Lead Reclaim And Rubber Products Limited is in the business of manufacturing of reclaimed rubber, crumb rubber powder and rubber granules. Company focuses ona) Saving valuable natural resources by way of recycling; and b) Helping the customers fulfil their circularity aspirations through use of the reclaimed rubber products. They are one of the few companies in the reclaimed rubber industry that can process radial rubber, scrap tyre and tube rubber. Company's manufacturing facility is situated at Sarali Road Village - Pithai, Taluka Kathalal, Kheda – 387630, Gujarat, which is spread over a total land area of approximately 7790 Sq. mts. with the existing plant occupying approximately 2253 Sq. mts with the total install capacity of 5520 metric tons. Our Product Portfolio offers a diversified product range which includes variety of grades, thickness, widths and standards of various grades of whole tyre reclaim rubber, butyl reclaim rubber and natural reclaimed rubber. Currently, they sell the products to companies in the automotive manufacturing sector, distributors and dealers. They also sell the products to foreign buyers located in Sri Lanka, Argentina, Turkey, China, etc through merchant exporters. Company's revenue from exports (including sales through merchant exporter) for the six months period ended September 30, 2022 and for the FY 2022 and FY 2021 has been Rs. 162.60 Lakhs, Rs. 522.39 Lakhs and Rs. 15.75 Lakhs, respectively which constituted 33.02%, 50.71% and 2.24% of the revenue from operations for the respective fiscal. Company has employed 25 employees. As per financial performance, De Neers Tools Limited has posted total income/net profits of Rs 73.43 Cr / Rs 0.55 Cr (FY20), Rs 62.11 Cr / Rs 0.54 Cr (FY21), Rs 80.08 Cr / Rs 5.04 Cr (FY22) and Rs 56.02 Cr / Rs 3.86 Cr (upto 7M FY23), So company has shown average growth in top-line, but sudden jump in net profit just before IPO raises concerns. Company has posted an average EPS of Rs 5.61/- and average RoNW of 18.47% for last three fiscals. Issue is priced at a P/BV of 2.68 as per NAV of Rs 37.63/- as on 31.03.2022. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 17.23 and as per annualised FY23 earnings P/E 13.11. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Khambatta Securities Limited associated with this SME IPO and handled 3 SME IPOs in last 1 years. From last 3 SME IPOs, all opened above issue price or at par on the listing day. As of now from last 3 IPOs, 1 is trading below and remaining are trading above issue price or at par. ( As on 27.04.2023 ) Also, Share India Capital Services Private Limited associated with this SME IPO and handled 2 SME IPOs in last 1 years. From last 2 SME IPOs, all opened above issue price or at par on the listing day. As of now from last 2 IPOs, 1 is trading below and remaining are trading above issue price or at par. ( As on 27.04.2023 ) As Per financials, De Neers Tools Limited has shown average results, RoNW is 21.17% and P/E is respectively 17.23 and 13.11 as per FY22 and annualised FY23 earnings, which looks fully priced, but sudden rise in net-profit in just before IPO raises concerns. Also company has high debt and trade receivables are more than 40% of total sales. Company is in business of industrial tools, which is highly competitive. So we are giving AVOID rating to this SME IPO.
✍️ Post a Comment