India) Limited stands as a paragon of precision and innovation in the realm of sheet metal machinery. With its inception in 1999, the company has carved a niche for itself in the industry, offering a blend of craftsmanship and technological prowess. The city of Ahmedabad, known for its rich industrial heritage, serves as the cradle for this enterprise, fostering a conducive environment for manufacturing excellence.
The company's journey began under the aegis of a visionary promoter family, whose foresight and entrepreneurial spirit laid the foundation for a business that would go on to redefine industry standards. The inception of Energy-Mission Machineries was driven by a singular ambition: to create a suite of products that would not only meet but exceed the expectations of the sheet metal processing industry.
Over the years, Energy-Mission Machineries has expanded its horizons, establishing a sprawling 260,000 sq. ft state-of-the-art manufacturing facility, which stands as a testament to the company's commitment to delivering top-notch products on time. This expansion was part of a strategic move to go public in the financial year 2023-2024, a decision that promises to elevate the company's capabilities, enabling further enhancement of its manufacturing facilities, fostering self-reliance, and ensuring greater trust and transparency with stakeholders.
With a quarter-century of production expertise, Energy-Mission Machineries boasts the largest manufacturing facility in India for sheet metal processing machinery. The company takes pride in its in-house production of machine parts, ensuring quality and reliability, as well as the ability to meet customer demand promptly. The incorporation of advanced technology solutions into their machines ensures that customers have access to the latest advancements in the field.
The company's commitment to innovation is evident in its continuous product improvements and the development of unique solutions to meet the evolving demands of the industry. The exceptional quality of their machines is a hallmark of Energy-Mission Machineries, offering products that are reliable, durable, and built to last. Their high-tech machines are equipped with the latest features and capabilities to enhance productivity and precision.
The company caters to a wide array of industries and has a vast market presence, making it a versatile and trusted partner for businesses in various sectors. They offer high-quality products at competitive pricing, providing customers with a desired value for money-advantage. At its core, Energy-Mission Machineries is dedicated to making a positive impact on the planet and the communities it serves, with sustainability being an integral part of its business philosophy.
Energy-Mission Machineries (India) Limited is not just a company; it is a beacon of innovation and quality in the sheet metal machinery industry. From its humble beginnings in Ahmedabad to its current status as a leader in the field, the company continues to push the boundaries of what is possible, driven by a relentless pursuit of excellence and a commitment to serving the needs of its customers and the wider community.
Competitive Strengths
Energy-Mission Machineries (India) Limited (EMML) stands out in the industrial machinery sector with its robust competitive strengths that have positioned it as a formidable player. This detailed analysis explores the various facets that contribute to EMML's market edge.
Revenue, Sales, and Profit
Energy-Mission Machineries (India) Limited has shown a significant growth trajectory in its financial performance. For the financial year ending March 31, 2023, the company reported a revenue increase of 27.31% compared to the previous year. This growth is a testament to the company's expanding market presence and operational efficiency. The profit after tax (PAT) for the same period rose impressively by 135%, indicating not only increased revenue but also enhanced profitability and effective cost management strategies. The company's operational success is reflected in its decision to go public with an IPO, aiming to raise ₹41.15 crores through a fresh issue of 29.82 lakh shares. The price band for the IPO is set at ₹131 to ₹138 per share, with a minimum lot size of 1000 shares, making the minimum investment for retail investors ₹138,000. The company's robust financial performance and its strategic initiatives for expansion, as evidenced by the IPO, suggest a strong foundation for future growth and profitability.
Distribution Network and Geographical Reach
Energy-Mission Machineries (India) Limited, established in 1999, has developed a robust distribution network and extensive geographical reach to cater to the global demand for sheet metal machinery. With a state-of-the-art manufacturing facility spanning 260,000 sq. ft and a production capacity of 1000 machines per annum, the company has made its mark with over 6000 installations worldwide. In India, the company's presence is bolstered by sales network associates across the country, ensuring timely and efficient service support. The company's products are distributed in over 20 states and 2 union territories within India, with significant revenue streams from Maharashtra, Gujarat, and Karnataka. Internationally, Energy-Mission's machinery is exported to numerous countries, including the USA, Switzerland, Russia, Nepal, Kenya, Uganda, UAE, Saudi Arabia, and more, reflecting its global footprint. The firm has also established service centers in strategic locations such as Bangalore, Chennai, Coimbatore, Madurai, Ahmedabad, Mumbai, Pune, Hyderabad, and Kolkata to provide prompt customer care and maintain the high quality and usability of their products. This extensive network is a testament to Energy-Mission's commitment to delivering high-quality products supported by best-in-class service.
