Krupalu Metals BSE SME IPO review

•    The company is engaged in the manufacturing wide range of brass and copper products.
•    It is expanding its capacity to more than double.
•    The company posted growth in its top and bottom lines for the reported periods.
•    Based on its recent financial data, the issue appears aggressively priced.
•    Well-informed/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Krupalu Metals Ltd. (KML) is engaged in the manufacturing of wide range of brass and copper products. The company specializes in producing brass and copper sheets and strips, metal components, and providing various job work services. These metal components include cutting components, inserts, pipe fittings, profiles, terminals, electrical components, bus bars, and many other customized products. In addition to its manufacturing capabilities, the company also trades raw materials, ensuring that it has access to a diverse range of metal products to meet the specific requirements of its customers across different industries.

The factory and registered office of the company is situated at Plot No. 4345, GIDC Phase-III, Dared Udyognagar, Jamnagar, Gujarat, India, 361009. The premises, where the company's operations are based, are under a 99-year lease agreement between the Gujarat Industrial Development Corporation (GIDC) and Krupalu Metals Pvt Limited. This lease agreement is renewable with mutual consent between both parties, providing the company with long-term stability in terms of its manufacturing operations.

At present, its facility is equipped to manufacture brass and copper sheets with maximum dimensions of 48 inches in height, 14 inches in width, and up to 6 mm in thickness. This setup allows for an annual production capacity of approximately 864 metric tons. With the addition of the new machinery, it will significantly expand capabilities. The upgraded facility will be able to produce sheets with dimensions reaching up to 80 inches in height, 24 inches in width, and 10 mm in thickness. This will result in an incremental production capacity of 936 metric tons per annum, bringing total annual production capacity to 1,800 metric tons for brass and copper sheets. Its capacity utilization increased from 73.38% for FY23 to 86.16% for FY25. As of July 31, 2025, it had overall 40 employees including 27 daily labours.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 1872000 equity shares of Rs. 10 each, at a fixed price of Rs. 72 per share to mobilize Rs. 13.48 cr. The IPO opens for subscription on September 08, 2025, and will close on September 10, 2025. The minimum application to be made is for 3200 shares and in multiple of 1600 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 31.88% of post-IPO paid-up equity capital of the company. The company is spending Rs. 1.49 cr. for this IPO process, and from the net proceeds of the issue, the company will utilize Rs. 5.18 cr. for capex on purchase of additional plant and machinery, Rs. 5.71 cr. for working capital, and Rs. 1.10 cr. for general corporate purposes.

The IPO is solely lead managed by Finshore Management Services Ltd., while Cameo Corporate Services Ltd. is the registrar to the issue. Anant Securities is the market maker. 

The company has issued/converted entire initial equity shares at par value. It has also issued bonus shares in the ratio of 2 for 3 in September 2024. The average cost of acquisition of shares by the promoters is Rs. 2.43, and Rs. 4.82 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 4.00 cr. will stand enhanced to Rs. 5.87 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 42.28 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total Income/Net Profit, of Rs. 33.58 cr. / Rs. 0.42 cr. (FY23), Rs. 37.12 cr. / Rs. 1.55 cr. (FY24), and Rs. 48.50 cr. / Rs. 2.15 cr. (FY25). The company posted growth in its top and bottom lines for the reported periods. Surge in its bottom lines for FY25 is a bit surprise. Its debt-equity ratio of 1.37 as of March 31, 2025 raise concern.

For the last three fiscals, the company has reported an average EPS of Rs. 4.15, and an average RoNW of 32.97%. The issue is priced at a P/BV of 4.70 based on its NAV of Rs. 15.31 as of March 31, 2025, and at a P/BV of 2.16 based on its post-IPO NAV of Rs. 33.38 per share.

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 19.67, and based on its FY24 earnings, the P/E stands at 27.38. Thus, based on its recent financial data, the issue appears aggressively priced.

The company has posted PAT margins of 1.25% (FY23), 4.17% (FY24), 4.45% (FY25), and RoCE Margins of 17.21%, 36.28%, 48.45%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy, based on its financial performances and future prospects.

COMPARISON WITH LISTED PEERS:
As per offer document, the company has shown Sprayking Ltd., Poojawestern Metaliks, as its listed peers. They are currently trading at a P/E of around 9.97 and 17.2 (as of September 04, 2025). However, they are not truly comparable on an apple-to-apple basis. This compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORDS:
This is the 26th mandate from Finshore Management in the last four fiscals (including the ongoing one). Out of last 10 listings, 1 opened at discount, 1 at par, and the rest with premium ranging from 3.63% to 90.00 % on the date of listing.