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

0:00 Hey everyone, welcome to Primary Market Chatter brought to you by Sunday Investing. This is our July 4th week episode. Uh so what we'll be doing is this is an interesting week where there were no IPOs for the first two days. Everyone was chilling. A couple of IPOs are closing tomorrow and then bulk of action is towards the second half of the week. Friday IPOs which are interesting Thursday IPO. So we'll cover all of them today uh and try and just uh talk about what our review is. Just before we start want to highlight that won't be joining the session. Uh yes won't be joining the session. So it will be Rohit and me and then we have a very special guest whom a lot of you would be knowing already. We

0:46 have Sachin with us uh who goes by the name MU Striker FC on uh is a rather popular figure there. But yeah uh very very very happy to have Sajjin with us. He has graciously agreed to uh do some of the reviews as well with us. So what we'll see what we'll continue to do is we'll have a rotating panel IPO cover but you'll see more people joining as and when uh like we feel uh that the IPOs are in long supply and we don't have so many analyst. uh so and next week would be one right because next week there are so many IPOs opening NSDL has definitely been delayed but IPOs so very happy uh to have Sachin with us welcome Sachin on

1:33 uh the panel for primary market chatter welcome welcome welcome to all yep uh with that maybe what I'll do is before we get started just want to highlight a couple of things uh two things that that I always say one we are not say registered research analyst to definitely do your own due diligence due diligence issues think of it we what we say is not a qualified opinion it is just a opinion for the lack of a better word so definitely do your own due diligence and see YouTube channel definitely go ahead and join the YouTube

2:18 channel as well the link to which is in the pinned comments. So those were the two uh kind of housekeeping rules that we kind of have before we start the show. With that, let me just set up today's episode. What we'll do is we'll talk about six companies today. Ch company about we'll start with uh the fourmemes. We'll start with TSC then go to Swastika then go to Monach and Sevi uh and then probably do the two main board Indie Cube and G&G. So that's the order. uh it's TSC or probably because those are like interesting companies or else like a decision between apply or not apply. Uh so we'll do that and then we'll spend time on the

3:03 mainboard issues which is Indie Cube and G&G. So sub let me set up TSC and try and do a review. Incorporated in 2003, company is a travel management company specializing in comprehensive air ticketing services for its clients focused on B2B uh and corporate sectors. TSC uh collaborates with airlines and travel agents to provide cost effective travel solutions. So that's the high level gist of uh TSC. Uh so the company's raising 26 cr at a market cap of 98.3400 cr to 26% dilution company 25 financials to around 26 cr

3:51 bottom line around 5 soc around 20 expert global which was a decent seems to bring a few good companies but before I get actually get started just want to highlight in terms of my review on this is very straightforward there are a lot of things which are wrong in the company or at least blatantly present as wrong so unless you know the insider story uh unless I know the insider story which I don't I will be avoiding this company but let me just go ahead and talk about it in detail in terms of what the company uh does so it's a air travel company agency

4:44 credit card rebates based company most of the revenue is coming from Punjab like in transaction value basically These are the backend around 633 CR revenue. So it seems that the company's extremely focused in Jalander and then there is like Chandigar also kind of comes in close with a big number of like 17 18 CR. Just by that logic like around Punjab, Punjab kind of makes up for 80% of all revenue for this

5:32 company or company at least fully bookings last year 1.62 lakh which is a big number right like around 447 bookings every day. So they booked like 450 people ticket every day through their agents booked uh through the different uh customers and the the kind kind of customers they served is 3,000 uh which who use this portal uh for them again present mostly in North India agent login agents books

6:22 markets. So basically it's a plat login portal for uh agents at a very small uh level which is majorly Punjab based. In terms of the revenue, most of the revenue most of the revenue is coming from aine commissions like around 4 CR of 24 is direct commission. So 8 CR is productivity linked bonus. Basically company they make like 3CR on credit card payments. Then service

7:08 is basically a ticket service charge for booking the ticket. So that forms like one/ird of their revenue. Uh and in total their revenue is like 24 cr because of which and like they have some interest components etc which to totally add up to 25 cr. So that's all good parts right like the business is inherently decent use it should continue because of inertia which is all good now I'll kind of talk but again I feel that use using agents or middleman's in between I don't know how penetrated is Punjab but I feel that's a sector which doesn't excite me like over time people will just move to online right like people

7:54 used to earlier book train tickets as well through uh agents and then then that completely stop right so I feel that is inherent risk for this business as well uh but which is why I don't understand this company at all that is made in 2020 dscline which is not opening now so I don't understand director last year the first director was drawing a salary of 41 lakh rupees per year lb luckbug which is a decent amount

8:40 3.5 lakhs a month that is scheduled to go up to 10 lakh rupees per month from after IPO August 2024 so uh remuneration although that is still like from my understanding that is the higher cap But they will always have like very different like sales incentive is profit before taxotific similarly sales incentive 10%. Third incentive, third promoter also had like

9:26 12 lakhs a month, one lakh rupees that is increased to three lakhs and there is a sales incentive of 10% profit before tax. So all of these things just don't give me comfort, right? Because you're bringing in private investors, public investors yet uh the money is being disproportionately taken by uh private u owners. it doesn't sit well with me and I understand that this might just be a provision but uh like creating that provision in itself kills the company for me right like% so that just leaves you with CR right like so that is the thing which I don't understand clearly

10:12 between the promoters how that is done uh because of which I am not a big fan but Just want to highlight there are a few good names in preIPO uh who have done the preipo the ink list is decent for what I was expecting it is better in terms of what the company will do 25 CR all of it will go to working capital so that's a straightforward uh uh list but ankle is decent LM quality decent preipo names decent so I feel there is something with respect to which I can't see which doesn't meet the eye maybe something with respect to subsidiary company financials but something to do with that maybe TSC fins private limited which is their subsidiary company maybe something that

10:58 but I will not take a punt on this because of primary two things there are a lot of issues a the better companies and B I don't know what the story is so if there is a story it might do well unless there's no story it's coming at 20p with so many conditions which I don't understand so I'll be skipping the Uh so that is with respect to the first company which we spoke about which is TSC uh TSC India Limited. Anything which uh Rohit and Sachin you guys have to add or we can quickly move forward to the next issue? Let me just see if there are any comments. I've been speaking on and on. Nothing from my end. Nothing. Nothing man.

