Belrise Ind. IPO review (Apply)

•    The company is one of the leading automotive component manufacturing company with diverse range of products.
•    It also provides engineering solutions for automobiles across the variants.
•    It enjoys around 24% market share in two-wheeler segment.
•    It posted growth in its top lines, but marked pressure on its bottom lines.
•    Based on its financial data, the IPO appears reasonably priced.
•    Well-informed investors may park funds for long term.

ABOUT COMPANY:
Belrise Industries Ltd. (BIL) is an automotive component manufacturing company based in India offering a diverse range of safety critical systems and other engineering solutions for two-wheelers, three-wheelers, four-wheelers, commercial vehicles and agri-vehicles. Its product portfolio includes metal chassis systems, polymer components, suspension systems, body-in-white components and exhaust systems, among others. BIL’s products are largely agnostic to vehicle powertrain types, reflecting its ability in catering to both electric vehicles and internal combustion engine vehicles, thus positioning it favorably to adapt to the growing electric vehicle market. 

The company specialize in precision sheet metal pressing and fabrication (i.e., the process of joining sheet metal components to create unified structures for assembling vehicle subsystems and bodies), and is one of the top three companies with a market share of 24% in the overall two-wheeler metal components segment in India as of March 31, 2024, in terms of revenue (Source: CRISIL Report). Further, it also specializes in precision sheet metal pressing and fabrication for three-wheelers (Source: CRISIL Report). India is the largest three-wheeler (3W) market in the world. Similarly, it also specializes in precision sheet metal pressing and fabrication for four-wheelers (passenger vehicles as well as commercial vehicles) As per CRISIL Intelligence, depending on India's GDP growth to be between 6% to 8% for the next 5 years, the India PV industry is expected to grow at a CAGR of 4.5% to 6.5% respectively between 2024 and 2029. The commercial vehicle industry is also expected to grow at a CAGR of 3% to 5% between 2024 and 2029 (Source: CRISIL Report). As a large and well-established precision sheet metal pressing and fabrication company in India, it is well-positioned to capitalize on the growing two-wheeler, three-wheeler and four-wheeler markets in India and internationally.

Currently it serves diversified customer base of 29 OEMs. As of December 31, 2024, it had 2144 employees on its payroll, and also hired 5649 contract labours. As of March 31, 2025, it had 17 manufacturing facilities.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 238888889 fresh equity shares issue worth Rs. 2150.00 cr. (at the upper cap). The company has announced a price band of Rs. 85 – Rs. 90 per equity shares of Rs. 5 each. The issue opens for subscription on May 21, 2025, and will close on May 23, 2025. The minimum application to be made is for 166 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 26.85% of the post-IPO paid-up equity capital. From the net proceeds of the fresh equity issue, the company will utilize Rs. 1618.13 cr. for repayment/prepayment of certain borrowings, and the rest for general corporate purposes. 

The company has allocated not more than 50% for QIBs, not less than 15% for HNIs and not less than 35% for Retail investors.

The joint Book Running Lead Managers (BRLMs) to this issue are Axis Capital Ltd., HSBC Securities and Capital Markets (India) Pvt. Ltd., Jefferies India Pvt. Ltd., and SBI Capital Markets Ltd., while MUFG Intime India Pvt. Ltd. is the registrar to the issue. SBI Cap Securities Ltd., Investec Capital Services (India) Pvt. Ltd., are the syndicate members.

Having issued/converted initial equity shares at par, the company issued further equity shares in the price range of Rs. 378.50 – Rs. 2500 per share (based on Rs. 5 FV), between March 2012, and December 2019. It has also issued bonus shares in the ratio of 15 for 1 in February 2024. The average cost of acquisition of shares by the promoters is Rs. 0.00, Rs. 0.23, and Rs. 1.31 per share. 

Post-IPO, its current paid-up equity capital of Rs. 32.55 cr. will stand enhanced to Rs. 44.49 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 8008.91 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 5410.68 cr. / Rs. 261.85 cr. (FY22), Rs. 6620.78 cr. / Rs. 313.66 cr. (FY23), and Rs. 7555.67 cr. / Rs. 310.88 cr. (FY24). For 9M of FY25 ended on December 31, 2024, it earned a net profit of Rs. 245.47 cr. on a total income of Rs. 6064.76 cr., against Rs. 297.50 cr. / Rs. 6013.22 cr. respectively for the corresponding previous period. Thus, while its top line has marked small growth, its bottom line marked inconsistency indicating pressure on margins. As of December 31, 2024, its top line got about 75% from domestic sales and about 25% from exports sales.

For the last three fiscals, the company has posted an average EPS of Rs. 4.57 and an average RoNW of 14.31%. The issue is priced at a P/BV of 2.26 based on its NAV of Rs. 39.75 as of December 31, 2024, and at a P/BV of 1.69 based on its post-IPO NAV of Rs. 53.24 per share (at the upper cap). 

If we attribute FY25 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 24.46. Based on FY24 earnings, the P/E stands at 24.79. Thus, the issue is reasonably priced. 

The company reported PAT margins of 4.85% (FY22), 4.77% (FY23), 4.15% (FY24), 4.08% (9M-FY25), and RoCE margins of 12.86%, 14.04%, 14.83%, 11.03% for the referred periods, respectively. 

According to the management, recent acquisition of H-One and plans of three new plants will boost its earnings going forward. As it will clear over Rs. 1600 cr. debt, interest cost saving will be an added feather. Repeat orders from the ongoing customers on the rise and introduction of new product variants will help boosting its top line as well.

DIVIDEND POLICY:
The company has paid 10% dividend for FY23. It has already adopted a dividend policy in August 2023, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Bharat Forge, UNO Minda, Motherson sumi Wiring, JBM Auto, Endurance Techno, and Minda Corp., as their listed peers. They are trading at a P/E of 60.0, 60.4, 42.4, 85, 37.7, and 43.8 (as of May 16, 2025). However, they are not truly comparable on an apple-to-apple basis. 

MERCHANT BANKER’S TRACK RECORD:
The four BRLMs associated with the offer have handled 65 pubic issues in the past three fiscals, out of which 17 issues closed below the offer price on the listing date.