Meera Industries Limited FPO

Incorporated in 2006, Meera Industries Limited is engaged in manufacturing of textile machines such as winding, twisting, heat setting and cabling machines. In addition, the high-performance machines are also designed, developed and sold by the company to other textile manufacturing and processing units. They also provide a testing facility and assistance after sales to maintain a healthy relationship with customers.. The company has its own yarn twisting division which was started in the year 2017-18 to process and sell the yarn. It also exports textile machinery products in South America, Europe, America, Africa, and Asia continents. It has a wholly owned subsidiary named Meera Industries USA LLC located in the State of Northern Carolina to supply products in Canada, the USA and other South American countries.. Meera Industries' manufacturing unit is located at Surat, Gujarat to produce heat-setting, winding, and yarn twisting machine. An R&D Center approved by DSIR (Department of Scientific and Industrial Research) is also located in this manufacturing unit. The competitive strengths of the company are:1. Cost effective products 2. Timely order execution3. Manufacturing unit at a prime location4. A balance sheet with zero debt5. In house manufacturing, and R&D unit On the financial performance front, Meera Industries has posted turnover/net profits of Rs. 21.94 cr. / Rs. 2.40 cr. (FY18) and Rs. 4.94 cr. / Rs 36.41 cr. (FY19). Trade receivables for company in FY18 is around Rs 3.41 cr which is around 10% of total income and that's reasonable. Meera Industries has posted an average EPS of Rs. 10.50 and an average RoNW of 32.54% for last two fiscals. The issue is priced at a P/BV of 3.89  on the basis of its NAV of Rs. 57.22 post issue. If we annualise latest earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 20.25 thus issue appears fully priced. As per RHP, listed peers are shown in above table, but it can't be strictly comparable. On BRLM's front, for Aryaman this is the 32nd IPO in last three fiscals and from last 10 IPOs, one opened below issue price and remaining opened above issue price with 0.05% to 2% premium on the day of listing. As of now, from last 10 IPOs, one is trading below issue price and remaining above issue price. ( As on 11.06.19 ) Company has shown very good results, RoNW is 32.54% and issue looks fully priced with respect to latest earnings with P/E of 20.25. If company can show same growth, than it would be good bet. Performance of BRLM is good. So we give NEUTRAL rating to this SME IPO.

• 1 Mr. Dharmesh V. Desai
• 2  Mrs. Bijal D. Desai