11:45 I think for people who track the names, the names in the preIPO are associated with folks who tend to move the price or uh what's the right word? When when people see those names, they automatically assume that the stock is going to get cornered. So people who are keen on that sort of thing can just look at the uh preIPO holders and then take a call whether they want to trade this stock. Yeah, I think I was looking at it but it's just that I don't know the story at all right and there's no interview available as well. So it's just very like it just feels that they don't like nobody wants this company to be discovered for this space for the lack of a better word. If it is the case then I would let it be family because the

12:32 issues are not in short supply right so don't have just this company to look at and and one thing to add that if smart works was questioned for that IPO thing that the IPO will be brought and they will the management will get the incentive why shouldn't this be questioned correct correct for sure I don't think I don't think traders really care about all that I think they're going to look at whether they get 15 20% very quickly post listing because the stock will be run as opposed to anything in the fundamentals. Yep. Yep. Let's see. With that maybe what we'll do is we'll move forward and talk about the second company. The second company we'll talk about as Swastika Castel Limited. Just setting up

13:18 the company again. Incorporated in 1996. Company is engaged in the business of aluminium casting. The company operates primarily in the manufacturing sector focusing on producing highquality aluminium castings through processes such as sand, gravity and centrifugal casting. So second company with the name swastika cast. So with that maybe just setting up the IPO IPO details it's a 14C cr IPO at a market cap of uh 53 cr in gap last year around 2.63. So they're coming at like 20p and the LM for the company

14:07 is really good. All right. So with that maybe I will hand it over to Sachin to talk about swastika. Over to you Sachin. Uh thank you. Thank you man. So Swastika Castel is an aluminium casting manufacturer basically out of Gujarat Vodra to be precise. uh they offer equipments for text, firefighting equipment, automotive, railways etc. uh currently operating in what uh around 100,000 square ft² facility. Uh majorly employing contractual employees uh the employees on payroll are very less and in the same regard the main man behind the business Mr. Vun Sharda is actually

14:52 taking around 30% of the salary around 18 lakhs or some 20 lakhs per salary and the total remunation for the whole employees is around 1.5 CR. So that is one thing to note. So about the capacities they have mentioned that they are utilizing around what 50% of the capacities and slowly for the funds that they are trying to get uh from the IPO uh they are trying to maybe increase this capacity uh to a certain level and for the rest of the part that is that will address the bottlenecks that is they current have the capacity that they currently have doesn't include the helium testing equipments that they required the CNC machines and so so they used to outsource them before and now

15:39 they're trying to make them in-house. Uh behind the history of the promoter Mr. Varun Sharda he has good experience uh and someone along with him Indra Sharda she's a chartered accountant 5 years of experience the clients include Seammens Hitachi Toshiba some others as well 35% exports 65% domestic business exports likely having some good margins on that front so in the IPO meet he tried to mention that the China plus one policy is actually actually benefiting India and Sastika as well. I don't know the scale for Sastika currently but he did mention that. Coming on to the financials uh they

16:24 reported around 24 cr in revenues in FI23 then about flat in FI24 and a slight increase about 30% in FI25. The major reason for that flat revenue was they mentioned that aluminium prices fluctuated a lot. So they couldn't manage it well and that led to the uh flat revenues in FI24. Though they have mentioned that they are targeting around 20 25% in FI26 as well and now when the IPO seats are fully utilized they will uh probably target 40% on more in FI27 and going ahead. uh current order book status is around 18 CR and with uh they mentioned that they have long-standing relationship with the clients especially in the

17:11 export market Spain, Poland, Vietnam etc. Uh everything now for the growth projections I have already told uh for the competitive landscape they have shown thigh casting as their peer. I don't know why because Thai is primarily in automotive whereas sastika is probably around 10 to 10 20% in automotive as well. They mentioned that there was no uh listed pair in their segment. So they mentioned Thai as well. Don't know the ration for it. Uh they mentioned that uh some unlisted pairs are there. This all of this is mentioned in the IPO meet. So some unlisted players are there and some international clients are also there that they compete with. But since swastika is at a relatively lower scale than those so

17:57 they don't face much challenges. Uh there are some related party transactions uh which they mentioned that that was that was primarily for the CNC and outsourcing machine that they are now trying to do inhouse. So now for the valuation part it's coming at around 15 times. uh if we go by the IPO year margins which is uh primarily due to the reduced salaries of the other employees uh other than Mr. Vunard. So Vun Shada is taking his uh share exactly as he was in the previous years slightly reduced but the other employees are now on so they are on contractual basis so their salaries are quite reduced and that is primarily led to profit increase. Thigh is near 2025. Uh Thai casting has also received

18:44 a fund raise uh in recent times. So and they have better client than uh Sastika Castle at the moment. So and so this is uh regarding the valuations it could have been priced a bit lower I think and to remind that this is a fixed price issue. So there will be no anchors and all uh LM LM is what? LM is 1 minute. LM LM is LM is horizon. Yes, as Manish mentioned. So Horizon has a in and out experience. So it works sometimes, it doesn't work sometimes. So take a call basis that thanks Hin thanks for highlighting. Just want to highlight it's a 20p right purchase like

19:31 53 revenue right so that 20p right and the margin has went up primarily. Yes, I mentioned 15 for the FI26 for what they're projecting on TTM there are 20. Got it. Got it. Understood. So basically forward 15 approximately but company I feel it can work primarily because of just the small size but having said that it's a fixed price issue I would be avoiding this issue simply because too many companies to compete with there is seen in talk about and then there's monarch which is ending on 24th. Uh with that maybe we can move forward to the next company. It's a very smalish company. Again if you know something which you which doesn't seem thai uh then one can take a call but at least on

