EKI Energy Services SME IPO Financial Analysis (Subscribe for Long Term)

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.

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

Review Author

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]

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