Unique Features
Energy-Mission Machineries (India) Limited stands out in the industry for its commitment to precision and innovation in sheet metal machinery since its inception in 1999. With a sprawling 260,000 sq. ft state-of-the-art manufacturing facility, the company boasts a robust production capacity of 1000 machines per annum, marking its global presence with over 6000 installations across various countries from the USA to China. The company's product range is extensive, including Hydraulic Shearing Machines, CNC Press Brakes, and Plate Rolling Machines, all known for their high quality and easy usability. Energy-Mission's infrastructure is a testament to its dedication to quality, featuring a comprehensive manufacturing facility, machine & fabrication shop, assembly shop, and a design & development team. The firm's innovative approach is further exemplified by its customized indigenous robust FE Analyzed structure design and its multi-speed operations that enhance efficiency. Additionally, the company's legal status as a Limited Company and its significant annual turnover reflect its established position in the market. Energy-Mission's ethos of delivering high-quality products at competitive prices, supported by best-in-class service, underpins its mission to meet customer needs effectively and efficiently.
Investment in Research and Development
Energy-Mission Machineries (India) Limited has demonstrated a commitment to innovation and growth through its investment in research and development (R&D). The company's focus on technological advancement is evident in its recent Initial Public Offering (IPO), where it emphasized the objective to continue investing in its technological capabilities. This strategic move is aimed at expanding both domestic and international presence, reducing operating costs, and improving operational efficiencies while maintaining quality standards. Financial reports indicate a robust revenue growth, with a significant increase over the past three years, showcasing the company's strong financial foundation to support its R&D endeavors. The company's in-house manufacturing facility and stringent quality control mechanisms are indicative of its dedication to product excellence, which is likely supported by its R&D investments. However, it's important to note that the company faces risks such as reliance on key products and the absence of long-term supply agreements, which could impact its business operations. Despite these challenges, Energy-Mission Machineries (India) Limited appears poised to leverage its R&D investments to maintain a competitive edge in the industry.
Energy Mission Machineries (India) Limited IPO Details
Issue Date: The Issue Date in an Initial Public Offering (IPO) refers to the specific day when a company's shares are first made available for public purchase on the stock market. This date is a critical milestone in the IPO process, marking the transition of a company from private to public status and allowing investors to buy shares directly from the company for the first time. (Issue Date: May 9, 2024 to May 13, 2024).
Listing Date: The listing date refers to the day when the company's shares are officially listed and begin trading on a stock exchange. This is typically several business days (3-6 days) after the issue date after processes like share allotment and finalization are completed. On this date, investors who were allotted shares during the IPO can begin selling them, and new investors can start purchasing them on the exchange at the prevailing market price. (Listing Date: Thursday, May 16, 2024).
Face Value of Shares: The face value of shares in an Initial Public Offering (IPO) refers to the original cost of the shares as determined by the company going public. It represents the nominal value and is often set at a lower figure, such as Rs. 10 or Rs. 100, which remains constant irrespective of the market price of the share after the company is listed on the stock exchange. When a company launches an IPO, the shares are typically offered at a price that includes this face value plus an additional premium, which reflects the current market valuation of the company. The premium over the face value is determined by the company's financial performance and future growth prospects as assessed by the investment bankers managing the IPO. (Face Value: ₹10 per share).
Price Band: A price band of an IPO is the range of prices within which the investors can bid for the shares of a company that is going public. The price band is set by the issuer and the lead managers of the IPO, based on various factors such as the demand and supply of the shares, the financial performance and valuation of the company, and the market conditions. (IPO Price: ₹131-₹138 per share).
Lot Size: In the context of an Initial Public Offering (IPO), the term "lot size" refers to a fixed number of shares that the issuing company sets as the minimum quantity that investors can apply for. This lot size is predetermined before the IPO and is mentioned in the application forms. The lot size varies from one company to another and is an important factor for investors to consider when applying for an IPO. (Lot Size: 1000 Shares).
