Rajeshwari Cans Limited

Incorporated in 2013, Rajeshwari Cons Limited is engaged in the business of manufacturing round printed tin containers of various sizes which are used as packing material. They supply the tin containers to the customers engaged in the business of tobacco manufacturing and paint manufacturing. The Company also performs printing work on tin sheets supplied by the customers. The partnership firm i.e. Rajeshwari Metal Printers started with single line production and manufacturing of tin containers with different capacity ranging from 50 gm to 500 gm for packing tobacco material and up to 5 Litres for paint industry. Initially, the business commenced with single colour offset printing machine and subsequently, installed one additional line for the production of tin containers thereby increasing the installed capacity of the plant. They also purchased two colour printing machine. On the financial performance front, Rajeshwari Cans has reported turnover/net profits (loss) of Rs. 18.49 cr. / Rs. 0.11 cr. (FY18), Rs. 21.32 Cr. / Rs. 0.15 Cr. (FY19) and Rs. 22.09 Cr. / Rs. 0.18 Cr in FY20. For Upto Q3 FY21, company has posted 12.85 Cr total income and 0.12 Cr net profit. So company has shown average results, and due to pandemic company has seen decline in sales. For the last three years, company has posted average EPS of Rs. 0.87 and RoNW of 7.74%. The issue is priced at a P/BV of 1.36 based on its NAVs of Rs. 14.74 post issue. As per FY20 earnings, on fully diluted equity post issue, IPO is priced at P/E of around 56. If we annualise latest earnings of FY21 on fully diluted equity, than P/E is around 62. So issue looks very expensive. As per RHP, comparison between listed peers is shown in above table. On BRLM's front Fedex securities Ltd. has handled 10 IPOs in last three fiscals. From last 10 IPOs, 1 opened below issue price and remaining above issue price. As of now from 10 IPOs, 5 are trading below issue price and remaining above issue price. ( As on 27.03.2021 ) For Rajeshwari Cons Limited, financial data is average, RoNW is 8.44%, P/E is around 56 for FY20 and 62 for annualised FY21, so issue looks expensive. Performance of BRLM is average. So we give AVOID rating to this SME IPO.

• 1 Bharatkumar Vora
• 2 Harshadkumar Vora
• 3 Siddharth Vora
• 4 Pratik Vora