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Review By Dilip Davda on February 12, 2024
• TCL is a distinguished automotive ancillary providing critical components.
• The company has renowned customers and the list gets widening.
• It has posted growth in its top and bottom lines, and management is confident of maintaining the trends established.
• Based on FY24 annualized earnings, the issue appears fully priced.
• Investors may consider parking funds for the medium to long term rewards.
ABOUT COMPANY:
Thaai TCL) is a distinguished automotive ancillary company with IATF 16949:2016 certification, specializing in High-Pressure Die Casting, as well as the precision Machining of both Ferrous and Non-Ferrous materials and Induction heating and quenching. Its business model is firmly rooted in a B2B approach, catering to leading entities in the automotive components sector.
In recognition of its commitment to environmental sustainability, the company received the MSIL-GREEN Certification from Maruti Suzuki India Limited in 2021. The company was originally formed as a Partnership Firm under the Partnership Act, 1932 and was converted from Partnership firm into a public limited company as per the provision of Part I Chapter XXI of the Companies Act, 2013 with the name and style of "Thaai Casting Limited" and received a Certificate of Incorporation from the Registrar of Companies, Tamil-Nadu and Andaman situated at Chennai dated June 12, 2023.
TCL's product portfolio encompasses a diverse range of Automobile components, including Engine Mounting Support Brackets, Transmission Mounts, Fork Shift and Housing, Armature - Steering Wheel, Electrical Connectors, YFG Base Frame (Right-hand drive side/Left-hand drive side), Housing, Top Cover, and more. As of September 30, 2023, it had 132 employees on its payroll.
TCL's customer list includes names like PYUNG HWA, Yazaki, HL Mando, UCAL, Harting, Schindler, Hyundai, KIA, Maruti Suzuki, Toyota, Mahindra, Tata Motores, Royal Enfield etc.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 6129600 equity shares of Rs. 10 each (worth Rs. 47.20 cr. at the upper cap) It has announced a price band of Rs. 73 - Rs. 77 per share. The issue opens for subscription on February 15, 2024, and will close on February 20, 2024. The minimum application to be made is for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.50% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO funds, it will utilize Rs. 37.30 for capital expenditure and the rest for general corporate purposes.
The company has reserved 347200 equity shares for the market maker, and from the rest, it has allocated not more than 50% for QIBs, not less than 15% for HNIs and not less than 35% for Retail investors.
The issue is solely lead managed by GYR Capital Advisors Pvt. Ltd., and Purva Sharegistry (India) Pvt. Ltd. is the registrar of the issue. Giriraj Stock Broking Pvt. Ltd. is the market maker for the company.
The company has issued/converted entire equity share capital at par so far. The average cost of acquisition of shares by the promoters is Rs. 10.00, and Rs. 11.97 per share
Post-IPO, company's current paid-up equity capital of Rs. 17.00 cr. will stand enhanced to Rs. 23.13 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 178.10 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue/net profit of Rs. 20.49 cr. / Rs. 0.40 cr. (FY21), Rs. 38.42 cr. / Rs. 1.15 cr. (FY22), and Rs. 49.12 cr. / Rs. 5.04 cr. (FY23). For 7M of FY24 ended on October 31, 2023, it earns a net profit of Rs. 5.57 cr. on a total revenue of Rs. 28.89 cr. Thus its top and bottom lines posted growth for the reported periods and indicates prospects for the company going forward.
For the last three fiscals, it has reported an average EPS of Rs. 1.75, and an average RONW of 27.09%. The issue is priced at a P/BV of 5.64 based on its NAV of Rs. 13.65 as of October 31, 2023, and at a P/BV of 2.53 based on its post-IPO NAV of Rs. 30.44 per share (at the upper cap).
If we attribute annualized FY24 earnings to its post-IPO fully diluted paid-p capital, then the asking price is at a P/E of 18.64. Thus the issue appears fully priced.
For the reported periods, the company has posted PAT margins of 1.97% (FY21), 3.01% (FY22), 10.29% (FY23), 19.28% (7m-FY24), and RoCE margins of 0.03%, 0.05% 0.13%, 0.09% respectively for the referred periods.
DIVIDEND POLICY:
The company has not declared any dividends in the last five years. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Endurance Techno and Electrosteel as of February 12, 2024). However, they are not comparable on an apple-to-apple basis.
MERCHANT BANKER'S TRACK RECORD:
This is the 21st mandate from GYR Capital in the last three fiscals, out of the last 10 listings, all opened with premiums ranging from 4.76% to 366.67% on the date of listing.
Review By Dilip Davda on February 12, 2024
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 Thaai Casting Ltd offers an early investment opportunity in Thaai Casting Ltd. A stock market investor can buy Thaai Casting IPO shares by applying in IPO before Thaai Casting Ltd shares get listed at the stock exchanges. An investor could invest in Thaai Casting IPO for short term listing gain or a long term.
Read the Thaai Casting IPO recommendations by the leading analyst and leading stock brokers.
Thaai Casting IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Thaai Casting IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Thaai Casting IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Thaai Casting IPO.
The Thaai Casting IPO allotment status will be available on or around February 21, 2024. The allotted shares will be credited in demat account by February 22, 2024. Visit Thaai Casting IPO allotment status to check.
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