Company Overview
Ztech India Limited is an emerging player in the industrial automation sector. The company primarily focuses on providing automation solutions for various industries, including manufacturing and energy.
IPO Details
- Issue Size: ₹37.30 crores
- Price Band: ₹104 to ₹110 per equity share
- Lot Size: 1200 shares
- IPO Dates: May 29, 2024 – May 31, 2024
- Listing Date: June 4, 2024
- Lead Manager: Narnolia Financial Services Limited
Financial Performance
- Revenue Growth:
- FY 2024: ₹67.37 crores
- FY 2023: ₹25.88 crores
- FY 2022: ₹30.84 crores
- Profit After Tax (PAT):
- FY 2024: ₹7.80 crores
- FY 2023: ₹1.97 crores
- FY 2022: ₹0.08 crores
The company has shown substantial revenue growth in the most recent fiscal year, coupled with an impressive rise in profitability (IPO Watch) (Share Market Express) (Ipo Upcoming).
Valuation and Peers
- Earnings Per Share (EPS): 36.94
- Return on Net Worth (RoNW): 26.37%
Comparatively, Ztech India’s RoNW is significantly higher than several industry peers, indicating strong profitability relative to its equity base. However, precise P/E ratios and other comparative valuation metrics are less clear due to the SME nature of the listing (Ipo Upcoming) (Money Mint idea).
Use of Proceeds
The funds raised from the IPO will be primarily utilized for:
- Meeting working capital requirements.
- General corporate purposes.
- Issue-related expenses.
Market Sentiment and Grey Market Premium (GMP)
The grey market premium (GMP) for Ztech India IPO has shown some interest, suggesting positive market sentiment ahead of the listing. However, specific GMP figures fluctuate and should be monitored closer to the listing date for a better indication of demand.
Investment Risks
- Market Competition: The industrial automation sector is competitive, with larger players having a stronger market presence.
- Scalability: The company’s ability to scale operations and maintain profit margins is critical.
- Economic Sensitivity: Industrial automation projects are often capital-intensive and sensitive to economic cycles, which could impact revenue and profitability during downturns.
Recommendation
Considering the robust revenue growth, significant increase in profitability, and strong RoNW, Ztech India shows promise. However, the competitive landscape and economic sensitivity pose potential risks.
Subscription Recommendation Score: 7/10
Investors with a higher risk appetite and interest in the industrial automation sector may find this IPO attractive, while more conservative investors should weigh the risks carefully.