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Review By Dilip Davda on July 11, 2018
Supershakti Metaliks Ltd. (SML) forms part of Sai Group which has carved itself into a well known group and established it’s goodwill in iron and steel manufacturing industry. SML is operating a Steel Melting Section with installed capacity of 135000 MTPA to produce semi finished product (i.e. Billet) and Rolling Mill Section with installed capacity of 162000 MTPA to produce Wire Rods, HB Wires, Binding Wires etc.
To part finance its working capital and general corporate fund needs, SML is coming out with a maiden IPO of 1600200 equity shares of Rs. 10 each at a fixed price of Rs.375 per share to mobilize Rs. 60.01 cr. Issue comprises of offer for sale of 800000 shares and fresh equity issue of 800200 shares. Issue opens for subscription on 17.07.18 and will close on 20.07.18. Minimum application is to be made for 300 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Aryaman Financial Services Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 27.77% of the post issue paid up capital of the company. Its entire equity is the result of scheme of demerger (that happened at par). Average cost of acquisition of shares by the promoters is Rs. 64.61, Rs. 71.96, Rs. 79.89 and Rs. 100.71 per share. Post issue, SML’s current paid up equity capital of Rs. 4.96 cr. will stand enhanced to Rs. 5.76 cr.
On performance front, for last three fiscals, SML has posted turnover/net profits of Rs. 245.67 cr. / Rs. 0.72 cr. (FY16), Rs. 301.02 cr. / Rs. 0.58 cr. (FY17) and Rs. 360.09 cr. / Rs. 12.38 cr. (FY18). Sudden mega jump in bottom line for FY18 is a real wonder for one and all which is a result of adjustments of inventory and other expenses. Issue is priced at a P/BV of 3.41 on the basis of its NAV of Rs. 110.03 as on 31.03.18 and at a P/BV of 2.55 on the basis of post issue NAV of Rs. 146.82. For last three fiscals it has posted an average EPS of Rs. 13.11 and an average RoNW of 12.09% (With the help of superb unbelievable profits for FY18). If we take FY18 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 17 against industry composite of 14 and thus issue is priced aggressively. As per offer documents, it has shown Adhunik Industries, Gallant Metals and Kamdhenu as its listed peers that are currently trading at a P/Es of around 75, 6 and 32 (as on 10.07.18). Listed peers are strictly not comparable with this company. SML operates in high volume, low margin business. Its debt ratio is 0.41 as on 31.03.18.
On merchant banker’s front, this is the 34th mandate from its stable in last four fiscals and out of last 10 listings, 3 opened at discount, 3 around par and the rest with a premiums ranging from 1% to 6%. Thus it has poor track records.
With FY 18 earnings, company could do some wonders, but sustainability of the same trends going forward is a major concern. Hence cash surplus, risk savvy investors may consider investment for long term.
Review By Dilip Davda on July 11, 2018
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 Supershakti Metaliks Limited offers an early investment opportunity in Supershakti Metaliks Limited. A stock market investor can buy Supershakti Metaliks IPO shares by applying in IPO before Supershakti Metaliks Limited shares get listed at the stock exchanges. An investor could invest in Supershakti Metaliks IPO for short term listing gain or a long term.
Read the Supershakti Metaliks IPO recommendations by the leading analyst and leading stock brokers.
Supershakti Metaliks IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Supershakti Metaliks IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Supershakti Metaliks 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 Supershakti Metaliks IPO.
The Supershakti Metaliks IPO allotment status will be available on or around July 25, 2018. The allotted shares will be credited in demat account by July 27, 2018. Visit Supershakti Metaliks IPO allotment status to check.
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