Mitcon Looking To Get Listed On NSE Emerge

Mitcon Consultancy & Engineering Services (MCESL), a Pune-based consultancy provider, is set to come up with its public issue very soon. The company has filed a draft prospectus to list its shares on the NSE Emerge platform (for small and medium-sized enterprises).

MCESL is offering 41 lakh equity shares of which 2.06 lakh equity shares were reserved for market makers. At a fixed price of Rs 61 per share, the issue will drive funds of Rs 25.01 crore for the company. The company has hired IDBI Capital Market Services and Keynote Corporate Services as lead managers for the issue.

MCESL offers its services across the country, with offices in Mumbai, Ahmedabad, New Delhi, Chennai, Bengaluru and Nagpur. The company provides consultancy services in sectors including power, renewable energy, climate change environmental management, banking, infrastructure and biotechnology. It also conducts IT and skill-based training programs. The consultancy business contributes 57% to its revenues, while the skill-based education business accounts for 8%. Its client list includes Ajanta Pharma, GSPC Pipavav Power, Sterling Biotech, HPCL Bio-fuels and many others.

During the fiscal 2013, MCESL posted a weak performance on the income front. Its revenues dropped to Rs 48 crore, down 13% from that of Rs 55 crore in FY12 due to the decrease in income from vocational training and IT courses. The company has reduced its total operating expenses by 17% during the period. Further, the drop in sales in FY13 has also impacted the operating income of the company, which declined by 1% to Rs 15.61 crore against Rs 15.69 crore in FY12. The decrease in finance expenses by 44% to Rs 5 lakh has resulted in a growth of 2% in its net profit to Rs 9.97 crore.

The company intends to utilise the raised funds to set up new offices in various locations and to purchase office equipment and machinery. The proposed expense for establishing new offices in Bengaluru, Hyderabad, Chennai, New Delhi and Ahmedabad and to set up environment testing facilities in Bengaluru and Hyderabad is Rs 16.14 crore. An amount of Rs 4.50 crore from the net proceeds will be used for acquiring office equipment and testing equipment for laboratory.

On the valuations front, MCESL's share will be valued at a PE of 7.4x FY13 EPS of Rs 8.23 calculated at the offer issue price. The company also has good profitability numbers, with an EBITDA and net profit margin of 32% and 20% respectively. Although, it has seen a decline in its revenues from the last fiscal, this was due to the slowdown in the domestic economy overall. Looking at the attractive valuations and company's presence in diversified sectors, we recommend subscribing to the issue for a long-term horizon.