Supershakti Metaliks Limited

Started in 2012, Supershakti Metaliks Limited is a Kolkata based company engaged in the business to provide diversified products of steel, manufactured at their plant located at Durgapur, spread over 11.27 acres. Company 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.  Company is operating a Steel Melting Section with installed capacity of 1,35,000 MTPA to produce semi finished product (i.e. Billet) and Rolling Mill Section with installed capacity of 1,62,000 MTPA to produce Wire Rods, HBWires, Binding Wires etc. in the plant. Company is currently operating at 81.79% and 72.09% capacity utilisation for Induction Furnace and Rolling Mill. Company is planning to increase Induction Furnace capacity to 2,08,800 MTPA and Rolling Mill capacity to 2,52,000 MTPA with expected capacity utilisation 76.61% and 62.18% respectively. Company is using Electrotherm equipments for Induction furnace and Armech Engineering machineries for its Block Mill.  The Company enjoys a wide product range with diverse applications across downstream sectors. It possesses multiple manufacturing processes within the Plant with the ability to address customer orders with shrinking turnaround time. The Company has the widest range of products enabling it to cater to a wide spectrum of applications across the industries and balancing it out from market volatilities. The company has 376 employees on its payroll. As per financial performance, company has posted total income/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). Company has shown consistent growth in top-line, but bottom-line is not consistent and Sudden increase in bottom-line generates doubts for sustainability. For last three fiscals, it has posted an average EPS of Rs 13.11 and an average RoNW of 12.09%. Issue is priced at P/BV of 2.55 based on its post issue NAV of 146.82. If we take latest net profit of FY18 and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 17.45 and as per RHP, industry average P/E is 13.80. So issue looks fully priced. On BRLM's front, for Aryaman Financial Services Limited this is the 36th IPO and from last 10 IPOs, 3 opened below issue price, 2 at par and other listed with 1% to 10% premium on the day of listing. As of now, from last 10 IPOs, 3 are trading below issue price and remaining above issue price. ( As on 11.07.18 ) As per financials, company's performance is good, but inconsistent bottom-line with sudden jump in FY 18 is very surprising, RoNw is 12.09% for last three fiscals and issue is fully priced as per latest earnings. If company can maintain same bottom-line in future, than only it looks good otherwise its very aggressively priced.  So we give NEUTRAL rating to this SME IPO as per current market situation.

• 1 Mr. Dilipp Agarwal (Individual Promoter)
• 2 Mr. Deepak Agarwal (Individual Promoter)
• 3 Veerbhadra Sales Private Limited (Corporate Promoter)
• 4 Khandelwal Finance Private Limited (Corporate Promoter)