GNG Electronics, Indiqube Spaces, Monarch Surveyors & July 4th week IPOs : Primary Market Chatter

Brief Summary

Alright folks, this episode of Primary Market Chatter covers six companies going public. They're looking at four SME IPOs: TSC India, Swastika Castal, Monarch Surveyors, and Savy Infra, followed by two mainboard IPOs: GNG Electronics and Indiqube Spaces. The panel gives their takes, weighing the pros and cons of each, and whether they'd apply.

SME Focus: TSC India, Swastika Castal, Monarch Surveyors, Savy Infra
Mainboard Focus: GNG Electronics, Indiqube Spaces
Key Takeaway: Due diligence is key, and sector dynamics play a big role in IPO decisions.

Opening Remarks

The hosts kick off the show, mentioning that this week is packed with IPOs, especially towards the end. They introduce a special guest, Sachin, who'll be helping with the reviews. They also remind everyone that they aren't registered research analysts, so do your own homework before investing. They'll be covering six companies in total, starting with the SME IPOs before moving on to the mainboard ones.

TSC India (SME)

TSC India, incorporated in 2003, is a travel management company focused on B2B air ticketing for corporate clients. They're raising ₹26 crore with a market cap of ₹98.34 crore. While revenue is around ₹25 crore, the bottom line is about ₹5 crore. The speaker is wary, pointing out several red flags. Most of their revenue comes from Punjab, specifically Jalandhar and Chandigarh, making up 80% of their business. They're booking around 450 tickets daily for 3,000 customers, mainly in North India. A significant portion of their revenue comes from airline commissions and credit card payments. The speaker is concerned about the increasing remuneration for directors post-IPO and feels the money is being disproportionately taken by the owners. Despite decent pre-IPO investors, the speaker will be skipping this IPO due to the issues and lack of a clear story.

Swastika Castal (SME)

Swastika Castal, established in 1996, is in the aluminium casting business, manufacturing high-quality castings via sand, gravity, and centrifugal processes. They're raising ₹14 crore at a market cap of ₹53 crore, with earnings of ₹2.63 crore last year. Sachin takes over to discuss this company. They operate out of Gujarat, offering equipment for textiles, firefighting, automotive, and railways. They're running at about 50% capacity and plan to use IPO funds to expand and address bottlenecks like helium testing equipment and CNC machines. The promoter has good experience, and their clients include Siemens and Toshiba, with 35% exports. They claim to benefit from the China plus one policy. Financials show flat revenue in FY24 due to aluminium price fluctuations but project growth in the future. The order book stands at ₹18 crore. Valuations are around 15 times, but margins have increased due to reduced employee salaries. It's a fixed price issue with Horizon as the LM. The speaker would avoid this issue due to too much competition.

Monarch Surveyors (SME)

Monarch Surveyors, incorporated in 1992, is a civil engineering consultancy firm offering services from topography surveys to feasibility studies. It's a ₹94 crore IPO with a market cap of ₹354 crore. Revenue is ₹156 crore with a PAT of ₹35 crore. Rohit shares his quick study of the company, highlighting that they offer concept-to-commissioning services for infrastructure projects, creating detailed project reports (DPRs). They use advanced surveying equipment like 3D laser scanning and drones. 60% of their work is DPR for roads, and 85% of their business is from Maharashtra. They have a ₹500 crore order book. The company is raising funds to acquire more equipment. They work with both central and state governments, as well as private clients like L&T and Adani. The company is coming at 10x, which is extremely cheap compared to peers like Droo Consultancy. Morgan Stanley is an interesting name in the anchor book. The speaker is positive and expects a good listing.

Savy Infra (SME)

Savy Infra, incorporated in 2006, is an EPC company specializing in earthwork and foundation preparation, also offering transportation services. It's a ₹70 crore IPO with a market cap of ₹250 crore. The company operates in both infrastructure and logistics, making it unique. The company has a PAT of ₹24 crore on revenue of ₹284 crore. Sachin explains that 85% of revenues come from EPC, operating mainly in Gujarat and surrounding states. Clients include Dilip Buildcon and Welspun. They're transitioning to EV vehicles for logistics and have received orders for 12 EV trucks from Welspun. Financials show significant revenue growth since the Mundra family took over. The order book is around ₹430 crore. Short-term borrowings have high interest rates. The valuation is around 10 to 11 times. The speaker would apply with the intention of flipping on day one.

GNG Electronics (Mainboard)

GNG Electronics, established in 2006, offers refurbishing services for laptops, desktops, and LCD devices under the brand Electronics Bazar. It's a ₹460 crore IPO with ₹400 crore fresh issue and ₹60 crore OFS, with a market cap of ₹2700 crore. Revenue is ₹1420 crore with a PAT of ₹70 crore. Rohit shares his expertise in the refurbishment segment, highlighting that they primarily focus on laptops (75% of their business). Key to their business is building trust through warranties and buyback programs, refurbishment skills, and securing a steady supply. They have partnerships with HP and Lenovo. The company works as an IT asset disposal partner with corporates. The speaker is a big bull on refurbishment and will definitely apply.

Indiqube Spaces (Mainboard)

Indiqube Spaces, incorporated in 2015, provides managed workspace solutions, managing 115 centers across 15 cities with a seating capacity of 186,000. It's a ₹700 crore IPO with ₹650 crore fresh issue, at a market cap of ₹5,000 crore. Revenue is ₹1100 crore with losses of ₹40 crore. The speaker explains that they operate in managed aggregation. They hold a leadership position in Bangalore. Clients include Zerodha and RedBus. The speaker is generally positive on the co-working space but feels there are too many players. Steady-state occupancy has been declining, and the business is heavily concentrated in Bangalore. The company is priced at a high enterprise value compared to peers. The speaker will decide on the last day whether to apply for short-term gains or skip the issue.