New Swan Multitech Limited is an engineering-led manufacturer of (i) complex and critical precision engineered components and parts used in automotive sector ('auto components') and (ii) agricultural farm machineries designed to meet the diverse needs of modern farming ('agricultural implements'). Within the automotive sector, they manufacture, procure and supply a range of precision machined tubular assemblies, welded assemblies, precision brackets and sheet metal parts. The wide range of offerings in this segment includes link assembly engine hangers, hinge body covers, front cover stay components, seat catch components, fuel filler cap components, main stand complete assemblies, front fender stay assemblies, engine guard plates, rear brake arm assemblies, separator breather, cable guide assemblies, battery tray components and many other parts, that are critical for the two-wheeler vehicles and various type of brackets such as cooling recovery reservoir brackets, exhaust tailpipe brackets, fuse block brackets, floor panel brackets, air cleaner inlet hose brackets for the passenger car vehicles. Within the agricultural implements sector, they design, manufacture and supply a comprehensive range of agricultural implements that cater to different aspects of farming such as soil preparation, sowing, crop management, harvesting and crop residue management. The wide range of offering in this segment includes various type of rotovators, seeders, super seeders, weeders, potato planter, potato digger, fertilizer spreader, mulcher, puddler, laser land leveller, disc ploughs and many other agricultural implements. They manufacture agricultural implements from the manufacturing unit located at Village Raian, Ludhiana, Punjab. The said unit was established in F.Y. 2014-15 and is located at a plot area of 6.74 acres. For Fiscal 2023, the revenue from operations were Rs. 15,116.04 Lakhs of which they derived 60.70% of revenue from auto components segment and 37.13% from agricultural implements segment. The auto components are manufactured from the manufacturing unit based at Village Vithlapur, Ahmedabad, Gujarat, which was established in F.Y. 2015-16. The said unit is located at a plot area of 10 acres and is equipped with various machineries. They have well-equipped laboratory, modern technology and testing equipments with supporting environment and facilities, to ensure that the products conform with the desired quality. The R&D capabilities include in-house tool designing, design simulation, prototyping and testing abilities such as CMM (Faro Arm 6 Axis-3D), Weld Penetration, Universal Testing Machine, Salt Spray Testing Machine, Humidity Testing Machine, Hardness Tester. They also procure certain of the auto-components in the finished and unfinished form (bought the parts) from the Promoter Group entity, M/s New Swan Enterprises which includes fuel cap & bracket for seat latch, stay stopper rubber, body cover, plate engine guards, side stand and various other items. The product portfolio has over 300 SKU’s of agricultural implements and auto components. They also own 5 design registrations relating to the agricultural implements i.e. Mulcher, power weeder, crop planter, potato harvester and potato planter which are registered with the Patent Office, Government of India. In automotive segment, they supply most of the products directly to OEMs in finished (machined) condition. In the two-wheeler vertical, they have relationship spanning over 6 years with Honda Motorcycle and Scooter India ('HMSI'), which is the largest customer in terms of revenue for Fiscal 2023, over 3 years with MG Motors to which they supply passenger car components and over 3 years with Mahindra & Mahindra to which they supply agricultural implements. Within the domain of agricultural implements, the product distribution encompasses an extensive network of over 200 dealers, covering 11 states in India. They reach also extends to supplying agricultural implements to notable OEMs such as Mahindra & Mahindra, John Deere India Pvt. Ltd. etc. They also export the agricultural implements to countries like Mauritius, Russia, Kazakhstan, South Africa, Sudan and Nepal. In the six months period ended Sept 23, fiscal 2023 and 2022, they derived 0.59%, 2.08% and 1.39% of the revenue from exports. As per financial performance, New Swan Multitech Limited has posted total income / net profits of Rs 149.61 Cr / Rs 3.43 Cr (FY21), Rs 145.52 Cr / Rs 3.63 Cr (FY22), Rs 151.42 Cr / Rs 9.92 Cr (FY23) and Rs 77.88 Cr / Rs 4.97 Cr (upto Q2 FY24). So as per previous financials data, company has shown almost static results, but sudden rise in net profit just before IPO raises doubts. Company has posted an average EPS of Rs 4.82 and average RoNW of 26.23% for last three fiscals. Issue is priced at a P/BV of 2.66 as per NAV of 24.85 as on 30.09.23. 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 34.57, 12.65 and 12.61 respectively, which looks fully priced. As per RHP, there are no listed peers. On BRLM's front, Hem Securities Limited is associated with this SME IPO and handled 35 SME IPOs in last 3 years. From last 10 IPOs, all opened above issue price or at par on the day of listing. As of now from last 10 IPOs, all are trading above issue price. ( As on 06.01.24 ) On BRLM's front, Share India Capital Services Private Limited is associated with this SME IPO and handled 6 SME IPOs in last 1 year. From last 6 IPOs, all opened above issue price or at par on the day of listing. As of now from last 6 IPOs, all are trading above issue price. ( As on 06.01.24 ) As per financials, New Swan Multitech Limited has shown static results, RoNW is 33.27% and P/E is respectively 34.57, 12.65 and 12.61 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. But sudden rise in net profit just before IPO raises doubts. Company is in business of manufacturing of auto components and agricultural implements, which is highly competitive and unorganised segment. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO for listing gains. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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