RRP S4E innovation Unlisted Shares

Presentation Summary

At S4E, innovation is the core strength, rooted in over three decades of dedicated pursuit of excellence. They are a electro-optics and precision engineering company specializing in developing advanced technological solutions, with a focus on nano-machining and research and development to enhance electro-optic technologies. The company's pre-IPO note provides key information and analysis.

Company Overview:

S4E's mission is reflected in its commitment to pushing the boundaries of technology. They have a state-of-the-art Nano Machining facility in India, setting industry standards with capabilities for mechanical components (1-micron tolerance) and optical elements (3 nm surface finish). S4E has played a pivotal role in space exploration, contributing technology and processes for large telescopic mirrors showcased in the MACE PROJECT. They hold four Electro Optics patents with three more in the pipeline and are expanding into Drone Cameras, Counter Drone systems, and VTOL technologies via the "Make in India" initiative.

Industry Analysis:

The company operates within the electro-optics and precision engineering sector, a highly specialized industry focused on advanced optics and electronics. This sector is closely linked to defense, aerospace, and surveillance, driven by innovation, intellectual property, and R&D, with high barriers to entry. Increased demand exists for surveillance equipment, thermal imaging, and night vision technology in both civilian and military applications. The sector also sees investment in lightweight and sophisticated equipment.

Products and Services:

S4E is currently operating under two segments: Repairs of electro optics (Thermal Camera) and Air Purifier Monitoring System, Manufacturing air purifying system for confined places such as small rooms and in cars (generating most FY23 sales). The company is planning to expand into new segments in the future, particularly acquiring anti-drone technology from Israel, developing Drone Cameras for Solar Panel Cleaning and finding wind mill defects. Product offerings include: PRM 25 Micro Reflex Sight (55 grams, for subcompact pistols), AP 37 Telescopic Sight 4x/5x, Dhristi 5x to 25x Zoom, Night Vision Binocular, and Long Range Camera.

Financial Performance (FY2022 vs FY2023):

• Revenue: 38.31 Cr vs 31.20 Cr
• EBITDA: 12.25 vs 16
• EBITDA Margin: 32.13% vs 52.72%
• NP Margin: 16.24% vs 27.34%
• PAT: 6 vs 8.3
• Interest Coverage Ratio: 10.37 vs 6.79
• D/E Ratio: 0.12 vs 0.07
• Current Ratio: 2.15 vs 1.79
• EPS: 13.05 vs 15.89
• Return on Net Worth: 14% vs 13.57%

Valuation (FY2023):

• P/E Ratio: 18.88
• P/B Ratio: 2.56
• Market Cap: 163 Cr

Other Key Points:

The company expects revenue of Rs. 45-50 crore in FY2024 and Rs. 100 crore in FY2025. Key peers include BEL, Tonbo Imaging Private Limited, and Tata Advanced Systems Limited.