20:18 high level the company looks very straightforward and doesn't seem exciting to me. Uh with that maybe let me move forward and talk about the third company. The third company we'll be talking about is uh Monarch SAS setting up the company incorporated in 1992. company is a civil engineering consultancy firms. It offers comprehensive services spanning topography surveys, project management, consultancy, design and engineering, geo geo technical investigations, land acquisition, GIS mapping and feasibility studies. Setting up the IPO, it's a big size IPO 94 crores IPO sub fresh issuer uh company market cap it's coming at 354 crores of market cap. So 354 94 dilution 28 29%. uh if I purchase revenue revenue was 156 crores or PA the PAT is

21:08 35 CR so very healthy PAT margins like close to 20 to 23% PAD margin company but which is expected of a consultancy company uh because they tend to operate with operating leverage and P which seems optically pretty low but we'll have to see growth in terms of the LM the LM is also beline which enjoys a good repute. With that over to you Rohit to talk about Monach uh surveyors because I've heard a few things and everyone's interested to figure out about Monach. Sure. Uh just uh highlight is I have studied this company in like 25 minutes. So I I'll try and explain whatever I've learned but do please go and uh see I've

21:54 I've listened to one interview. If there are more interviews online uh please do uh search uh you know find them out and uh make your own view. Uh so monarch survey this is a 95 cr so good it's it's a nice largeme uh with obviously 35 cr pack uh which justifies the size of the rails. Uh they are a consultancy firm so they do what they call concept to commissioning for infra projects. So this is from start to finish uh to determine the project. So they obviously won't get into the execution of the project but they'll help create the reports that the companies that actually need to execute the project or if the government wants to give a project out for tendering they are the ones who will do the detail project report or DPR uh it usually starts from survey uh

22:42 there'll be a design element there will be a uh you know land acquisition element for example there'll be a an element of just saying okay how do you actually if this is an expressway this is a highway Do you have a two lane? Do you have a four lane? Do you have a six lane? So everything that goes into determining what that project will be, how much it will likely cost before the thing actually goes out for tending. Uh and they do this for primarily roads uh a little bit in railways. But they have the capability to do this and they've done some projects across you know even metros, town planning, water you know like dams uh transmission lines. So across everything from the in this infra segment. uh their focus though is roads and railways. Um so what they do uh is

23:28 so let's say uh the government wants to set up an expressway. So it would start by say surveying the land to map that terrain you know what is the altitude elevation what are the bumps you know what what is the what does that geospatial uh this thing look like then they would create those feasibility studies they would manage approvals uh during the construction they would probably moni monitor the progress provide qual quality checks make sure that it is uh going as per the standards and timelines so that they are ensuring everything except the actual execution uh they are the ones who are responsible and one of the things that they do which is what I think is a little bit of a differentiator is that they use very very uh upto-date uh surveying equipment

24:16 and techniques so they do high definition 3D laser scanning they use different types of GPS uh there's some technical terms but different kinds of say GPS to actually map the surroundings and locations They use a lot of radar, LAR, uh drones, uh so there's a lot of different things and and those are just the I say technical terms and each of these terms or each of these processes have their own technology that is continuously getting updated that these guys have to be on top of. But all of these that are what they claim are their differentiators. They're always ahead of the curve when it comes to the equipment and tools with which they do the work and do their consultancy. Today about 60% of what they do is this

25:04 DPR for roads 15% is for railways and the rest is all these small other other categories. I feel in that other categories where their long-term say the long-term value in this company is as they scale some of those other categories today 85% of their business comes just from Maharashtra which is in a way a risk but for them they look at it as an opportunity they've sort of proven the model in Maharashtra and they want to take this you know to all the other states where they have small small presence today they have about a 500 cr order book of which 150 cr is executed and 350 cr is pending uh to be done in 2 2.5 years they bid for about 10 12 projects every month and win two or three. So you can and and their projects are typically 7 10 cr on average. They

25:49 have a few big ones. You win an expressway you might win a 70 80 cr project but generally their average project is 7 to 10 cr. So you can say that they'll be constantly winning maybe 150 to 200 cr every year and as they scale they will hopefully keep bidding more uh and some of the working capital that they're raising is to help help with that. Now they have a lot of equipment in house which also reflects in their balance sheet. So for a consulting company they have almost 40 odd cr of just you know equipment in their balance sheet which is a good thing and in their view it is a reason for their margin and their efficiency because they have the best equipment. They're also in fact one of the the the biggest aspect of their fund raise I think 32 odd cr is just to get even more you know fancy equipment. You can have a look uh just Google some of these jetto

26:35 trolley and these trimble uh the the the equipment that they say and you'll get an idea of what is the sort of thing that these guys do. U so obviously there is a core tailwind which is the infra push from the government. Uh but I think there is also a general digitization of our infra digital twin project that the government is looking to undertake. There's a lot of uh geospatial mapping that is happening in the country. There are some estimates thrown out of how India wants to spend one lakh cr over the next 5 years 10 years I'm forgetting the number now but over the next x number of years to digitize a lot of this infra uh and map a lot of our infra and our land and that is the core tailwind that these guys uh should be

27:21 capitalizing on uh they're very good clients obviously they work with the central and state governments uh but they also have a lot of private clients like L&D Adani goes etc who they help with on the private side when they want to bid for some of the projects that a government will uh tender that the government put out they will help the say an adani on how how much and how exa uh you know how exactly to bid uh at the end of the day this is a consulting business so it will always have good margins uh it's a peoplecentric business which means you are you have to hire good quality people so that is generally the limitation to scaling a consulting business because you're not just hiring labor you're actually hiring skilled manpower and how fast you can hire skilled manpower will determine how fast you can grow. Today if you see in their

28:08 employees out of 500 employees almost 170 are engineers uh and they have a similar number of surveyors and 70 80 project uh supervisors. So it's you will have a higher skill for a business like this which is obviously the thing that also gives you margins but it caps the speed with which you can grow a little bit. Um their numbers are very good. uh 155 cr last year. There's FI25 with a 35 cr pat. That's like a 22% PAT margin which is amazing. Uh they didn't grow a lot from 24 to 25. I'm not sure exactly why that is but as per their receivables they are looking to do almost 50 60% growth for this year. I that's this is not validated. I don't know if in some interview they have said that said this number or given any different guidance

