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Review By Dilip Davda on December 12, 2021
• NRL is importing scrap and recycling it into metals.
• Rising commodity prices augurs well for this recycler.
• Based on its financial data, the issue appears reasonably priced.
• Cash surplus investors may consider investment for the long term.
ABOUT COMPANY:
Nupur Recyclers Ltd. (NRL) is in the field of import of non-ferrous metal scrap such as shredded Zinc Scrap, Zinc die-cast scrap, Zurik SS scrap and Aluminium Zorba grades. It is also involved in the trading of these metals. The company processes materials from recyclables' such as metal or scrap to make the earth healthy. It develops efficient recycled products and works with the customers to give them quality products.
NRL processes a different range of materials with the pieces of equipment and works with the customers to give them tailor-made quality products.
It works as a crucial business interface, networking between manufacturers/processors/yards and consumers/traders across the country. We pursue business based on quality contacts, information and service. The company operates as an important intermediary in the Metals Scrap Supply Chain whereby it imports scrap metals such as zinc, Zurich (shredded nonferrous metals predominantly comprising stainless steel, plus insulated copper wire (ICW), aluminium, copper, lead, magnesium and other metals) from various suppliers and supply the same to customers in the Metal Business. The company's business model is based on the B2B model wherein the Company sells the scrap to the business enterprises who further transform the scrap into the finished product as per their requirements. It also processes and segregate the scrap metals and sell them as per the customers' requirements as per their quality by assigning specific grades.
According to management, it has recently ventured into the EV charging stations segment in collaboration with Attero Recycling.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its needs for working capital (Rs. 26.00 cr.), general corporate purpose (Rs. 6.49 cr.), NRL is coming out with a maiden IPO of 5700000 equity shares of Rs. 10 each at a fixed price of Rs. 60 per share to mobilize Rs. 34.20 cr. The issue opens for subscription on December 13, 2021, and will close on December 15, 2021. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.40% of the post issue paid-up capital of the company. NRL will spend Rs. 1.71 cr., for this IPO process.
The issue is solely lead managed by Corporate Capitalventures Pvt. Ltd., and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. SS Corporate Securities Ltd. is the market maker for this issue.
Its equity is issued at par and has also issued bonus shares in the ratio of 1509 for 1 share in September 2021. The average cost of acquisition of shares by the promoters is Rs. NIL, Rs. 0.006 per share.
Post issue, NRL's current paid-up capital of Rs. 15.10 cr. will rise to Rs. 20.80 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 124.80 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last fiscal, NRL has posted turnover/net profits of Rs. 0.91 cr. / Rs. 0.01 cr. (FY19), Rs. 13.21 cr. / Rs. 0.03 cr. (FY20) and Rs. 104.97 cr. / Rs. 10.01 cr. (FY21). For the first quarter of FY22 ended on June 30, 2021, it has earned a net profit of Rs. 6.64 cr., on a turnover of Rs. 39.35 cr.
The company has posted an average EPS of Rs. 3.36 and an average RoNW of 0.77%. The issue is priced at a P/BV of 5.42 based on its NAV of Rs. 11.06 as of June 30, 2021, and at a P/BV of 2.45 based on its post-issue NAV of Rs. 24.47.
If we annualize FY22 earnings and attribute it to fully diluted post IPO equity, then the asking price is at a P/E of 4.70, whereas on the basis of FY21 earnings, it comes to 12.47 making this IPO reasonably priced. According to management, due to the rise in commodity prices and the rise in demand for aluminium, copper, zinc etc. this company was able to earn better margins and this trend is likely to continue for the coming few years as the economy will re-open with speedy reforms post-pandemic.
COMPARISON WITH LISTED PEERS:
As per the offer documents, the company has shown Rajnandini Metal as its listed peer. It is currently trading at a P/E of 36.85 (as of December 10, 2021). However, they are not truly comparable on an apple-to-apple basis.
MERCHANT BANKER'S TRACK RECORD:
On the merchant banker's front, there were no mandates from their stable in the last three fiscals including the ongoing one.
Review By Dilip Davda on December 12, 2021
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Nupur Recyclers Limited offers an early investment opportunity in Nupur Recyclers Limited. A stock market investor can buy Nupur Recyclers IPO shares by applying in IPO before Nupur Recyclers Limited shares get listed at the stock exchanges. An investor could invest in Nupur Recyclers IPO for short term listing gain or a long term.
Read the Nupur Recyclers IPO recommendations by the leading analyst and leading stock brokers.
Nupur Recyclers IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Nupur Recyclers IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Nupur Recyclers IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Nupur Recyclers IPO.
The Nupur Recyclers IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Nupur Recyclers IPO allotment status to check.
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