Precision Metaliks Limited started in the year 2012 and was initially engaged in the metals trading business till FY19 and then commenced manufacturing from FY20 in the SEZ unit at Visakhapatnam, AP. Following is list of the key products / services : 1. Value added services on alloy wheels 2. Automated cleaning of Aluminium chips + briquetting into Ingots3. Robotic Polishing of alloy wheels and4. Others Engineering Services 1. Value added services on alloy wheelsThe company converts semi finished / raw wheels to finished wheels by carrying the value added services such as Polishing, Buffing, Testing and Packing for the major client, Synergies Castings Limited, Visakhapatnam. The company is also planning to offer these services to the USA market through Silver MetalX INC, USA by way of supplying finished Alloy Wheels with accessories to cater to the aftermarket. 2. Automated cleaning of Aluminium chips + briquetting into IngotsThe cleaning process first runs scrap through an automatic magnetic separator, then washes the chips, then, chemically degreases the same, then dries the same before being packed. Where the customer requires briquetting, these clean and dry chips are fed into the high pressure press which briquettes the same into high density blocks, which can be used as ingots. 3. Robotic Polishing of alloy wheelsPML has developed a custom solution, which is a combination of 'robotic grinding and buffing, combined with automatic ‘media’ polishing, which allows 3D polishing of alloy wheel castings. 4. Other Engineering ServicesThey also provide high-end design Engineering services, Analysis, Product Development, Prototyping, Tooling Design and various other services such as flow forming, skin cut services etc. As per financial performance, PML has posted total income/net profits of Rs 0.052Cr / Rs 0.004 Cr (FY19), Rs 22.17 Cr / Rs 0.82 Cr (FY20), Rs 49.24 Cr / Rs 1.49 Cr (FY21) and Rs 48.13 Cr / Rs 2.15 Cr (H1 FY22). So company has shown exceptional results over last couple of years. Company has posted an average EPS of Rs 13.49 and average RoNW of 7.62% for last three fiscals. Issue is priced at a P/B of 2.13 as per NAV of Rs 23.99 post issue. As Per FY21 earnings on fully diluted equity post issue, asking price is at P/E of around 55.52 and as per annualised FY22 earnings P/E is 19.32. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, First Overseas Capital Limited associated with this SME IPO and handled 10 IPOs in last 3 years. From last 10 IPOs, two opened below issue price and remaining above issue price or at par. As of now from last 10 IPOs, eight are trading below and remaining is trading above issue price or at par. ( As on 17.01.22 ) As per financials, PML has shown exceptional financials, RoNW is 9.72% and P/E is respectively 56 and 19 as per FY21 and annualised FY22 earnings, which looks fully priced. If company can maintain similar growth and margins, such as last 18 months, in future is very doubtful. Performance of BRLM is average. We may find similar listed companies at cheaper valuations , so we are giving AVOID rating to this IPO.
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