Sealmatic India Limited

Sealmatic India Limited is engaged in the business of designing and manufacturing of mechanical seals and associated products. Mechanical seals are mainly used in Oil & Gas, refinery, petrochemical, chemical, pharmaceutical, fertiliser, power, mining, pulp & paper, aerospace, marine and other industrial. Company manufactures customised seals to meet the requirement of the client. Company has a complete range of engineered mechanical seals and sealing support systems to cater the needs of customers located all across the globe. Sealmatic products are globally recognized as a trusted brand in process industry in over 45 countries, to name a few: USA, UK, Germany, Netherlands, Italy, Sweden, Norway, Switzerland, Denmark, Australia, France, Japan and many more countries. The company has manufacturing facility at Thane - 401104, India. The said manufacturing unit is setup on a lease land in Survey No. 12, Hissa 9A, collectively admeasuring 3,855.86 Sq. Mtrs. The said unit is on rent. The company has also entered into lease agreement for setting up its second manufacturing unit. The said second unit is located at Industrial gala 1 to 7 ground floor Empire Estate-1 unit no. 2 Khindipada Village Vasai East, Thane 401208, which is about 14 Kms away from the existing unit. The said unit when fully functional will increase manufacturing capacity by 60% of the current capacity.  Company has a strong customer base of domestic as well as foreign clients. Company has about 77% of its total sales from export of its product and 23% from domestic sales. As on November 30, 2022, the Company has employed 235 employees at various levels of the organization. As per financial performance, Sealmatic India Limited has posted total income/net profits of Rs 33.58 Cr / Rs 4.94 Cr (FY20), Rs 35.48 Cr / Rs 6.49 Cr (FY21), Rs 42.76 Cr / Rs 8.41 Cr (FY22) and Rs 25.82 Cr / Rs 5.43 Cr (upto H1 FY23). So company has shown good results. Company has posted an average EPS of Rs 10 and average RoNW of 29.31% for last three fiscals. Issue is priced at a P/B of 2.64 as per NAV of Rs 85.22 post issue. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 24.20 and as per annualised FY23 earnings P/E is 18.74. As per RHP, there are no listed peers. On BRLM's front, ISK Advisors Private Limited associated with this SME IPO and handled 3 SME IPOs in last 3 years. From last 3 SME IPOs all opened above issue price  or at per on the listing day. As of now from last 3 IPOs, are trading above issue price or at par. ( As on 14.02.2023 ) As per financials Sealmatic India Limited has shown average results, RoNW is 27.9% and P/E is respectively 24.20 and 18.74 as per FY22 and annualised FY23 earnings, which looks fully priced. Company has shown good results in IPO year and it may be difficult to maintain same margins in future. Company is in business of mechanical seals and associated products, which is highly competitive and fragmented. Performance of BRLM is good. So we are giving NEUTRAL rating to this IPO.

• 1  Mr. Mohamed Hanif Chaudhari             
• 2  Mr. Umar A K Balwa
• 3  Mr. Rafiq H. Balwa