FREE Equity Delivery and MF
Flat ₹20/trade Intra-day/F&O
Business Profile
Incorporated in 2011, EKI is in the business of Climate Change Advisory Services, Carbon Credits Trading, Business Excellence Advisory, and Electrical Safety Audits. The company offers its services to various clients in the government and private sectors like power generation, waste management, clean development mechanism, airports, and many more industries. As of Sep 2020, Eki had 70 full-time employees.
The company has a broad client base in India representing some large Indian industrial groups, Indian Power Producers, banks and other financial institutions, central public sector undertakings, SMEs, and government bodies. Some of its clients are World Bank, Airport Authority of India, NTPC, GAIL, Bank of Baroda, and others. Its client base expands to various other countries like Australia, USA, Germany, Europe, and many more.
Financial Review
EKI posted total revenues of Rs 59.96 crore for 9 months ending and PAT of Rs 5.39 crore. Total revenues in FY20 increased 232% to Rs 66.02 crore from Rs 19.88 crore in FY19. PAT rose to Rs 4.47 crore from Rs 0.68 crore in FY19. There is a tremendous increase in its revenues for the last three fiscals. EBITDA and the net margins have been decent through FY18-FY20 as can be seen from the table. Return on net worth has been strong at 74% for FY20.
The issue appears to be reasonably priced at annualised EPS for nine months ended 30th Sept 20. At annualised EPS of 14.21, P/E is 7.18 at upper price band of Rs 102. P/BV is 4.48x at NAV of Rs 22.78 per share. As per RHP, Mitcon Consultancy and Engineering services Limited is shown as the peer of Eki and its P/E is 13.02x.
Title | 30-Sep-20 | FY20 | FY19 | FY18 |
Total Revenue | 59.96 | 66.02 | 19.88 | 7.01 |
PAT | 5.39 | 4.47 | 0.68 | 0.27 |
EBITDA | 7.57 | 6.15 | 0.92 | 0.62 |
Total Assets | 21.86 | 16.1 | 4.12 | 2.77 |
EBITDA Margin | 12.63% | 9.31% | 4.64% | 8.77% |
Net Margin | 8.99% | 6.77% | 3.42% | 3.85% |
Conclusion
EKI is a certified provider of different types of services relating to carbon offsets generation projects and National/International management standards implementation, management consulting, audit, training while considering the context of the organization and to meet the needs and expectations of all interested parties stakeholders, statutory and regulatory requirements. It operates in a niche segment and there are a few listed peers. Proceeds from the issue would be utilized to meet the working capital requirements of the company.
The government’s thrust on clean and green India and the development of renewable sources of energy has created awareness among the business community and paved the way for the continuous growth and expansion of the company’s operations. The Issuer&rsquo's financial performance has improved significantly with the increase in both topline and bottom-line numbers for the last three fiscals. However, the sustainability of revenues in the future years needs to be tracked in the coming years. The Offer is reasonably priced and investors may consider it for the long term.
Review By CA Priyanka Choudhary on 18th Mar 2021
About CA Priyanka Choudhary
Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.
Email: [email protected]
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.