Sampat Aluminium BSE SME IPO review (Not Rated)

•    The company is engaged in the manufacturing of aluminium long products like wires and rods. It also trades in this metal as and when demand arises.
•    The company marked inconsistency in its top lines for the reported periods.
•    The sudden boost in its bottom lines from FY24 surprises as it is operating in a highly competitive and fragmented segment.
•    Based on recent financial data, the IPO appears fully priced.
•    Well-informed investors may park moderate funds for medium to long term.

ABOUT COMPANY:
Sampat Aluminium Ltd. (SAL) is engaged in the manufacturing of aluminium long products i.e., aluminium wires and aluminium rods, primarily through the procurement of Aluminium ingots, rods, wires and also by recycling of aluminium scrap. It manufactures a wide range of continuously cast and hot-rolled aluminium products, utilizing the ‘Properzi process’. SAL’s Product Portfolio consists of Aluminium Wire in sizes of 5.5 MM and 6.5 MM and Aluminium Rods in sizes of 7.5 MM, 9.5 MM, 12.5 MM, 16 MM & 20 MM as per customer specifications. Aluminium and its alloys are essential materials in various mechanical and electrical applications, including the distribution and transmission of electricity, as well as in the production of transformers. 

Aluminium wires and rods are widely used across various industries due to aluminium's properties such as being lightweight, corrosion-resistant, conductive, and relatively inexpensive. The company majorly supply products to electrical power, construction, manufacturing, building wiring and steel industries Further, there have been certain instances wherein it has provided job work services for supplying of aluminium rods and wires, wherein customers provide with the raw materials and the company supply them the aluminium wires and rods as per their requirements. It performs quality checks on the finished products to ensure the product meets customer specifications and requirements of customers and are ISO 9001:2015, certified by Integral Certification Limited. It has presence in 13 states i.e., Gujarat, Maharashtra, Rajasthan, Himachal Pradesh, etc. and 2 Union Territories i.e., Delhi and Dadra and Nagar Haveli and Daman and Diu. The company has catered to 65, 129, 112 and 100 customers for the period ended July 31, 2025, and Financial Year ending March 31 2025, 2024 and 2023 respectively.

Initially, it focused on the production of aluminium rods with thicknesses ranging from 7.50 mm to 20 mm. Thereafter, it expanded capabilities and initiated the production of aluminium wires with a thickness of 5.50 mm. Its manufacturing facility is a zero-wastage unit. During process of manufacturing aluminium rods and wires waste material generated is reutilised by it in manufacturing processes. Additionally, SAL also commercialise aluminium scrap by selling it to third parties. As of July 31, 2025, it had 26 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its book building route maiden IPO of 2544000 equity shares to mobilize Rs. 30.53 cr. (at the upper cap). The company has announced a price band of Rs. 114 – Rs. 120 per share of Rs. 10 each. The IPO opens for subscription on September 17, 2025, and will close on September 19, 2025. The minimum application to be made is for 2400 shares and in multiple of 1200 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 30.00% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 23.32 cr. for setting up a new manufacturing facility at Borisana – Mehsana in Gujarat, and the rest for general corporate purposes.
The IPO is solely lead managed by Marwadi Chandarana Intermediaries Brokers Pvt. Ltd., while Cameo Corporate Services Ltd. is the registrar to the issue. 

The company has issued initial equity shares at par, and issued further equity shares in the fixed price of Rs. 500 per share between May and June 2024. It has also issued bonus shares in the ratio of 4 for 1 in March 2025. The average cost of acquisition of shares by the promoters is Rs. 1.36, Rs. 2.00, and Rs. 7.00 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 5.94 cr. will stand enhanced to Rs. 8.48 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 101.77 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total revenue/Net Profit of Rs. 131.03 cr. / Rs. 1.42 cr. (FY23), Rs. 148.92 cr. / Rs. 6.58 cr. (FY24), Rs. 133.00 cr. / Rs. 6.93 cr. (FY25). For 4M of FY26 ended on July 31, 2025, it earned a net profit of Rs. 3.35 cr. on a total revenue of Rs. 52.28 cr.

For the last three fiscals, the company has reported an average EPS of Rs. 10.07, and an average RoNW of 38.60%. The issue is priced at a P/BV of 2.76 based on its NAV of Rs. 43.54 as of July 31, 2025, but its post-IPO NAV data is missing from the offer documents.

If we attribute its FY26 super annualized earnings on post-IPO expanded equity base, then the asking price is at a P/E of 10.12, and based on its FY25 earnings, the P/E stands at 14.67. Thus, based on its recent financial data, the issue appears fully priced.

The company has posted PAT margins of 1.10% (FY23), 4.48% (FY24), 5.22% (FY25), 6.41% (4M-FY26), and RoCE Margins of 11.36%, 32.04%, 23.13%, 10.00%, 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 Palco Metals, Arfin India, as its listed peers. They are currently trading at a P/E of around 13.1 and 79.6 (as of September 12, 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 5th mandate from Marwadi Chandara in the last two fiscals (including the ongoing one). Out of last 4 listings, 1 opened at par, and the rest with premium ranging from 0.70% to 90.00% on the date of listing.