Ratnaveer Precision Engineering Limited

Ratnaveer Precision Engineering Limited is a stainless steel ('SS') product manufacturer focused on producing finished sheets, washers, solar roofing hooks, pipes and tubes. They operate out of four manufacturing units, out of which two (Unit-I and Unit-II) are located at GIDC, Savli, Vadodara, Gujarat, one (Unit-III) is located at Waghodia, Vadodara, Gujarat and the other one (Unit-IV) is located at GIDC, Vatva, Ahmedabad, Gujarat. The manufacturing units are strategically located with availability of transportation, which facilitates convenient transportation of the products. Company manufactures SS finishing sheets, SS washers and SS solar mounting hooks at the Unit I and SS pipes & tubes at the Unit II. Unit III and Unit IV are dedicated for the backward integration process. Unit III is the melting unit where they melt steel scrap and turn it into steel ingots and Unit IV is the rolling unit where flat ingots are further processed to turn them into SS sheets which are the raw material for SS washers. Company's products find application across various industries including automotive, solar power, wind energy, power plants, oil & gas, pharmaceuticals, sanitary & plumbing, instrumentation, electro mechanics, architecture, building & construction, electrical appliances, transportation, kitchen appliances, chimney liners, etc. The products are used in both commercial and residential sector and are sold within India and overseas. Company sells the products both in the domestic as well as international markets. In the domestic market, they sell the products to the manufacturers as well as traders / stockists and end customers whereas in the international market they supply the products through traders/stockists in the International market. As on March 31, 2023, some of the countries they are exporting to including but not limited to Germany, UK, Spain, Netherland, etc. As per financial performance, Ratnaveer Precision Engineering Limited has posted total income / net profits of Rs 364.05 Cr / Rs 5.45 Cr (FY21) and Rs 428.47 Cr / Rs 9.47 (FY22) and Rs 481.14 Cr / Rs 25.04 Cr (FY23). So as per previous financials data, company has shown good growth. Company has an average EPS of Rs 4.81 and average RoNW of 18.20% for last three fiscals. Issue is priced at a P/BV of 3.19 as per NAV of 30.74 as on 31.03.23. If we attribute latest earnings of FY22 on fully diluted equity post issue, then asking price is at a P/E of around 50.16 and as per FY23 earnings P/E is around 18.98, which looks fully priced. As per RHP, peers comparison is shown in above table. On BRLM's front, one lead managers are associated with this IPO, and have handled around 10 IPOs in last three fiscals. Unistone Capital Private Limited : This is 11th IPO from this BRLM. From last 10 IPOs, one opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, all are trading above issue price or at par. (As on 29.08.2023) As per financials, Ratnaveer Precision Engineering Limited has shown good growth, RoNW is 29.12% and P/E is respectively 50.16 and 18.98 as per FY22 and FY23 earnings. As per FY22 earnings, issue looks aggressively priced and as per FY23 fully priced. Company is in business of manufacturing stainless steel-based products, which is highly fragmented and competitive. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Vijay Ramanlal Sanghavi