Master Components Limited

As per financial performance, Master Components Limited has posted total income/net profits of Rs 13.28 Cr / Rs 0.77 Cr (FY21) and Rs 18.42 Cr / Rs 0.93 Cr (FY22) and Rs 20.90 Cr / Rs 1.70 Cr (FY23), So company has average growth, but sudden rise in bottom-line before IPO is very surprising. Company has posted an average EPS of Rs 3.92/- and average RoNW of 11.89% for last three fiscals. Issue is priced at a P/BV of 2.61 as per NAV of Rs 53.65/- as on post issue. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 59.77 and as per FY23 earnings P/E is 32.84. As per RHP, comparison between peers is shown in above table. On  BRLM's  front, Aryaman  Financial  Services  Limited is  associated with this SME IPO and  handled  15  SME  IPOs  in  last  3  years.  From  last 10 IPO, 1 opened  below issue price and remaining opened at par or above issue price on the listing day. As of now from last 10 IPO, 5  is trading above issue price. ( As on 14.09.23 ) As per financials, Master Components Limited has shown average results, RoNW is 14.63% and P/E is respectively 59.77 and 32.84 as per FY22 and FY23 earnings. So, issue looks aggressively priced. Also sudden rise in net profit and higher value issue expenses are very surprising. Company is in business of manufacturing plastic engineering components and sub-assemblies, which is highly fragmented and competitive segment. Performance of BRLM is average. So we are giving AVOID rating to this SME IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1  Mudduraj Kulkarni
• 2  Shrikant Joshi
• 3  Rajeshwari Kulkarni
• 4 Anagha Josh