Technofab Engineering IPO looks expensive:Nirmal Bang

MUMBAI: Nirmal Bang is of the view that the initial public offering of Technofab Engineering looks expensive compared to its peer Sunil Hitech.

“On valuation front, based on diluted earnings TEL is offered at a PE of 13.05 & 12.51 times at upper & lower band respectively. This looks expensive than its peer’s Sunil Hitech which is trading at PE of 11 times.

Apart from foraying into high risk low margin segment like roads, company has also significant exposure to African countries where execution problem may creep up and might impact on profitability,” the report said.

Technofab Engineering entered the capital market Tuesday with public issue of 29.90 lakh shares in the price band of Rs 230-240 per share. The 100 per cent book building issue will close Friday.

The company is engaged in the business of providing Engineering Procurement and Construction (EPC) services, executing a wide range of Balance-of-Plant (BoP) and electromechanical projects on a complete turnkey basis.

It plans to use the proceeds to meet long-term working capital requirements, finance the procurement of construction equipment, finance setting up of maintenance and storage facility for construction equipment and for setting up of training centre for employees.