Newmalayalam Steel Limited

As per financial performance, Newmalayalam Steel Limited has posted total income / net profits of Rs 323.61 Cr / Rs 6.73 Cr (FY22), Rs 359.96 Cr / Rs 6.01 Cr (FY23), Rs 303.15 Cr / Rs 4.27 Cr (FY24) and Rs 155.34 Cr / Rs 5.19 Cr (H1 FY25). So as per previous financials data, company has shown zigzag results, but sudden rise in net-profit just before IPO raises doubts. Company has posted an average EPS of Rs 4.16 and average RoNW of 14.52% for last three fiscals. Issue is priced at a P/BV of 2.49 as per NAV of Rs 36.11/- as on 30.08.34. If we attribute latest earnings of FY23, FY24 and annualized FY25 on fully diluted equity post issue, then asking price is at a P/E of around 25.91, 36.45 and 14.98 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Khandwala Securities Limited is associated with this SME IPO and this is 7th IPO from the lead manager. From last 7 IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing. As of now from last 7 IPOs, five are trading below issue price and remaining are trading above issue price or at par as on today. ( As on 15.12.24 ) As per financials, Newmalayalam Steel Limited has shown good growth, RoNW is 10.55% and P/E is respectively 25.91, 36.45 and 14.98 as per FY23, FY24 and annualized FY25 earnings. So, issue looks fully priced and sudden rise in net-profit just before IPO raises concerns. Company is in business of manufacturing of galvanised pipes, tubes, and sheets, which is highly competitive and fragmented business segment. Performance of BRLM post listing is poor. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Vazhappily Davis Varghese
• 2 Divyakumar Jain
• 3 Ankur Jain
• 4 Mahendra Kumar Jain
• 5 Molly Varghese
• 6 Cyriac Varghese