28:54 but as per receivables they're saying they'll do 250 cr in FI26. uh there is a bump in receivables in FI25 uh almost it's gone from 10 cr to 40 cr despite revenue not really changing much uh but that in the RHP is because there was a lot of billing in the end of March I think they would have also wanted to make sure that the March numbers look good uh and a lot of that money has been received uh some of these slightly lumpy businesses it can happen it maybe this would have been due in April and they would have made sure it got build in March just so the revenue does not look off for the IPO year but The claim is that the money for all of this has been received. Uh the cash flows though have been maintained. They're very good. You'd again expect that from a consulting business. Uh this company is coming at just 10x which is extremely

29:39 cheap. Uh in terms of peers now there are two types of peers. There is there's one company called Drew Consultancy which looks like a very very similar peer to me. Very similar company. Maybe maybe uh Monarch has slightly better equipment and capabilities around this geospatial and mapping and stuff like that. Uh Droo trades at but otherwise droo is very similar. They also work mainly in infra and roads. Uh it trades at 18 or I think 19 times. Uh there's a company called sysc which is more of an IPled business in geospatial. Uh they have their own uh platforms and IP. uh so I would say and that trades at like 40x so that's a much more the the capabilities of that business are very different and at a different league that rates at 40x if I'm not mistaken uh this

30:26 company is closer to du uh but the one thing here is um there are a lot of fairly obscure nano caps in this kind of infra consultancy uh space that trade at like 7 to 10p also I have no idea about those companies they For what reason? There's these are like 40 cr 50 cr kind of market cap companies. Uh there is this Monglum Infra also that came last year that came with a lot of hype listed at 90% whatever 100 some crazy number. I think the price was once at 110 and today it has fallen to 20 and the numbers have been horrible. So this uh consulting space you've got to be sure that the company that you have picked is

31:11 a high quality company with good management with good plans. Uh I feel Monarch is actually very good. Uh what little bit I could see I I got a lot of comfort from the promoter and from their balance sheet and the the equipment that they have and the way they operate. Uh it doesn't look like the obscure companies or this Monglum. It looks closer to Adu or in some cases you know some of the things that they compete with. I understand they actually compete with the sciences tech. Uh so obviously this is not a business like that but I think this is a highquality company. Uh 10p for a high quality company whatever it is is cheap. Uh where it will list I'm not sure but I think somewhere between 18 to 20x is okay. I don't see it moving a lot after that but I think an 18 20x in line with droo is a kind of

31:58 safe expectation. I don't even know why this company has come at 10x. uh but I think it gives a lot of opportunity for people who get lucky uh and get an a lotment to make good money uh on this thing. Uh one interesting name in anchor was Morgan Stanley uh of course bunch of other not bad anchors decent anchors but Morgan Stanley in the anchor book directly. So generally when you have some of these global FIS you'll not see Morgan Stanley but you'll see Morgan Stanley something something ODI that ODI means that somebody else there's some unknown person who's using Morgan Stanley some some foreign maybe an Indian from NRI whatever who is using Morgan Stanley as the vehicle to invest in the anchor in this case it is Morgan Stanley itself which is an interesting

32:44 thing at least that's that's my understanding because that ODI or P note or whatever that is not mentioned in the anchor name if it is actually Morgan Stanley that's a very interesting uh development for theme ecosystem to have somebody like them uh as an anchor so overall I'm positive it is beline beline to will obviously has generally done a very good job of uh protecting the price uh there is a very healthy GMP also we can apply and it will subscribe to 100x probably uh in most of the categories so you can hope that you will get an allotment uh if you do this is every chance this list 60 70% up. Thanks Roy. Thanks for the comprehensive review. If you read it in 25 minutes, I've been reading about my companies for

33:30 the last 2 hours and still haven't done a that decent a job. So, who knows? But yeah, I feel uh it's good that it's coming at 10p. 10p seems low for a consultancy business with a uh with a healthy pat margin. again not comparing with let's say something like a gem gem envirro but when gem envirro also came in it had a very healthy uh pat margin and the share ran at least in the short term so I feel here also the share would do well um in the short term don't know where it will list but probably hoping for a 50 60% uh or something above that so I'll be applying to this issue it's on 24th so what we need to keep in mind is 23rd is when they say we are closing. 24th is

34:17 when J is uh sorry J my bad. Monach is closing. Uh so and then 25th is when G&G and Indie Cube is closing. So we'll have to utilize the funds well to be able to uh manage the concurrent issues. So definitely do that. But yeah, this seems like a slam dunk applied at least at the IPO price and then we'll see. Uh with that maybe we have covered uh mostly on monarch just uh Sachin if you have anything to add on monarch which you feel we didn't cover. Uh just on the tech part uh they the tech that get uh redundant over time which they need to continuously replace and the advanced tech that is coming in that could replace the manpower a bit. So that's one thing maybe for the future

35:03 to keep an eye on but that is one thing to note. So you're saying that's a risk on the business because uh the business would not need so many people but then it's good right they'll still need consultancy companies to be able to certify everything right uh the DPS etc. So the margins would further increase if that happens. Correct. Uh yep. And one thing that they mentioned uh some time back that regarding Droo consultancy they mentioned that D operates in couple of segments be it roads or infrastructure. Uh whereas this monarch it operates across segments uh it's roads and bunch of other segments across almost five to six segments more. So that's definitely advantage for Monarch.