Total Issue Size: The total issue size represents the total number of shares the company is offering to raise capital through the IPO. This number is determined by the company and its advisors, considering factors like their funding needs and the expected investor demand. The total issue size is then divided by the lot size to determine the total number of lots available for purchase by investors. (Total Issue Size: 2,982,000 shares (aggregating up to ₹41.15 Cr)).
Fresh Issue: A Fresh Issue in the context of an Initial Public Offering (IPO) refers to the creation and sale of new shares by a company to the public. Unlike an Offer for Sale, where existing shareholders sell their shares, a Fresh Issue results in the generation of new capital for the company. This capital is typically used for growth initiatives such as expansion, research and development, or debt repayment. (Fresh Issue: 2,982,000 shares (aggregating up to ₹41.15 Cr)).
Issue Type: The type of an IPO can vary depending on the market and regulatory conditions. Some of the common types of IPOs are, Fixed priced IPO, Auction IPO, Book Building IPO, and Hybrid IPO. (Issue Type: Book Build Issue IPO).
Listing At: An integral part of the IPO process is the listing. This refers to the day the company's shares officially begin trading on a stock exchange, such as the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE) in India. Once listed, anyone with a brokerage account can buy and sell the company's shares on the exchange. (Listing at: NSE SME).
Retail Shares Offered: Retail shares offered in an IPO refer to the portion of shares that are specifically allocated for individual investors, as opposed to institutional investors. These shares are part of the public offering where companies going public aim to raise capital by selling shares. Retail investors are typically allocated a certain percentage of the total shares available for the IPO. The allotment process for retail investors is designed to be fair and transparent, ensuring that all investors have an equal chance of receiving shares based on their application and market conditions. (Retail Shares Offered: 992,000 (33.27%)).
Anchor Investor Shares Offered: Anchor investors are qualified institutional buyers who are allocated shares in an IPO before it opens to the public. They play a crucial role by committing to purchase shares at a set price, thereby stabilizing and boosting confidence in the IPO among other potential investors. Typically, anchor investors are subject to a lock-in period, during which they cannot sell their shares, ensuring their investment aligns with the long-term success of the company. (Anchor Investor Shares Offered: 849,000 (28.47%)).
Market Makers Shares Offered: Market Maker Shares in an IPO refer to the shares that are allocated to market makers, who are responsible for improving the liquidity and facilitating better price discovery of the stock post-IPO. Market makers are registered members of the stock exchange and provide two-way quotes, buying and selling shares at predetermined prices. This system is particularly important for SME (Small and Medium-sized Enterprises) IPOs, where market makers play a crucial role in ensuring that there is enough trading activity and stability in the stock's price. (Market Maker Shares Offered: 150,000 (5.03%)).
QIB Shares Offered: QIBs are institutional investors such as banks, mutual funds, insurance companies, pension funds, etc., who have the expertise and financial resources to invest in the securities market. They are considered as informed and sophisticated investors who can assess the risks and returns of an IPO. QIBs can bid for up to 50% of the total shares offered in an IPO via the profitability route, or up to 75% of the total shares offered in an IPO via the QIB route. QIBs have to pay only 10% of the bid amount at the time of application, and the rest after the finalization of the basis of allotment. (QIB Shares Offered: 566,000 (18.98%)).
NII (HNI) Shares Offered: NII stands for Non-Institutional Investors, which includes High Net-worth Individuals (HNIs) who bid for shares worth more than ₹200,000. The NII category is reserved for investors who do not fall under the retail or Qualified Institutional Buyers (QIBs) categories. Typically, a certain percentage of the IPO, usually around 15%, is allocated for NIIs to ensure a wider distribution of shares. HNIs within the NII category often have a higher chance of allotment compared to retail investors, making it an attractive option for those looking to invest larger sums in an IPO. (NII (HNI) Shares Offered: 425,000 (14.25%)).
Competitors of Energy Machineries (India) Limited
Energy Machineries (India) Limited (EMMIL) has carved a niche for itself in the sheet metal industry, providing reliable and economical solutions. But no company operates in a vacuum. To stay ahead, EMMIL needs to be aware of its competitors' strengths and weaknesses.
