Storage Technologies & Automation Ltd

Storage Technologies & Automation Limited was incorporated in the year 2010 and is engaged into storage racking system. They specialise in design, manufacturing, installation services of metal storage racks, automated warehouses and other storage solutions. The range of products and services demonstrates their commitment to providing innovative, efficient solutions for diverse warehousing needs, catering to a wide range of industries each with its own specific storage and logistical requirements, which includes oil & gas, automotive components & aerospace, food & beverages and cold storage, pharmaceutical, textile, retail, FMCG and others. They are a customer-centric business driven by a focus on continuing innovation and operational efficiency. They offer the clients with a wide variety of display and storage racks for commercial as well as industrial purposes. These are manufactured using qualitative raw materials. This helps in ensuring the durability and optimum strength of the finished products. They also use different grades of Mild steel (Hot rolled coils, cold rolled coils, Galvanised steel coils, PPGI coils, pipes and structural sections), powder for powder coating, Epoxy, Enamel paints and plastic for packaging as raw material. The expansive infrastructure, spanning approximately 56,250 square feet in Bangalore, Karnataka and approximately 56,250 square feet of storage facility supports a streamlined manufacturing process.  As of April 01, 2024, the total order book value of the Company is Rs 2136.00 Lakhs. They believe that the experience in execution of projects, technical capabilities, timely performance, reputation for quality and timely delivery, as well as the price competitiveness has enabled them to obtain the projects. As per financial performance, Storage Technologies & Automation Limited has posted total income / net profits of Rs 48.52 Cr / Rs 1.18 Cr (FY21), Rs 69.90 Cr / Rs (0.21) Cr (FY22), Rs 81.37 Cr / Rs 0.61 Cr (FY23) and Rs 53.17 Cr / Rs 3.58 Cr (upto 31.10.23 FY24). So as per previous financials data, company has shown sales growth, but profit remained zig-zag. Also sudden rise in net-profit just before IPO raises doubts. Issue is priced at a P/BV of 2.45 as per NAV of 31.78 as on 31.10.2023. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around (479.20), 165.54 and 16.31 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Oneview Corporate Advisors Private Limited is associated with this SME IPO and handled 2 SME IPOs in last 2 year. From last 2 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 2 SME IPOs, one is trading below issue price and remaining is trading above issue price. ( As on 24.04.24 ) As per financials, Storage Technologies & Automation Limited has shown average results, RoNW is 20.89% and P/E is respectively (479.20), 165.54 and 16.31 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced. Company is engaged into storage racking system, which is highly competitive and fragmented segment. Performance of BRLM is average. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Mohammad Arif Abdul Gaffar Dor
• 2 Khasim Sait
• 3 Hanif A Khatri
• 4 Syed Azeem
• 5 Afzal Hussain
• 6 Nuumaan Khasim