35:50 Got it. Perfect. Thanks. Thanks uh Sachin. With that maybe just want to highlight that uh Sachin is also uh very famous on Chitar. So if you haven't followed him, please go ahead and follow him while we kind of move forward to the next company. Also if you are not following the YouTube channel by any chance, go ahead and follow the YouTube channel as well. Pin pin comment YouTube channel link. I will put in the space as well. We'll record it and put it. Uh so with that maybe what we'll do is we'll move forward to the fourth SMA before we talk about main boards. Uh two main boards and we are running short on time so let me just quickly wrap it up. Uh Sevy Infra incorporated in 2006 company's a EPC company specializing in earth work and foundation preparation for infra projects including road construction

36:35 embmentsments etc. The company also operates an asset light business model offering specialized services by renting trucks and drivers and managing the execution of transportation. So uh the company's kind of combination of both of them works in infrastructure infra and then logistics. So uh it's a combination of both of those sectors and that kind of makes it a very unique uh play where you know that the P would be P multiple would rather be low but in terms of the IPO it's a 70 cr IPO 70 crores IPO so big size IPO at a market cap of 250 crores 250 crores per company 70 dilute so around uh it's 28% again similar range is what

37:21 the company diluting for 25 financials the company has done a pat of 24 CR revenue 284 crores 24 cr so they coming at again cheap right 10.2 type company but it's a proper infrac logistics uh and logistics also like asset heavy logistics not asset light logistics per say so be wary of that when you're giving a B to this company but yeah that is what at least my read was in terms of the LM the LM is unisone so with that over to you Sachin to talk about uh separ Am

38:06 I audible? Yep. Yep. Yep. All right. So, Sav Infra is uh into primarily into EPC and logistics. 85% of the revenues are coming from EPC and the rest from logistics. Uh operating primarily in Gujarat and in and around Maharasht, Odisa, uh Andra as well. Client client list includes delay buildcon Wellspun wellspun is a new one that uh is coming with the EV truck thing. Uh I'll explain that later. Uh the it was primarily uh a business under the Kotaris previously and then it was taken over around 2020 by this Mundra family Tilak Mundra. uh tilak mundra uh though on the education side he doesn't have much experience but uh being in the

38:54 business and managing different type of family business he's probably gains uh experience in this segment as well so EPC is 85% of the revenues they do primarily excavation uh 60% or so uh is the excavation part the rest is maybe doing construction work roads canals and basic civil work that uh that takes probably around uh 8 to 9 months to uh they operate under asset light. So they lease machinery and then they uh perform their works. The logistics segment 15% of the revenues uh they are tied up with Mahajeno in Maharashtra for that fly ash and iron core thing. So they used to transport it and also transport excavated materials.

39:39 Uh now they have mentioned that earlier they used to transfer uh the diesel vehicles. Now they are trying to enter into the EV vehicles. They mentioned that they are in probably a first mover advantage in this though not entirely because AVG is also doing something similar that were mentioned quite a while ago. Now why they are doing is because they say that the uh transition to EV vehicles will probably get higher margins uh around that uh that is received in diesel vehicles. They already have received uh around 12 EV trucks orders 38 ton capacity from Wellspan and they're uh trying to uh deploy more than 500 trucks going ahead. Uh now coming to the financials since they took over the Kotari business. So

40:25 in FI23 it was probably around six cr of revenues and then it jumped up uh to 100 cr in FI24 and now it's 280 CR in FI25. They have said that they're trying to maintain around 70 to 80% growth for FI26 as well and due to the EV logistics part they are uh trying to uh project the net margins going ahead in FI26 around 9 to 10%. Coming to the order book it around it's around 400 KES 430 crores to be precise and they are trying to say that they will execute uh everything possibly everything in FY26 as well to match that growth outlook they sus thing is a pertinent issue in EPC uh be it any EPC

41:12 so that is one thing to note uh there are some short-term borrowings that are quite high interest around 18 to 25% given by the directors sometimes unsecured loans So that is one thing to note. Now for the valuation part it's around 10 to 11 times in trailing basis they've shown AVP as a uh peer that is around 14 15 times I think and Ganesh infra uh Ganesh Infra doesn't fit a better pier because now Ganesh is primarily a subcontractor and now they are slowly venturing into uh primary contracting but for now they are subcontractor and Ganesh is also diversifying into water projects uh unlike this sav in front uh the IPO is around 70 CR 49 CR is going for working

41:58 capital purposes and for the rest they have uh literally said that 21 CR will be uh for GCP now they haven't mentioned that they will use this GCP only for the EV trucks but it's assumed it will be used they diluted around uh two to two and a half% in around I think uh in July 24 that was around 89 cr market cap now the current market cap they are coming at 250 CR. So there is a more than likely dilution from the promoters uh at this current point. So uh and the post IP promoter holding is around 62%. Going forward they are targeting to increase this EV logistics business and they are targeting not to take these EV trucks on the balance sheet. So they are

42:44 targeting to lease them from the NVFCs, use them from uh for the transporting part and then uh keep their balance sheet asset light as previously. Now they are trying to bid for larger orders as well in and uh around Gujarat and probably diversifying other locations as well. Uh they mentioned that the receivables and cash flow issues visible in the FI25 financials are largely under recovery uh in the two to three months that have passed in FI26. Uh now the LM LMM here is unisone. So again like Sika Castel it's a hit and miss. So be wary of that. Uh negatives I have already told that promoter concern uh regarding his that the experience

43:29 they have is okay but uh they have tried to occupy a already existing business change its name change its objectives and then uh continue the current business in the uh already existing business. just to show uh that the already existing business had some history going back. Coming to the anchors, I saw some good names in the anchors. Uh Chhattisgarh Investments is there. Uh some uh overseas fund of equity strategies master fund is there. IBSU global growth uh fund is there which I saw was holding probably Balu Forge and Raven Reality in their name, shareholding names. So that is one thing to note. Rest all looks decent. Art is there. So uh that is one thing to note.

