Promoted by a technocrat and a first-generation entrepreneur, Deem Roll Tech Limited believe that they are one of the manufacturers of high-quality steel and alloy Rolls in India, which is the building block of the iron and steel rolling mill industry. The Rolls manufactured by the Company finds its application in the iron and steel rolling mill industries in the domestic and international markets. With around 20 years of experience, they believe that they have been synonymous with quality and reliability in the Roll manufacturing industry which they manufacture both under standard specification and tailored as per the customer specific requirements. They supply the Rolls directly to rolling mill manufacturers (“OEMs”) and in the replacement market to the iron and steel rolling mills through a network of dealers / distributors and agents. They export the Rolls to over 10 countries, such as USA, Germany, Europe, Middle East, Oman, Saudi Arabia, South Africa, Nepal and Bangladesh. As on September 30, 2023, they have overall catered to over 340 domestic customers and 30 export customers. The revenue from export sales amounted to 17.19%, 20.00%, 16.91% and 16.56% of the revenue from operations for the six months period ended September 30, 2023 and for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. They manufacture the products from steel scrap, roll scrap, pig iron, nickel, ferro molybdenum, other ferro alloys, resin coated sand, etc conforming to international standards As on the date of this Prospectus, they have a highly sophisticated and technically competent manufacturing units located at Plot No. 1006/1007, Chhatral GIDC, Chhatral, Tal. Kalol, Gandhinagar, Gujarat (“Manufacturing Unit 1”), at Plot No. 110/1,110/2, New Survey No. 202, Village Ganeshpura, Mehsana, Gujarat, India (“Manufacturing Unit 2”) and at Chinsurah Dhaniyakali Road, Betamore, PS Dadpur, Hoogly, West Bengal (“Manufacturing Unit 3”), with an aggregate installed capacity of 8500 MTPA. The corporate office is located at C-3/301, Anushruti Apartment, Opp New York Tower, S.G. Highway, Ahmedabad, Gujarat 380 054. The Manufacturing Unit 2 is ISO 9001:2015 certified by ISOQAR, Alcumus. The Manufacturing Units consists of engineering & design, mold making, melting, casting, machining and dispatch sections backed by related quality testing and assurance equipment. Presently, they use static cast and centrifugally cast technology for the manufacturing of Rolls. They are capable of casting a single Roll of up to 15 MT. The key factor in the manufacturing business is the user acceptance of the manufacturing process and manufacturing facilities, given the critical end use of the product. They have, in the last few years, been successful in obtaining various such acceptance. They share a good client relationship with the customer and they receive majority of the business from repeat clients. The Manufacturing Unit 2 have been inspected and accepted by third party inspection agencies. Further, the quality of the products has been accepted to be satisfactory in third party inspections. The basic raw material includes steel scrap, roll scrap, pig iron, nickel, ferro molybdenum, other ferro alloys, resin coated sand, etc. and they procure the raw materials based on market availability, pricing and quality through domestic suppliers such as steel manufacturers, stockists and traders. The cost of materials consumed by them in the operations accounted for 62.09%, 60.80%, 53.97% and 55.16% of the revenue from operations for the six months period ended on September 30, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. As per financial performance, Deem Roll Tech Limited has posted total income / net profits of Rs 64.62 Cr / Rs 2.98 Cr (FY21), Rs 92.12 Cr / Rs 4.10 Cr (FY22), Rs 104.49 Cr / Rs 6.92 Cr (FY23) and Rs 50.28 Cr / Rs 3.72 Cr (upto Q2 FY24). So as per previous financials data, company has shown above average growth. Company has posted an average EPS of Rs 9.12 and average RoNW of 17.34% for last three fiscals. Issue is priced at a P/BV of 1.54 as per NAV of 84.02 as on post issue. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 26.24, 15.54 and 14.46 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Fedex Securities Private Limited is associated with this SME IPO and handled 24 SME IPOs in last 3 year. From last 10 SME IPOs, two opened below issue price and remaining opened above issue price or at par on the day of listing. As of now from last 10 SME IPOs, three are trading below issue price and remaining are trading above issue price. ( As on 16.02.24 ) As per financials, Deem Roll Tech Limited has shown above average growth, RoNW is 20.31% and P/E is respectively 26.24, 15.54 and 14.46 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced, but issue expenses are very high. Company is engaged in manufacturing of high-quality steel and alloy Rolls in India. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
✍️ Post a Comment