Incorporated in 1994, Pavna Industries Limited is engaged in the manufacturing of automotive parts and automobile applications solutions. The company manufactures a wide range of automotive components for Original Equipment Manufacturers (OEM) to cater to the requirements of passenger vehicles, 2-wheelers, 3-wheelers, heavy and light commercial vehicles, and off-road vehicles. The Company along with its subsidiaries has a diversified product portfolio, which consists of high-quality reliable partssuch as Ignition Switches, Fuel Tank Caps, Latches, Auto Locks, Handles, Switches, Oil Pump, Carburetor, ThrottleBody, Fuel Cocks, Injection System, Casting Components etc. The company also provide aftermarket sales and services. Company after market products include products manufactured by us such as filters, clutch plates, bearings, wiper blades and brakeshoes. Company's manufacturing units are located in Aligarh (Uttar Pradesh), Aurangabad (Maharashtra), & Pantnagar (Uttarakhand). Company's facilities are located in key auto-clusters and some of the facilities are in close proximity to the plants of our OEM customers. Apart from allowing company to optimise delivery to company's customers, the proximity of facilities to the plants of company's OEM customers also facilitates greater interaction with our customers, thereby enabling company to respond to customer's requirements in a timely manner. The facilities have been laid out to match best plant engineering standards housing various machineries and suitable infrastructure and quality control setup to handle the product portfolio as company's plants are busy producing automotive products in large quantities as per exacting standards. Company's units are ISO 9001:2015, ISO14001:2015, OHSAS 18001:2007 and IATF 16949:2016 certified. The company have five units located in Aligarh close to each other there by increasing the flexibility and reducing the overheads and costs. On the financial performance front, Pavna Industries Limited has reported turnover/net profits (loss) of Rs. 106.77 cr. / Rs. 3.24 cr. (FY18) , Rs. 137.97 cr. / Rs. 5.86 cr. (FY19) and Rs. 136.31 cr. / Rs. 4.08 cr. (FY20) . For upto H1 of FY21, company has posted 51.71 Cr total income and 0.27 Cr net profit. For the last three years, company has posted average EPS of Rs. 8.74 and RoNW of 20.68%. The issue is priced at a P/BV of 2.41 based on its NAVs of Rs. 68.38 post issue. As per FY20 earnings, on fully diluted equity post issue, IPO is priced at P/E of around 23. If we annualise latest earnings of FY21 on fully diluted equity, than P/E is around 70. So issue looks very fully priced. As per RHP, comparison between listed peers is shown as above. On BRLM's front Aryaman Financial Services Limited has handled 10 IPOs in last three fiscals. Out of last 10 listing, all 8 are opened above issue price and above are opened below issue price on the day of listings. As of now from last 10 IPOs, 3 are trading below issue price and remaining above issue price. ( As on 20.02.2021 ) For Pavna Industries Limited, company has shown good performance, RoNW is 16.06% and P/E is 23 for FY20. As pandemic has worst effect on auto sector and so performance of H1 was poor. Also auto parts Industry has very high competition and this is expected to grow at good rate in India. Performance of BRLM is average. So we give NEUTRAL rating to this SME IPO.
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