Incorporated in 1994, Baheti Recycling Industries Limited an aluminium recycling Company, primarily engaged in processing aluminium based metal scrap to manufacture (i) aluminium alloys in the form of ingots and (ii) aluminium de-ox alloys in the form of cubes, ingots, shots and notch bar. The versatile properties of aluminium and its alloys, results in it being used in various industries, which include automobiles, construction, electrical transmission application, food packaging etc. Aluminium alloys are used in automobiles components due to its stiffness, corrosion resistance and excellent strength to weight ratio. The Aluminium de-ox alloys are used as deoxidizer in steel manufacturing units. Aluminium is more environment-friendly than steel, plastic and other materials. It has widespread uses throughout the economy and is equally important to both the industrial and consumer sectors. Key sectors to drive aluminium consumption in India are Auto, Power, Electronics, Railways, Aerospace & Defence Construction, Solar Energy and Aluminium packaging. Aluminium is 100% recyclable and consumes 95% less energy and releases 95% less greenhouse gases as compared to primary aluminium and there is no loss of properties or quality during the recycling process. The Company revenue from exports for 2M FY23, FY22 and FY21 has been Rs. 254.97 lakhs, Rs. 2192.32 lacs and Rs. 1619.71 lakhs respectively which constituted 4.44%, 8.83% and 12.71% of revenue from operations for the respective period/fiscal. Company revenue from trading operations for 2M FY23, FY22 and FY21 has been Rs. 740.16 lakhs, Rs.2905.11 lacs and Rs. 2022.97 lakhs respectively which constituted 12.89%, 11.69% and 15.87% of revenue from operations for the respective period/fiscal. The Company's capacity in FY is 12,000 MT and capacity utilisation in FY22 is 92.11%. As on October 31, 2022, Company has employed around 275 employees (including labour) at various levels of the Organization. They also employ manpower on contractual basis. As per financial performance, BRIL has posted total income/net profits of Rs 105.96 Cr / Rs 0.19 Cr (FY20), Rs 127.80 Cr / Rs 0.48 Cr (FY21), Rs 249.26 Cr / Rs 2.92 Cr (FY22) and Rs 57.57 Cr / Rs 0.57 Cr ( 2M FY22 ). So company has shown good results, but in the month of November 22, company is providing result for only 2 months is not justifiable. Company has posted an average EPS of Rs 2.22 and average RoNW of 10.53% for last three fiscals. Also finance expenditure is very high and in current increasing interest rate scenario, it may create issue. Issue is priced at a P/B of 1.57 as per NAV of Rs 28.63 post issue. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 15.98 and as per annualised FY23 earnings P/E is 13.56. As per RHP comparison between listed peers is shown in above table. On BRLM's front, Hem securities Limited is associate with this IPO, and have handled around 17 IPOs in last three fiscals. From last 10 IPOs, all opened above issue on the day of listing. As of now, from last 10 IPOs, all are trading above issue price. ( As on 24.11.22) As per financials, BRIL has shown good results, RoNW is 17.49% and P/E is respectively 15.98 and 13.56 as per FY22 and annualised FY23 earnings, which looks fully priced. Company is in business of aluminium recycling and this sector is expected to do well in future, but currently complete metal sector is performing badly. So we are giving NEUTRAL rating to this IPO and risk taking investors may apply for long term.
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