Chaman Metallics Limited is manufacturing facility is equipped with requisite technology and infrastructure including machineries, testing laboratory other handling equipments to facilitate smooth manufacturing process. The key raw materials to produce sponge iron are iron ore/iron ore pellets, coal and dolomite. Sponge iron manufacturing is highly sensitive to raw material characteristics that would help obtain the rated capacity and the desired product quality. To ascertain the suitability of raw materials in a rotary kiln, they have in-house testing laboratory that is responsible for conducting tests on raw materials i.e .coal, iron ore and dolomite to check their chemical and physical properties, so as to ensure that the product conform with the pre-determined standards. They are a customer centric Company, constantly striving to create value for customers through quality products offered and committed deliveries. Currently, They sell their products primarily in the state of Maharashtra, Odisha and Chhattisgarh. Some customers include Rajesh Steel & Wire Industries (New), R.K. Steel Sales, SMW Ispat Private Limited, Gajkesari Steels & Alloys Private Limited. Company Product Sponge Iron - is the key raw material required to manufacture steel in both induction as well as electric arc furnace.Dolochar – During the production of sponge iron, a solid waste is produced as a by-product called dolochar, which is used in manufacturing steel billets, ingots and re-rolled products. The company revenue from operations in FY22 and Profit After Tax is is Rs 18,486.79 lakhs and and Rs 934.65 lakhs respectively. The Company Actual Production Capacity, Installed Capacity and Capacity Utilization in FY 22 is 72000 MT, 56,294.21 MT and 78.19% respectively. As per financial performance, Chaman Metallics Limited has posted total income/net profits of Rs 58.37 Cr / Rs 3.69 Cr (FY20), Rs 140.76 Cr / 5.23 Cr (FY21), Rs 185.46 Cr / Rs 9.35 Cr (FY22) and Rs 111.82 Cr / Rs 6.82 Cr (upto H1 FY23). So company has shown good result. Company has posted an average EPS of Rs 3.96 and average RoNW of 20.96% for last three fiscals. Issue is priced at a P/B of 1.33 as per NAV of Rs 28.57 post issue. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 9.81 and as per annualised FY23 earnings P/E is 6.73. As per RHP, listed peers are shown in above table. On BRLM's front, Hem Securities Limited associated with this SME IPO and handled 18 SME IPOs in last three years. From last 10 IPO all are opened above issue price or at par. As of now from last 10 IPOs, three are trading below and remaining are trading above issue price or at par. ( As on 30.12.22 ) As per financials Chaman Metallics Limited, has shown good results, RoNW is 24.54% and P/E is respectively 9.81 and 6.73 as per FY22 and annualised FY23 earnings, which looks fairly priced. Company is in manufacturing and marketing of Sponge Iron, which is highly competitive and fragmented. Performance of BRLM is good post listing. So we are giving SUBSCRIBE rating to this IPO.
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