44:16 So considering all this uh it's uh and JMP is there as well for this issue. So must apply for my side. Thank you. Got it. So again just to clarify AP like do you think right Pier is AP? Yes, AP can be appear and some unlisted ones as well that do the excavation part. So he mentioned that Mr. Mundra that unlisted ones are there but we primarily compete with AP only. But but ABP has shown very strong uh growth after coming in right like when it had came in I know it it had came in cheap and didn't also get a great PE as well right versus this guy uh like sei has a slightly very track

45:02 record right where they have picked up a company and then tried to uh like build business on top of that just to show it's a old not just to show but like that is what has happened right so comparatively right So the margin is yes yes yes ma so the margin of like the gap is rather low right it's coming at 10.5 AP is at 13 so there's a 20% type right not more if I'm not plus plus a is diversified as well right so it's in solar and other segments as well and but this one is in the logistics and infrastructure so ap will get some better multiples got it just the sector in itself doesn't get that higher multiple I would be applying into this company honestly but I'll be applying only with the intention

45:48 of hoping that it gets a slightly lower subscription and I can flip on day one. I don't think this will list negative there will be enough demand so I would be applying but yeah that is what my view is on this company do you have anything to add on sevy or we can move on in the interest of time we already 50 minutes nothing much man there like this is the most entry level EPC possible which is like this ground excavation on top of that is logistics both are 10p sectors this company should get 5p in my view but uh Whatever there is some interest I I I don't become no I think that unis has tried to uh

46:33 make a appear because of the growth only. Yeah that's good. I'm glad he's trying to grow 70% of earnings growth the whole guy. So it'll trade at 2.5 times forward knowing the market but uh yeah I'm not very excited about this. Will you be applying? Mostly not. I think there are enough main boards clashing. Should have told me man I applied today. Oh no, but there are no main boards clashing, right? Like see whatever which day? Sorry. Sav is on Friday. So you can use money on 25th, right? That's why 23rd gets repurposed on 25th. Sorry, I thought this was on Friday. Then maybe I will. I'll see. I don't know. Probably not actually.

47:19 Oh, you still won't apply. I'll make you apply. There's nothing to lose there. Like it won't list much higher, but what's there to lose? True. Yeah. Anchors also anchor book issue, book issue, definitely IPO price will be protected. I feel so can definitely apply what I feel. Uh but yeah, long-term also I think the company will continue to grow at the pace of uh its earnings EPS growth sector. I don't think we'll get a good bump as such with that maybe we'll kind of close all the uh SM companies moving for the forward to the mainboard companies I wanted to do indie cube first but let me just try and finish up uh G&G and then we can come to Indie Cube very quickly because I'm bored of doing uh co-working

48:05 companies every week we did smart works yesterday last week and now we have to do indie cube but yeah before we move to that let me just set up G&G electronics and uh let Rohit talk about G&G Incorporated in 2006, the company offers refurbishing services for laptops, desktops and ICD devices both globally and in India. The company operates under the brand electronics bazar offering sourcing to refurbishment to sales to after sales services and providing warranty. IPO is a very small size IPO 460 cr IPO for a main board out of which 400 crores fresh 60 crores offs 400 crores is going into growth capital 60 crores is going into offs where the promoters taking a part exit companies coming at a market cap of 2700 crores

48:51 dilution around less than slightly less than 20% FI25 financials 70 revenue 1420 cr so market cap to sales is around 2 market cap to sales around 35 company financial for small size issue and the anchor book also look pretty decent with that over to you to talk about G&G electronics or electronics. Sure Manish and one of the reasons I had only 25 minutes for Monarch was because I had to find 20 minutes to read this also. So this is not going to be a like I've not been very thorough on the RP

49:37 but I have a lot of history in this segment. I used to run a startup that did refurbishment of electronics among other things. So I understand this space. So I'll share a perspective that is little different maybe from what is in the RHB and uh I've noted down two three points. So I I'll definitely mention those also some uh data specifically for this company. So Manish has given that initial intro they are in the business of refurbishment. Uh of course refurbishment is one part you basically source uh say these uh end of life or not necessary end of life some of these have much longer life but these end of use at least uh uh electronics you refurbish it and then you distribute it you sell and distribute it. uh they do this primarily B2B. They have tried a

50:24 little bit of B2C I believe but they're primarily a B2B business uh because it is just a lot easier and I'll come I'll come to that later. their main focus is in laptops. About 75% of their business is just laptops alone. And again, I'll come to that and I'll come to why uh from a fundamental business perspective by laptops. Uh apart from this, they also do a few interesting things. They do buybacks which I'll mention about later. Uh they work as an IT which is an asset disposal partner with a lot of corporates. Again, I'll mention that also in when I just tell you structurally why this is an interesting segment, an interesting business. Um, and they've tried a little bit of B2C through their own website, electronics bazar, as well as I think on Amazon and stuff, but that didn't work for them, which also I think is a good thing and they're kind of leaving that and

51:10 focusing just on B2B. Now, what matters for a refurbish refurbishment business? There are roughly four things that uh need to be solved for a refurbishment business to work and that's where the moat or the uh defensibility for the business comes from. So the first thing is a refurbishment business needs to build trust. This is at the end of the day a secondhand product. The product people inherently believe that such a product will stop working after some time. It will fail on me when I need it the most. It you know if I uh if I if I buy such a product I should not regret why didn't I buy a new product instead. So that trust is the single most important thing for which these guys solve it by doing two things. One is they provide warranties. Warranty is

51:56 obviously a function of your uh refurbishment and your own belief in your refurbishment capability otherwise your warranty cost will be very high. And the second thing that they do is they do something called a buyback which is when you sell the product you say that I will buy it back from you. You can do buybacks in two ways. One is when you sell it you you say I will buy it back after 2 or 3 years or you pro you power the buybacks for somebody else. Let's say Vijay sales is selling its laptop selling laptops. You provide a buyback there saying okay this is a one lakh laptop I promise I'll buy it back from you after 3 years for 30,000 rupees that helps with sales and conversion and gives you a source of uh you know source of constant source of supply but at the at the core you need to build trust in this business it generally takes time to build that trust it's not easy on day one and as you build it it becomes a

52:41 very very strong note whether it's B2B B2C whatever when you're selling a refurbished product you need to build trust and that is something I believe they have built painstakingly the second thing that really matters for such a business is the refurbishment skills itself. These guys hold I think certified partnerships with HP, with Lenovo, with bunch of these laptop brands. They have something with Microsoft. They do what they say is like a 21st step refurbishment. But way to think about it is they'll do everything from the simplest which could be some cosmetic upgrade uh let's call it L1 or in technical terms it's from L1 to L3. So L1 is this cosmetic stuff these basic you know screen repair simp simple sort of things all the way to L3 is typically a motherboard chip you know complex things that does require a little bit of technical or decent amount of technical skill uh and uh there's a decent cost

