Review By on March 7, 2017
Sarthak Metals Ltd. (SML) is engaged into manufacturing of wide variety of Cored wires, Aluminum Flipping coils, Industrial Oxygen gas, having wide application in various industries including Steel plants, Fabrication units, and Foundries. SML is also manufacturer and supplier of wire feeder machines that are known for drawing wires of 9 mm to 15 mm diameter. The company is also engaged in the business of trading of iron & steel and of carbon dioxide gas. SML commenced its operations in the year 1997 to manufacture industrial oxygen gas. Later in the year 2002, it diversified its product base by manufacturing cored wires and aluminum flipping coils. SML also started manufacturing of wire feeder machines since 2012.
To part finance repayment of existing working capital, general corpus fund needs, the company is coming out with a maiden IPO of 3636000 equity shares of Rs. 10 each at a fixed price of Rs. 30 per share to mobilize Rs. 10.91 crore. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Issue opens for subscription on 10.03.17 and will close on 17.03.17. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Guiness Corporate Advisors Pvt Ltd. and Bigshare Services Pvt Ltd is the registrar to the issue. From MoA in 1996 till January 2003 and on 30.03.2012 it issued equity at par. From March 2003 to March 2014 it issued equity in a price range of Rs. 20 to Rs. 100 per share. It has also issued bonus shared in the ratio of 2 for 1 (March 2012), 1 for 1 (March 2013) and 1 for 2 (March 2014). Its current paid up equity capital of Rs. 12.09 crore will stand enhanced to Rs. 13.69 crore post issue.
On performance front, it has posted turnover/net profits of Rs. 113.29 cr. / Rs. 2.39 cr. (FY2013), Rs. 147.22 cr. / Rs. 2.60 cr. (FY2014), Rs. 151.49 cr. / Rs. 2.87 cr. (FY2015) and Rs. 128.72 cr. / Rs. 3.67 cr. (FY2016). In FY16 despite witnessing setback in top line, it posted higher net. For first half of current fiscal it has earned net profit of Rs. 2.47 crore on a turnover of Rs. 73.96 crore. If we annualize these earnings and attribute on fully diluted equity post issue, then asking price is at a P/E of around 8 plus and at a P/BV of around 1.3, the issue is priced reasonably. It has no listed peer to compare with.
On merchant banker's front, this is the 27th mandate from its stable and in last three fiscals till date it has handled 15 issues that have shown mixed trends.
Conclusion: Cash surplus investors may consider investment for long term.
Review By on March 7, 2017
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of Sarthak Metals Ltd. offers an early investment opportunity in Sarthak Metals Ltd.. A stock market investor can buy Sarthak Metals IPO shares by applying in IPO before Sarthak Metals Ltd. shares get listed at the stock exchanges. An investor could invest in Sarthak Metals IPO for short term listing gain or a long term.
Read the Sarthak Metals IPO recommendations by the leading analyst and leading stock brokers.
Sarthak Metals IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Sarthak Metals IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Sarthak Metals IPO?"
Our recommendation for Sarthak Metals IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Sarthak Metals IPO.
The Sarthak Metals IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Sarthak Metals IPO allotment status to check.