The Local Contenders:
Gonvarri: A major Indian steel and automotive components manufacturer, Gonvarri might be a competitor for EMMIL in certain sheet metal processing machinery segments. Their experience in the metalworking industry deserves attention.
The Global Players:
Tenryu Saw: This Japanese giant is a leading manufacturer of woodworking and metalworking machinery. Their global presence and reputation for precision engineering could pose a challenge to EMMIL.
Stolle Machinery: This German company is a specialist in metal forming technology. Their innovative machinery solutions might be attractive to EMMIL's customers, especially for complex forming processes.
Leistritz: Another German player, Leistritz focuses on high-performance punching and shearing machinery. Their emphasis on speed and efficiency could be a point of consideration for EMMIL.
Beyond the Big Names:
It's important to remember that competition isn't limited to established players. Smaller, regional manufacturers or startups with disruptive technologies could also emerge as threats. EMMIL should stay informed about the latest trends and innovations in the sheet metal machinery industry.
How Can EMMIL Stay Ahead?
Focus on Innovation: Constantly developing new and improved machinery that addresses customer needs is crucial.
Customer Service Excellence: Providing exceptional customer service, including after-sales support and training, can foster brand loyalty.
Building Strong Relationships: Developing strong relationships with distributors and partners can expand reach and market access.
Data-Driven Decisions: Utilizing data to understand customer preferences and market trends allows EMMIL to make strategic decisions.
Conclusion
In conclusion, the IPO of Energy Machineries (India) Limited has garnered significant attention, reflecting the company's robust position in the metal fabrication solutions sector. With a strong retail and NII push, the IPO was fully subscribed within hours of opening, indicating high investor confidence. The company's focus on CNC and conventional metal forming machines caters to a diverse range of industries, from automotive to food processing, which speaks to its stability and potential for growth. While the sudden increase in profits from FY22 raises questions, the issue appears fully priced based on FY24 annualized earnings. Investors looking for medium to long-term rewards have shown interest, suggesting a cautious yet optimistic outlook for Energy Machineries (India) Limited's market debut.
Please Read the Detailed Review Here.
Disclaimer: This is not an investment advisory. The article above is for information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing securities, that suit your needs. The performance and returns of any equity stock can neither be predicted nor guaranteed.
FAQs
Q: What is an IPO?
An Initial Public Offering (IPO) is a process through which a privately held company offers its shares to the public for the first time and becomes a publicly traded company.
Q: How can I apply for an IPO?
You can apply for an IPO through various methods:
ASBA (Application Supported by Blocked Amount): In this method, your application money remains in your bank account until the basis of allotment is finalized.
UPI (Unified Payment Interface): You can authorize the blocking of funds in your bank account using UPI while applying for an IPO.
Q: What is ASBA?
ASBA stands for Application Supported by Blocked Amount. It allows your application money to be blocked in your bank account during the IPO bidding process. You continue to receive interest on the blocked amount.
Q: What is the difference between book building and a normal public issue?
Book building is a process where demand for securities is elicited and the price is assessed based on investor bids. In a normal public issue, the price is fixed by the issuer.
Q: Can I make payments through UPI for IPOs?
Yes, you can use UPI as a payment method for IPOs. The UPI platform blocks the funds for IPO applications after you approve the fund block mandate request.
Q: What is the minimum order quantity for an IPO?
The minimum number of shares you can apply for in an IPO is known as the minimum order quantity. It varies for each IPO.
Q: What is the cut-off price in an IPO?
The cut-off price is the price at which you bid for shares without specifying a particular price. It allows you to participate in the IPO without specifying a specific bid price.
Q: Can I revise my bids during the IPO process?
Yes, you can revise your bids multiple times before the IPO bidding period ends.
Q: Which banks offer the ASBA facility for IPOs?
Several banks, known as Self Certified Syndicate Banks (SCSBs), offer the ASBA facility. Some examples include HDFC Bank, ICICI Bank, Axis Bank, and SBI.
Q: How do I find IPO mandates on UPI apps?
You can check the list of UPI handles supported for IPO payments on the National Payments Corporation of India (NPCI) website. These handles allow you to apply for IPOs using UPI.