53:28 and profit margin angle at at that end a a core part along with refurbishment is the ability to source spare parts uh which is often the biggest challenge when it comes to products that are end of use or late in the life cycle spare part for a laptop or a phone today uh that released 3 years ago is not going to be easily available in the market and for that they have tie-ups. You basically have to have tie-ups with OEMs for this if you really want to be able to cater to every product and that is something that they have. And the last thing which is really important is the supply itself which is how do you source? So if you if you look at someone who sells new laptops, he's just going to go and uh tie up with a HP distributor and there'll be a steady stream of new laptops on for him to

54:13 source. It's the simplest thing to do. But if you are a refurbisher, you are constantly trying to get new old laptops every week, every month, you have to keep getting new laptops. So cracking that supply channel is not very straightforward. And that is also something that they've done. So there are two three ways like when I I spoke about the buyback program uh that gives them a steady stream of laptops. They they they power exchange program. So if you go to Chroma and I I don't know if they actually work with Chroma but as an example you go to Chroma and buy a new laptop you'll get a discount if you give them back your old laptop and somebody like uh uh electronics bazar would be the one that takes this uh and and will sort of get this in bulk from say a bunch of these uh retail outlets. You also do things with corporates where you work as disposal partners for them and

55:00 you make sure that let's say TCS is disposing of you know 5,000 10,000 laptops these guys come and buy it in bulk. So this entire thing is something it looks to me at least that they have cracked across trust across refurbishment including spare parts that constant source of supply and you can see that in the various relationships they have to make sure that they can continuously scale this business and they have in my view shown that over the last 3 4 5 years whatever data that we have and for me this if you can do these three things this is a big big mo these are the hardest things to track. Uh when you do this, you build trust which allows you to uh you know uh it's it's there there's a bit of a flywheel. As

55:45 you source more supply, you get better at refurbishment. As you get better at re refurbishment, you're able to provide better a more trustful experience because there's less failures. You're able to service whatever warranty issues are there. So it's a difficult thing. It's a step-by-step thing that you have to build and it takes time to get there. So that's the core I'd say thesis behind a refurbishment business. I think there are now more successful refurbishment businesses in India. You have somebody like a cashify. You have a spinny which has done very well in the used car space. There's somebody like a car 24. So you have large refurbishment or secondhand businesses in the country that have scaled over the last few years. So I think secondhand is a segment that is getting a lot more is becoming more mainstream getting larger.

56:32 Somebody like this they are of course not just reliant on India I think only 25% of their business is in India but 75% of their business is abroad so they're also getting a cost advantage on top of uh you know just the on top of just it being secondhand they're also getting a cost advantage by selling it uh internationally. So I think they've set themsel up beautifully. uh two three points I'll mention from the uh RFP. One is I think I said that 75% of their sales is from laptops. There is a core reason for this. Uh laptops are the highest discounted category amongst refurbished goods that you will see which is if a new phone is 10,000 maybe the old phone will sell at 5,000 6,000. If you have a new car you probably get a 30 40%

57:17 discount on it. If you have a new laptop versus an old laptop, you'll get an 80 70 75% discount on it. And that's a very unique thing about the laptop category and has mostly to do with the fact that laptops are a bulk cell uh source of supply. You will go and source it from a TCS or you'll go and source it from some corporate or some school or some education this thing where you'll get 10,000 laptops in one shot. And for the person who's selling the laptop, it is a product he just wants to dispose. So you get it at dirt cheap rates. you're then able to also refurbish in in bulk and then sell it at a fairly fairly low cost while still making a decent margin. So that's a very unique thing about laptops. These guys are focused completely over there. Uh giving that bulk sort of thing on both buy and sell which helps keep keeps cost low and

58:05 makes this a very I say high throughput kind of category. uh the numbers on the whole they did about 1,400 cr last year with 5% PAT 8% AIDenda uh one interesting thing is they so even though this companies at 2700 cr market cap so it's around 40x 39x or something with the IPO funds they're raising 320 cr is going to be done used just to clear out all their debt if you take out the interest cost of that 320 cr their pat will effectively go from this 6970 cr to about 100 cr roughly 100 101 something like that which effectively means this company is coming at 25 26 times it's not coming at 39 it's coming at 39 gross of debt and they're going to pay off

58:51 that entire debt so it is actually coming at 26 times if you throw in some growth for next year that is for FI26 it's probably coming at 20 22 times FI26 which for me in a unique one of kind of business with a lot of tailwinds this whole recycling thing is a very strong tailwind uh reuse recycle going green many companies have this ESG this u um forgetting the full form of it but these uh environment related uh uh goals also so environment sustainability yeah so all of those are in my view structural trends also so for me this is a very very interesting company I couldn't find any interviews so that's one thing I want to wait and listen to just hear the promoter out and just gather some

59:38 confidence on the promoters themselves but I am a big bull on refurbishment just my own past because of my own past uh so I am definitely going to apply for this this is something that I might actually keep as well in my portfolio for some time uh I think the anchors are also quite interesting I saw Bengal finance in the name Maduka's fund was there was there Goldman Sachs was there for just a 400 cr raise so overall this looked really interesting to me I just need to get some comfort on the promoters because Right. I have not been able to uh do any read or research on that uh and see if there's any on ground uh feedback but otherwise uh this is very very interesting company to me and I I definitely will be applying uh and I think it is it can do well even over the next uh sorry one more interesting thing

1:00:23 is I saw that the refurbishment this refurbish market for the segment laptops personal phones is slated to grow at 30 32% yearon year for the next 5 years again it's one of those where the core market itself has very very high growth projected. So lot of things in my view going for it coming at 25 26 times net of the debt clearance looks very very attractively priced to me. Got it. Question top of my mind. I'm not sure if you know this but like are they a B2B player? Are they a B2C player? What is the like are they complete B2B right now? Like they don't do any B2C. it's like some 3 4% B2C and they've mentioned also that they had tried B2C

