Sharvaya Metals BSE SME IPO review (Not Rated)

•    The company is engaged in the business of aluminium products for auto, industrial and general use.
•    After static top and bottom lines for FY23 and FY24, it posted sudden boost in top and bottom lines for FY25.
•    Mega jump in bottom line for FY25 raise eyebrows and sustainability as it operates in a highly competitive and fragmented segment.
•    Pre-IPO period financial data appears to have been cooked up for fancy valuations.
•    There is no harm in skipping this pricey bet.

ABOUT COMPANY:
Sharvaya Metals Ltd. (SML) is engaged in the business of providing Aluminium products to both domestic and international customers. The Company has been in existence for more than Ten (10) years and has started manufacturing unit in the year 2017. It has extensive product range, which includes the manufacturing of Aluminium Alloyed Ingots, Aluminium Billets, Aluminium Slabs, Aluminium Sheets, Aluminium Circles and Electric Vehicle (EV) battery housing, also known as a battery case or battery enclosure, that protects the battery cells from damage and provides structural support. 

SML’s products find application across various industries including cookware, consumer appliances, electric vehicle, LED, aviation, defence, automotive, extrusions, constructions etc. As on the date of this Red Herring Prospectus, it works with direct OEM and supplier to the OEM as customers. The company operates out of manufacturing unit located at Gate No 59, 17th KM Stone, Vill. Bhalwani, Nagar-Kalyan Highway, Tal. Parner, Dist. Ahmednagar, Maharashtra, India. Its manufacturing unit is strategically located with availability of transportation, skilled labour, water, electricity etc. Its manufacturing unit provides products to customers as per defined industry standard. It provides tailor made products also as per customer requirements. The Company has experience of meeting critical and stringent requirements of customers like manufacturing aluminium alloyed ingots required for high pressure die castings, billets required for aluminium extrusions industry and aluminium sheets & circles required primarily for utensils and cookware industry. SML unit is supported by infrastructure for storage of raw materials, manufacturing of products, storage of finished goods, together with quality control and R&D laboratory.

The company is focused at consistently expanding product portfolio by developing new designs. It works closely with customers to obtain their insights and feedback about the upcoming trends in the industry which enables it to develop and improve products to fulfil the requirements of the market. These products are designed to cater to various applications, specifically focusing on meeting the requirements of the automobile, engineering, and electric vehicle sectors. Presently, it is serving to customers from OEM suppliers in cookware industries, whereas in the automobile sector it directly supplies to tier one vendors and aluminium ingots for LED lights manufacturing companies. As of March 31, 2025, it had 30 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its book building route maiden combo IPO of 3000000 equity shares to mobilize Rs. 58.80 cr. (at the upper cap). The company has announced a price band of Rs. 192 – Rs. 196 per share of Rs. 10 each. The issue consists of 2500000 fresh equity shares issue (worth Rs. 49.00 cr. at the upper cap), and an Offer for Sale (OFS) of 500000 equity shares (worth Rs. 9.80 cr. at the upper cap). The IPO opens for subscription on September 04, 2025, and will close on September 09, 2025. The minimum application to be made is for 1200 shares and in multiple of 600 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 29.91% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 5.17 cr. for capital expenditure on civil construction and electrification, Rs. 9.00 cr.  for working capital, Rs. 20.40 cr. for capex on purchase of plant and machinery, and the rest for general corporate purposes.

The IPO is solely lead managed by Expert Global Consultant s Pvt. Ltd., while Bigshare Services Pvt. Ltd. is the registrar to the issue. Globalworth Securities Ltd., is the market maker as well as a syndicate member. The IPO is underwritten to the tune of 15% by Expert Global and 85% by Cumulative Capital Pvt. Ltd. 

The company has issued initial equity shares at par, and issued further equity shares at a fixed price of Rs. 88.00 per share (on the basis of Rs. 10 FV) in December 2024. It has also issued bonus shares in the ratio of 141 for 100 in January 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs.  4.15 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 7.53 cr. will stand enhanced to Rs. 10.03 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 196.59 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total Income/Net Profit of Rs. 70.53 cr. / Rs. 1.95 cr. (FY23), Rs. 71.58 cr. / Rs. 1.54 cr. (FY24), and Rs. 112.76 cr. / Rs. 12.51 cr. (FY25). Mega surge in bottom lines for FY25 appears to be a window dressing to get fancy valuations for IPO. Since the company is operating in a highly competitive and fragmented segment, sustainability of such margins going forward is a big question.

For the last three fiscals, the company has reported an average EPS of Rs. 9.70, and an average RoNW of 39.50%. The issue is priced at a P/BV of 6.48 based on its NAV of Rs. 30.25 as of March 31, 2025, and at a P/BV of 2.74 based on its post-IPO NAV 71.56 per share (at the upper cap). 

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 15.72, and based on its FY24 earnings, the P/E stands at 128.11. Thus, based on its recent financial data, the issue appears aggressively priced.

The company has posted PAT margins of 2.78% (FY23), 2.15% (FY24), 11.12% (FY25), and RoCE Margins of 15.91%, 15.44%, 49.39%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It has adopted a dividend policy in October 2024, based on its financial performances and future prospects. (There appears to be a typo error as the offer document has shown on page no. 191, adoption date as October 30, 2025).
 
COMPARISON WITH LISTED PEERS:
As per offer document, the company has shown Mann Aluminium, Manaksia Aluminium, Baheti Recycling, as their listed peers. They are currently trading at a P/E of around 40.6, 29.7, and 32.4 (as of September 03, 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 17th mandate from Expert Global in the last four fiscals (including the ongoing one). Out of last 16 listings, 1 opened at par, 2 at discount and the rest with premium ranging from 10.47% to 90.00% on the date of listing.