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APOLLO TECHNO INDUSTRIES SME IPO BUSINESS REVIEW. 🌟APPLYING TO SUPPORT MAKE IN INDIA. BUT WILL EXIT, IF MARGIN CRASHES OR NO SUCCESS IN GOOD CLIENT ADDITION Located in Mehsana, the company is the only manufacturer of Horizontal Directional Drilling (HDD) Equipment and Diaphragm Wall Drilling Rigs in India. These equipments are critical alternative to imported Chinese rigs and hope the IPO publicity and being listed company will help the Company brand to gain momentum after IPO. (Govt hardly supports such much wanted initiatives) 🩷LIKE, READ FULL REVIEW & DECIDE This business review is based on DRHP/RHP filed by the company at Exchange & is based on reviewer’s understanding of the documentation. For a full understanding of risks, financials, objectives & prospects suggest to go through the RHP in detail & form own opinion. OBJECTS: Out of Rs.48Cr Raised, Rs.38.5Cr for working capital and rest for general and listing expenses BUSINESS & PROSPECTS: The products made by this company can be widely used 👍by Municipal Corporation Contractors and Gas, Water Pipe Laying Contractors. Currently, these equipments are mostly imported. PRATHAM EPC raised IPO fund to import Directional Drilling machines from China. Pratham is importing the machine because villagers object to open land cutting in agricultural fields to lay gas pipes. The machine helps to lay underground pipes without making open horizontal cutting. 👍Ensures Roads are not damaged when new pipes are to be laid. By marketing Apollo Techno’s Products widely, imports can be reduced. Company does have scalability since contractors who find very hard to cut roads in Municipalities can easily do work with these machines. In fact, Govt should stop contractors from cutting already laid roads repeatedly and instead enforce use of these machines. The original promoter has been in the industry since 1991 when he formed Apollo Techno Equipment Company. It is assumed that he would have been handling repair maintenance of various imported drilling equipment. In 2016, the new company was formed to manufacture Horizontal Drilling Jigs with his son (MD) who is foreign educated industrial engineer returning to India. 👍 So like Taurian MPS,👍 we have a very good promoters & company making top quality construction equipment offering Indian made alternative instead of importing from China. (Off course some parts are still imported) RISKS: 1. Company’s Op margin has increased from 4% to 11% in Fy24 and further to 18% in FY25. Is this 18% Real and sustainable? In fact, June Quarter numbers show 8.5% margin only. 🚩This is a serious risk since IPO valuation is based on the higher margin. This matter needs clarification from Company. 2. Though we would expect that this company will have number of EPC contractors as clients, they seem to have none. 🚩The names of listed clients are all small unknown entities. In effect, the company’s product is yet to enter mainstream. In a way this also means POTENTIAL for growth once the company is NOTICED by larger Epc and Civil contractors. VALUATION AND DECISION: Rs.130 is at 15.6 x its TTM earnings, on post IPO equity basis. This is an industry where big investors like AK, VK, MA etc should step in and and support for “Make In India” initiative to be successful. Company has not yet been selling to big Municipal and PWD work Contractors nor large water and gas pipeline players. Even without this it has reached 100Cr turnover. So there is untapped market to scale the business Considering all the above will APPLY and then decide later whether to hold longterm or not, depending on reported margin and any reputed client addition. Not expecting short term gains. Suggest to assess by yourself and take your own decision, after further study, considering various factors discussed and any other info available. Images: P&L 🩷LIKE 🔖 BOOKMARK SME APOLLO TECHNO IPO REVIEW #StocksInFocus #StockToWatch