Monolithisch India NSE SME IPO review (May apply)

•    The company is in the business of manufacturing and trading of ramming mass and related materials.
•    The company posted steady growth in its top lines for the reported periods.
•    The surge in bottom lines fromFY23 to FY25 raise eyebrows and concern over its sustainability going forward.
•    Based on its recent financial data, the issue appears aggressively priced. 
•    Well-informed investors may park moderate funds for medium to long term.

ABOUT COMPANY:
Monolithisch India Ltd. (MIL) is engaged in the business of manufacturing and supply of specialized ramming mass used as a heat insulation/ lining material, by customers as a refractory consumable for Induction furnaces installed in iron/steel and foundry plants. It is also engaged in the trading of products on occasional basis to meet the excess and urgent requirement by customers. Most of its customers and raw material suppliers are located in nearby states with the manufacturing facility of the company. 

The major customers of the company are iron and steel producers located in Eastern parts of India, majorly in the states of West Bengal, Jharkhand & Odisha. Its product i.e. specialized ramming mass is used in the induction furnace to create thermal insulation between the coil of the induction furnace and the molten steel. The melting point of the ramming mass act as an insulation barrier material between the induction furnace crucible and the molten steel. It has over the years, based on the requirements of customers, developed different grades of ramming mass with different specifications and additives to serve furnace of different sizes and make. 

Its products are made of alpha-quartzite and stone boulder which is available in the Bihar, Jharkhand and Madhya Pradesh region, as most of suppliers are located in these areas. Alpha quartzite is much harder than other different quartzite in this category. It is dense, compact, resistant to weathering and erosion making it useful for manufacturing of ramming mass.

MIL emphasizes on supplying goods as per required standards and customer specification, and also ensure that all products have the appropriate content of various chemical compositions. For FY25 it served 63 customers out of which repeated customers were 40. As of March 31, 2025, it had 26 employees on its payroll and additional 40 contract workers in various department.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 5736000 equity shares of Rs. 10 each to mobilize Rs. 82.03 cr. at the upper cap. It has announced a price band of Rs. 135 – Rs. 143 per share. The issue opens for subscription on June 12, 2025, and will close on June 16, 2025. The minimum number of shares to be applied is for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.39% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 16.58 cr. capex on setting up of new manufacturing facility, Rs. 27.90 cr. for investment in its subsidiary Metalurgica India Pvt. Ltd., Rs. 20.00 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Hem Securities Ltd., and KFin Technologies Ltd., is the registrar to the issue. HEM Group’s Hem Finlease Pvt.  Ltd., is the market maker as well as a syndicate member.

The company has issued initial equity shares at par value, and issued further equity capital at a fixed price of Rs. 110 per share in September 2024. It has also issued bonus shares in the ratio of 7 for 1, in September 2024. The average cost of acquisition of shares by the promoters is Rs. 0.82, Rs. 1.25, and Rs. 13.75 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 16.00 cr. will stand enhanced to Rs. 21.74 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 310.82 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 41.90 cr. / Rs. 4.54 cr. (FY23), Rs. 68.94 cr. / Rs. 8.51 cr. (FY24), Rs. 97.49 cr. / Rs. 14.49 cr. (FY25). While it posted growth in its top lines, boosted bottom lines raises eyebrows and concern over its sustainability going forward.

For the last three fiscals, the company has reported an average EPS of Rs. 6.83 and an average RoNW of 43.47%. The issue is priced at a P/BV of 6.46 based on its NAV of Rs. 22.13 as of March 31, 2025, but the offer documents is missing its post-IPO NAV data.

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 21.44. Based on FY24 earnings, the P/E stands at 36.48. The issue relatively appears aggressively priced.

For the reported periods, the company has posted PAT margins of 10.85% (FY23), 12.36% (FY24), 14.88%, (FY25), and RoCE margins of 46.80%, 57.86%, 46.22%, respectively for the referred periods.  

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Raghav Productivity, as their listed peer. It is trading at a P/E of 88.4 (as of June 06, 2025). However, they are not truly comparable on an apple-to-apple basis. This compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
This is the 50th mandate from Hem Securities in the last three fiscals including the ongoing one.  From the last 10 listings, 1 listed at par and the rest with a premium ranging from 2.30% to 90%, on the listing date.