Bonlon Industries Limited

New Delhi based Bonlon Industries Ltd, started in 1997 and is engaged in the manufacturing, trading, and marketing of copper rods and bars. They manufacture products for various industries including electrical, construction, transport, and automobile. The company manufactures products in different specifications and sizes as per the client's requirement. With the amalgamation with three companies of the Bonlon group, the area of operations of Bonlon Industries is extended in the manufacturing of metal, hotel business, and civil construction. The manufacturing unit of Bonlon Industries is located at Plot No. G-1-663, RIICO Industrial Area, Bhiwadi, Alwar- 301019, Rajasthan. The hotel of the company is the 'Hotel Bonlon Inn' located in Karol Bagh. On the financial performance front, for the last three fiscals, on a consolidated basis, BIL has reported turnover/net profits of Rs. 238.81 cr. / Rs. - (1.23) cr. (FY17), Rs. 243.13 cr. / Rs. 0.28 cr. (FY18) and Rs. 217.44 cr. / Rs. 2.82 cr. (FY19). For the nine months period ended on 31.12.2019 of FY20, it has earned a net profit of Rs. 13.88 cr. on a turnover of Rs. 186.99 cr. The company has shown inconsistency in turnover/profits. A sudden boost in the bottom line for the last partial year raises doubts and looks only for IPO purpose. As at 31.12.19, its trade receivables are Rs. 13.93 cr. while trade payables and other current liabilities are Rs. 76.85 cr. which indicates an alarming situation. For the last three fiscals, BIL has posted an average EPS of Rs. 1.52 and an average RoNW of 1.99%. The issue is priced at a P/BV of 0.62 based on its NAV of Rs. 45.05 as on 31.03.2019 and at a P/BV of 0.69 on the basis of post-issue NAV of Rs. 40.54. As per FY19 earnings issue is priced at P/E of 14 and if we annualise FY20 earnings than P/E is 2.15. So as per FY20 annualised earnings issue looks very cheaply priced. On BRLM's front for Sarthi Capital Advisors Private Limited, this is the 43rd IPO since 2012-13. Out of last ten listing, one opened at discount and the rest with premiums ranging from 0% to 23% on the day of listings. As of now from last 10 IPOs, 8 are trading below issue price, one is suspended from trading and remaining above issue price. ( As on 30.06.2020 ) Company has shown average results and issue is priced at P/E of around 14 as per annualised FY19 earnings, which over priced in current scenario. Performance of BRLM is very poor. So we give AVOID rating to this SME IPO.

• 1 Mr. Arun Kumar Jain