Shera Energy Limited

Shera Energy Private Limited is primarily engaged in the business of manufacturing of winding wires and strips made of non-ferrous metals primarily Copper and Aluminium. Company also manufactures wire rods, wires and tubes of Copper and Brass. These wires, tubes and rods are manufactured in various shapes and sizes as per the requirement of the customers and / or demand in the market. Their product range includes paper covered wires, enamel and fibre covered wires, round wires, rectangular wires, bunched wires, tubes, rods, strips, etc. The Company has also commenced manufacturing special grade brass rods through Cold Extrusion process suitable to make bullet shells for defence applications. Company has successfully done the requisite trials and tests on this with customers. This product has been recently developed by the company on account of demand in the ammunition industry in the country. In order to expand the business and to get the benefits of backward and forward integration, the company has invested/acquired/incorporated three subsidiary companies namely, Rajputana Industries Private Limited, Shera Metal Private Limited and Shera Infrapower Private Limited to add value added products in the existing portfolio. As on September 30, 2022, company had 146 employees which include Accounts & Finance, Compliance, Maintenance, Marketing & Logistics, Production & Operations, Quality, Top Level Management and Permanent Labour. As per financial performance, Shera Energy Limited has posted total income/net profits of Rs 420.74Cr / Rs 3.61 Cr (FY20), Rs 415.61 Cr / Rs 5.02 Cr (FY21), Rs 514.91 Cr / Rs 6.99 Cr (FY22) and Rs 333.74 Cr / Rs 4.28 Cr (upto H1 FY23). So company has shown good growth. Company has posted an average EPS of Rs 2.90 and average RoNW of 9.07% for last three fiscals. Issue is priced at a P/BV of 1.61 as per NAV of Rs 35.38/- as on 30.09.2022. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 18.57 and as per annualised FY23 earnings P/E is 15.17. As per RHP, the comparison between listed peers is shown in above table. On BRLM's front, Holani Consultants Private Limited associated with this SME IPO and handled 3 SME IPOs in last 3 years. From last 3 SME IPOs 1 is opened below issue price and remaining are opened above issue price or at par. As of now from last 3 IPOs, all are trading above issue price. ( As on 04.02.23 ) As per financials, Shera Energy Limited has shown good results, RoNW is 10.48% and P/E is respectively 18.57 and 15.17 as per FY22 and annualised FY23 earnings, which looks fully priced. Company is in highly competitive business segment and operates with very thin margin. Also company has very high debt. So we are giving NEUTRAL rating to this SME IPO, as we may find good alternatives in listed market.

• 1 Sheikh Naseem
• 2 Shivani Sheikh
• 3 Isha Infrapower Private Limited