Om Metallogic BSE SME IPO review (Not Rated)

•    The company is engaged in processing aluminium-based metal scrap to manufacture Aluminium alloy in the form of ingots.
•    The company is operating in a highly competitive and fragmented segment.
•    It has posted growth in its bottom lines, while its FY23 and FY24 top line remained almost static.
•    Based on its recent financial data, the issue appears fully priced, discounting all near term positives.
•    There is no harm in skipping this pricey and “High Risk/Low Return” bet.

ABOUT COMPANY:
Om Metallogic Ltd. (OML) is an aluminium recycling Company, primarily engaged in processing aluminium-based metal scrap to manufacture aluminium alloys in the form of ingots. The versatile properties of aluminium and its alloys, results in it being used in automobiles Industry. Aluminium alloys are used in mostly automobiles components due to its stiffness, corrosion resistance and excellent strength to weight ratio. OML has 5,280 Ton per Annum installed capacity for processing aluminium scrap. Its manufacturing facility is strategically located near to majority of customers’ manufacturing facilities allowing it to optimise deliveries, reduce lead times and facilitate greater interaction with customers.

The major role in melting of metal is played by furnace, which is a high – temperature device used to melt the metal scrap. It is a structure in which material can be heated to very high temperature. The aluminium ingots are produced though induction furnace by melting of aluminium scrap. This is continuous process controlled by uniform heating with the help of electricity. The aluminium scrap is put into the crucible and heated to the required temperature for secondary refining. The liquid metal then poured into cast iron moulds and the ingots so produced from furnace. As of August 31, 2025, it had 17 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 2598400 equity shares at a fixed price of Rs. 86 per share of Rs. 10 each, to mobilize Rs. 22.35 cr. The IPO opens for subscription on September 29, 2025, and will close on October 01, 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 33.05% of post-IPO paid-up equity capital of the company. The company is spending Rs. 2.20 cr. for this IPO process, and from the net proceeds of the issue, the company will utilize Rs. 2.31 cr. for purchase of equipment/machinery, Rs. 8.50 cr. for working capital, Rs. 6.00 cr. for repayment/prepayment of certain borrowings, and Rs. 3.34 for general corporate purposes.

The IPO is solely lead managed by Corporate Makers Capital Ltd., while Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Prabhat Financial Services Ltd., is the market maker. The issue is underwritten to the tune of 15% by Corporate Makers and 85% by Prabhat Financial.

The company has issued initial equity shares at par, it has converted further equity shares at a price of Rs. 30 per share in October 2023. It has also issued bonus shares in the ratio of 7 for 5 in November 2023. The average cost of acquisition of shares by the promoters is Rs. 3.39, and Rs. 4.17 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 5.26 cr. will stand enhanced to Rs. 7.86 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 67.62 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 37.84 cr. / Rs. 1.10 cr. (FY23), Rs. 38.91 cr. / Rs. 2.22 cr. (FY24), Rs. 60.41 cr. / Rs. 4.12 cr. (FY25). The company marked growth in its top and bottom lines for the reported periods. However, FY23 and FY24 top line posted minor growth with rise in bottom lines and FY25 had higher top and bottom lines.

For the last three fiscals, the company has reported an average EPS of Rs. 4.76 (simple average), and an average RoNW of 30.90%. The issue is priced at a P/BV of 3.84 based on its NAV of Rs. 22.38 as of March 31, 2025, and at a P/BV of 1.98 based on its post-IPO NAV of Rs. 43.41 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 16.41, and based on its FY24 earnings, the P/E stands at 30.50. Thus, the issue appears fully priced.

The company has posted PAT margins of 2.92% (FY23), 5.75% (FY24), 6.87% (FY25), and RoCE Margins of 34.71%, 48.96%, 55.50%, respectively for the referred periods. 

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

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Baheti Recycling, Nupur Recyclers, as its listed peers. They are currently trading at a P/E of 31.7 and 37.0 (as of September 26, 2025). However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORDS:
This is the 5th mandate from Corporate Makers in the last two fiscals. Out of the last 4 listings, 1 opened at par and the rest in discount. Thus, the LM has a poor track record.