Hemant Surgical Industries Limited

Hemant Surgical Industries Limited, started in 1989 at Mumbai, manufactures, imports, assembles and markets a comprehensive portfolio of medical equipments and disposables. Company's product offerings cover a wide spectrum of equipments and disposables required for (i) Renal Care, (ii) cardiovascular disease (iii) respiratory disease, (iv) Critical Care and Radiology and (v) Surgical disposables. Their wide range of products include some of the indigenously manufactured products along with some other products that are imported from countries like: Japan, China, France and Australia and are further processed in their assembly units. In addition they are also providing services for maintenance and running of dialysis centres. Company has one manufacturing and two assembly units with details as follow: 1. Manufacturing Unit I situated at Achad Industrial Estate – Company is currently manufacturing products like : Dialysis solution (liquid and Powder) used in dialysis, Hot and Cold Sterilant used for cleaning dialyzer, Purified water used in rinsing and cleaning of dialysis machines and sanitizer.   2. Assembly Unit II situated at Atgaon - for assembly of various medical devices like: Nebulizers, Oxygen Concentrator, Air Mattress, Digital Thermometer, Pulse Oximeters, ECG Electrodes, Dialyzer which are sold under the Brand Name 'Aero Plus'. Silicon Foley catheters imported from China which are further processed and sold under the Brand name 'Safecath' and for assembly of new and refurbished dialysis machines imported from China, France and Australia, Meditapes imported from JMS Co. Ltd., Japan. 3. Assembly Unit III situated at Bhiwandi – for assembly of products like: Intravenous infusion set, ECG Machines, Ultrasound Machines, Paramonitor, Ventilator etc.  Company also entered into agreement with some International companies for importing and marketing in Bharat. As on December 31, 2022, the Company has employed approximately 172 employees at various levels of the Organization. As per financial performance, Hemant Surgical Industries Limited has posted total income/net profits of Rs 60.65 Cr / Rs 1.14 Cr (FY21), Rs 105.77 Cr / Rs 4.61 Cr (FY22) and Rs 111.5 Cr / Rs 7.65 Cr (FY23), So company has shown good growth, but sudden jump in net profit just before IPO generates doubts. Company has posted an average EPS of Rs 8.5/- and average RoNW of 30.14% for last three fiscals. Issue is priced at a P/BV of 2.84 as per NAV of Rs 31.7/- as on 31.03.23. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 20.36 and as per FY23 earnings P/E is 12.28. As per RHP, comparison between listed peer is shown in above table. On BRLM's front, Hem Securities Limited is associated with this SME IPO and handled 23 SME IPOs in last 3 years. From last 10 SME IPOs, all opened above issue price or at par on the listing day. As of now from last 10 IPOs, all are trading above issue price. ( As on 18.05.2023) As Per financials, Hemant Surgical Industries Limited has shown good results, RoNW is 32.4% and P/E is respectively 20.36 and 12.28 as per FY22 and FY23 earnings, which looks fully priced, also rise in net-profit in just before IPO raises concerns. Company is in business of medical equipments and disposables, and its highly competitive due to organized and unorganized players. But as health services sector will grow, we may see good growth in this sector also.  Performance of BRLM is good. So we are giving NEUTRAL rating to this SME IPO, but SME IPOs are very risky in nature due to limited clients.

• 1 Mr. Hanskumar Shamji Shah
• 2 Mr. Kaushik Hanskumar Shah
• 3 Mr. Hemant Praful Shah