Srigee DLM BSE SME IPO review (May apply)

•    The company is engaged in end-to-end plastic manufacturing capabilities to serve OEM and ODM customers.
•    The company posted growth in its top and bottom lines for the reported periods. 
•    Based on its financial data, the issue appears fully priced. 
•    The small equity base post-IPO indicates longer gestation period for migration to mainboard.
•    Well-informed investors may park moderate funds for medium to long term.

ABOUT COMPANY:
Srigee DLM Ltd. (SDL) is with its end-to-end plastic manufacturing capabilities, focuses on design-driven production to enhance both functionality and manufacturability. Its capabilities cover the full range of plastic production, serving OEM and ODM clients with services such as material selection, extrusion, mould making, precision injection moulding, and final assembly. For OEMs, SDL specializes in converting plastic prototypes—such as those used in consumer electronics and automotive parts—into high-quality, production-ready components. For ODMs, it works closely from concept through to the finished product, ensuring smooth integration of design and manufacturing processes.

SDL’s emphasis on design-led manufacturing is central to its service offerings, particularly for leading home appliance brands in the white goods sector, electrical components, and automotive applications. Building on a foundation in plastic injection moulding, it has expanded capabilities to include in-house die design and testing, polymer compounding, and assembly, offering a fully integrated solution under one roof.

This integrated approach enables SDL to facilitate swift and cost-effective Mold designing and testing, conferring a distinct competitive advantage over other OEM/ODM entities. It caters to Indian companies and MNC’s in the home appliances, mobile manufacturing, and automotive components industries.

SDL’s prominent clientele includes Symphony Limited in-home appliances. Its commitment to excellence and customer-centric philosophy has solidified its position as a distinguished Design-Led manufacturer in the industry, ensuring that the company consistently meets and exceeds clients' expectations.

It expanded operations to include the production of plastic mouldings for home appliances and enhanced its production capacity by integrating two additional injection molding machines. To further diversify its offerings, the company inaugurated Unit-II at Ecotech-II in Greater Noida, initiating manufacturing operations and venturing into the mobile phone sub-assembly business. 

For the reported periods of financial performance, contribution from plastic injection moulding & Assembly grew from 44.39% to 85.05%, while Polymer compounding & trading revenue decreased from 37.72% to 8.80%. As of January 31, 2025, it had 61 employees on its payroll. It also hires contract workers as and when required. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 1714800 equity shares of Rs. 10 each to mobilize Rs. 16.98 cr. at the upper cap. It has announced a price band of Rs. 94 – Rs. 99 per share. The issue opens for subscription on May 05, 2025, and will close on May 07, 2025. The minimum number of shares to be applied is for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 28.71% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, the company will utilize Rs. 5.43 cr. for capex on set up a manufacturing facility at Greater Noida, Rs. 9.51 cr. for acquisition of machineries for proposed manufacturing facility, and the rest for general corporate purposes. 

The IPO is solely lead managed by GYR Capital Advisors Pvt. Ltd., and Bigshare Services Pvt. Ltd., is the registrar to the issue. Globalworth Securities Ltd., is the Market Maker for the company. GYR Capital Advisors is also a syndicate member, and Intellect Stock Broking Ltd. is the sub-syndicate member.

Having issued initial equity shares at par value, the company issued further equity shares at a fixed price of Rs. 55 per share (based on Rs. 10 FV) in January 2024. It has also issued bonus shares in the ratio of 5 for 4 in October 2023. The average cost of acquisition of shares by the promoters is Rs. NIL, and Rs, 2.25 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 4.26 cr. will stand enhanced to Rs. 5.97 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 59.14 cr. The small equity base post-IPO indicates longer gestation period for migration to mainboard.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 33.04 cr. / Rs. 1.13 cr. (FY22), Rs. 47.25 cr. / Rs. 2.81 cr. (FY23), and Rs. 54.65 cr. / Rs. 3.10 cr. (FY24). For 9M of FY25 ended on December 31, 2024, it earned a net profit of Rs. 3.77 cr. on a total income of Rs. 54.47 cr. 

For the last three fiscals, the company has reported an average EPS of Rs. 6.52 and an average RoNW of 21.81%. The issue is priced at a P/BV of 2.28 based on its NAV of Rs. 43.34 as of December 31, 2024, but its post-IPO NAV data is missing from offer document.

If we attribute FY25 annualized earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 11.76. Based on FY24 earnings, the P/E stands at 19.11. The issue relatively appears fully priced.

For the reported periods, the company has posted PAT margins of 3.44% (FY22), 5.96% (FY23), 5.69%, (FY24), 6.94% (9M-FY25), and RoCE margins of 15.70%, 31.59%, 25.80%, 23.99%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. 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 Amber Enterprises, Cyient DLM as their listed peers. They are trading at a P/E of 93.7, and 46.2 (as of April 30, 2025). However, they are not truly comparable on an apple-to-apple basis. These peers’ comparison appears as an eye wash.

MERCHANT BANKER’S TRACK RECORD:
This is the 40th mandate from GYR Capital in the last five fiscals including the ongoing one.  From the last 10 listings, 1listed at par and the rest listed with a premium ranging from 4.18% to 90% on the listing date.