1:01:09 but B2C is a very very different game and I think this business the biggest successes with probably the one exception of spinny uh which also I would say has to be proven uh because their economics are still not yet proven though they have hit scale B2C is a very very difficult game generally refurbishment and secondhand businesses have succeeded have scaled in the B2B model and I say this as someone who tried the B2C model in this space and I know how challenging it is from an acquisition cost to get to the right consumer at the right cost. So even an Amazon and a Flipkart they have shut down their refurbished businesses uh because it was so complex and so consume time consuming and it is a lot easier to

1:01:55 just do B2B where you work with either large corporates or you work with large dealers who will send the products out to tier two tier three markets where there is say demand for this. So they are purely B2B. I think B2B is the way to work here both on the sourcing side and on the uh on the demand side and I think that they have also what I little bit I could sense from the RP because I did look this this particular bit up was that they said they tried B2C it didn't work for them and they said we we'll just focus on B2B. Got it. And then like uh like I know Amazon shut up as you said right and that that had a major impact on new if I'm not wrong right so like do like

1:02:41 end customers do they then sell it to B2C or like like are they colleges institutes or things like that who actually end up using these refurbished laptops somehow I don't still don't get confidence on a refurbished product and again like I'm not one of those who thinks that because I feel these electronics have reached a fastm moving consumer product sort of a it's more of a FMG where you just shuffle and move back and you never look at your old products like I would have at least two three phones at my home who have just like we have never refurbished for the lack of a better word we don't even understand if this segment exists so I think the myth needs to be broken a little so if you look at most countries

1:03:28 India India also uh and if you look at the mix of new products and secondhand products sold you'll be surprised to know that in many categories the secondhand product sells like if you look at the volume of products sold may not necessarily be by value but by volume of products sold uh you will in some categories have as many new products sold as secondhand products. So in the laptop category for example if I'm not mistaken every of every new laptop or every laptop that is sold or every 10 laptops sold six are new and four are old. Uh now you might feel oh icky about it or that lack of trust but and so you will fall in that six who buy new but there are four others who are buying uh an old or refurbished laptop

1:04:13 because of the price value proposition because that's what they can afford. someone is giving them warranty, giving them assurance that okay, I'm getting uh for 30,000 I'm getting a laptop that is otherwise worth 90,000 or a lakh and I'm getting an experience almost as good as new. If you look at the car segment uh globally for every one new car that is sold, two used cars are sold. Now again something like this might look very hard to believe if you are someone who only thinks about new but that is a fact. The numbers are are are not are opin are not opinions. They are facts. So there is a large market of people who buy secondhand refurbished who for whom the functionality outweighs the uh you know that

1:04:59 the the the fact that it is not new and it is a thriving market just globally like every country there is a large secondand it varies by category but there is a large secondhand market for every in every country for just about every product category. So it may not directly sync with our consumer experiences but it it is a reality. Got it. Understood. And I was looking at the anchor book. The anchor book was very interesting for this small size of issue. There were so so many names. Quite a few of decent names. Although some of them tend to also come inmemes uh when there is a hype inmemes. But yeah, the book was decent for the lack

1:05:45 of a better word. Yeah. Yeah, it was decent anchor book like interesting good names. Yeah. Any any pier I don't think they have given any there won't be any listed like new would be very low right because effectively yeah but a small theme in the segment is not reflective of what uh price this will trade at. I think this will set the bar for a refurbished business. uh and it's hard to say exactly what it should trade at but I think 20 25 times with a for a business where I think there is tailwinds there is a decent mode there is a lot of different things that you need to do well it is not like trading electronics refurbishment everything is

1:06:31 different from the supply chain to the refurbishment to the demand side like it is complex like you have a bunch of electronics distribution businesses that will come and trade at NP12P rashi peripherals and Readington and all these guys right which are just pure distributors operating at 2% AIDA uh whereas this guy operates at a 8 9% AIDA if I'm not mistake 8 9% AIDA so there's very big difference in what the two companies do or you know these segments and this will definitely definitely get a premium uh I can see this trading at 25 times 30 times comfortably this one is coming in at 35 right if I'm not wrong it's coming at 30 it's coming 25 net of debt like it they're coming in with

1:07:18 Yeah. Okay. Yeah. So it's so you feel most of the gains will only be from EPS then right like or else there may be a sector P rerating as well because there's no PS so nobody knows where they exactly there is no and for that premier energy sort of a graph right where it's very confused where do I need to trade. Yeah. Yeah. market will be very confused about the price it had. Uh but I think it is a unique business. So it will it will get like it's coming at in my view 25 times trillion if you take out the debt it's coming in at 25 times. I think 25 times is very cheap for a uh very very unique business. So I feel it will do it will do well like it can give a good decent pop.

1:08:04 Got it. Yeah. That is what our review was of G&G Electronics. With that maybe in the interest of time let me move forward and talk about one last company for the day. Uh the last company that we will be discussing is IndieQube. So just setting up INDube and we'll kind of cover it rather quickly. Uh incorporated in 2015 company provides managed sustainable and tech techdriven workspace solutions aiming to transform the traditional office experience for modern businesses. The company manages a portfolio of 115 centers across 15 cities. Total seating capacity 186k 1 lakh 86,000 seats in as of March 31st. Uh and that includes the lo

1:08:50 currently I think 1.4. Uh in terms of the IPO size, IPO size is 700 crores s IPO out of which 650 crores is a fresh issue. 50 crores off of FSA 650 crores is going into the company at a market cap of 5,000 crores. 5,000 crores per company 700 crores around 14% in terms of market fi25 financials to revenue 113 crores revenue at -40 losses company at least uh in terms of how the accounting is very depreciation heavy business uh as all co-working businesses are so it shows us loss but we look at what cash is cash bit is for the

1:09:36 business in terms of the LM the LM is ICI and JM financial uh so company again like last year uh last week we discussed smart works this again is in the same segment which is your co-working and manage aggregation so I learned today that the two segments are different co-working is basically think of like co-working as uh for the lack of a better word when you go to a restaurant restaurant and then you are going and like taking dinner, eating dinner there, right? So demand is being filter fulfilled after the restaurant is built versus a managed aggregation model. Managed aggregation model is they are first figuring out once they have enough demand that's when

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