Rajnandini Metal Limited

Started in 2010, Rajnandini Metal Limited is Faridabad - Haryana based company in business of trading of scrap of all types of ferrous and Non ferrous Metals such as Copper Wires, ingot scrap, and other related items used in various electrical and industrial applications. RML works as a business interface, networking between manufacturers / processors / yards and consumers / traders across the country. They operate as an intermediary in the Metals Supply Chain whereby they purchase materials such as Annealed/Un-Annealed Copper Wires, Copper Wires, Brass Scrap, Aluminium ingot, Zinc ingot etc. from various suppliers and supply the same to customers in the Metal Business. Company’s business model is based on B2B model wherein the Company sells the scrap to the business enterprises who further transform the scrap in to finished product as per their requirements. Company has three warehouses with total storage capacity of 1600 Tonne. Company presently has 11 employees comprising of administrative, finance and account, etc. As per the financial performance, RML has posted turnover/net profits of Rs. 104.37 cr. / Rs. 0.41 cr. (FY14), Rs. 109.84 cr. / Rs. 0.55 cr. (FY15), Rs. 136.55 cr. / Rs. 0.32 cr. (FY16), Rs. 127.31 cr. / Rs. 0.55 cr. (FY17) and Rs. 141.16 cr. / Rs. 0.94 cr. (FY18). Company has shown almost static bottom line with growth in top-line, but jump in profit for FY18 is surprising. Company works with very thin margins as its in trading business with high competition. Issue is priced at a P/BV of 1.30 on the basis of its NAV of Rs. 20.02 post issue. For last three fiscals, it has posted an average EPS of Rs. 1.57 and an average RoNW of 9.27%. If we take into account latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 17 and there is no listed peers in the market. On BRLM's front, for Corporate Capital Ventures Private Limited this is the 7th IPO in last two fiscals and from last 6 IPOs, one opened below issue price and other listed with 1% to 10% premium on the day of listing. As of now, from last 6 IPOs, 4 are trading below issue price and remaining above issue price. ( As on 19.09.18 ) As per financials, company's performance is almost static in bottom line, RoNw is 9.27% for last three fiscal and issue is fully priced as per latest earnings. Also company faces strong competition from unorganised local players as well as international market and operating at very thin margins. Performance of BRLM is poor. So we give AVOID rating to this SME IPO as per current market situation.

• 1 Mr. Het Ram
• 2 Mrs. Mithlesh Sharma