Started in 1989, Ganga Forging Limited is manufacturer in forging industry and is engaged in manufacturing of closed die forged products catering to both automotive and non-automotive segment. Automotive segment include manufacturing of products catering to commercial vehicle, passenger car, three wheeler, two wheeler and tractor. Non-automotive segment include electric power transmission, dairy equipment manufacturing, agricultural, gear and gear box, crank shafts, connecting road, heavy engineering industrial, hubs and flanges. Company sell these product as a semi-finished product to the supplier who further grinds the product. Company's existing manufacturing facility is equipped with 4 Drop Hammers, 2 automatic power press, 2manual power press, 4 furnace in their forge shop. Company's manufacturing facilities are well equipped with required facilities including machinery, other handling equipment to facilitate smooth manufacturing process. The Company is mainly catering to the domestic market for auto, agriculture and transmission and earth moving parts and railway components to foreign buyers. Company is planning to set-up a new manufacturing unit at Rajkot - Gujarat, with capacity of 2400 mt for expanding its business of manufacturing of closed die forging items. Current installed capacity of company is 5000 mt and its utilisation is around 82% and after expansion it will be 7400 mt and company is planning to keep capacity utilisation around 80% for FY1819. Company has 68 employees as on March 31, 2018 engaged in manufacturing, marketing and administration, financial, legal and other activities of the Company. As per financial performance, company has posted total income/net profits of Rs. 15.57 cr. / Rs. 0.32 cr. (FY13), Rs. 16.96 cr. / Rs. 0.61 cr. (FY14), Rs. 15.57 cr. / Rs. 0.47 cr. (FY15), Rs. 17.69 cr. / Rs. 0.25 cr. (FY16) and Rs. 17.79 cr. / Rs. 0.49 cr. (FY17). For the period upto Q3 of FY18, it has earned net profit of Rs. 0.39 cr. on a turnover of Rs. 18.18 cr. So top-line and bottom-line are almost similar. For last three fiscals, it has posted an average EPS of Rs 1.15 and an average RoNW of 11.05%. Issue is price at P/BV of 1.26 based on its NAV of 16.69 post issue. If we annualise latest earnings of FY18 and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 32 plus, against industry average P/E of 33. As per offer documents it has shown Pradeep Metals Ltd and MM Forgings Limited as its listed peers who are currently trading at a P/E of around 19 and 25 (as on 22.06.18). So issue is aggressively priced as per latest earnings. On BRLM's front, for Pantomath Capital Advisors Private Limited, this is the 76th IPO and from last 10 IPOs, 2 opened at par and other listed with 1% to 40% premium on the day of listing. As of now, from last 10 IPOs, 4 are trading below issue price and remaining above issue price. ( As on 25.06.18 ) As per financials, company's performance is stable with fall in bottom-line, RoNw is 11.05% for last three fiscals and issue is aggressively priced as per latest earnings. Company is planning to expand its capacity, that will increase its top-line and bottom-line. Performance of BRLM is also not good. So we give NEUTRAL rating to this SME IPO as per current market situation.
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