Shivam Chemicals Limited

Shivam Chemicals Limited is a manufacturer of Hydrated Lime (Calcium Hydroxide) & a distributor of various products such as Poultry feed supplement (MBM), Di-Calcium Phosphate (Feed Grade), Magnesium Oxide, Limestone Powder, etc With rich experience and knowledge they have built a well-established marketing network across India and they distribute animal feed products for various well renowned manufacture over the years, they have successfully supplied an impressive quantity of over 2.50 Lakh metric tons of various products, reflecting the commitment to meeting the demands of the market. The cumulative value of these supplied products has exceeded INR 7,500 million, underscoring the financial significance in the sector. With an average monthly sales volume of 2,650 metric tons, they maintain a consistent presence and contribute to the steady flow of products in the market. The journey began with a primary focus on animal feed supplement trading till FY 2022-23 and the evolution into manufacturing is happened through the establishment of a 100% owned subsidiary. The wholly owned subsidiary company Shivam Chemicals and Minerals Private Limited is located at Dahej Gujarat with a manufacturing capacity of 60,000 MT. They are engaged in manufacturing of Hydrated lime (Calcium hydroxide) product. As on December 31, 2023 they have 25 employees on a consolidated basis. They have 12 contracts labours in the subsidiary company i.e. Shivam Chemicals and Minerals Private Limited. As per financial performance, Shivam Chemicals Limited has posted total income / net profits of Rs 95.58 Cr / Rs 0.87 Cr (FY21), Rs 177.99 Cr / Rs 4.44 Cr (FY22), Rs 156.58 Cr / Rs 3.57 Cr (FY23) and Rs 107.11 Cr / Rs 0.71 Cr (upto Q3 FY24). So as per previous financials data, company has shown declining results. Issue is priced at a P/BV of 2.19 as per NAV of 20.12 as on post issue. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 16.85, 20.91 and 79.18 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Aryaman Financial Services Limited is associated with this SME IPO and handled 12 SME IPOs in last 2 year. From last 10 SME IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing. As of now from last 10 SME IPOs, five are trading below issue price and remaining are trading above or at par issue price. ( As on 18.04.24 ) As per financials, Shivam Chemicals Limited has shown declining results, RoNW is 26.90% and P/E is respectively 16.85, 20.91 and 79.18 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. Company is manufacturer of Hydrated Lime (Calcium Hydroxide) & a distributor of various animal products, which is highly competitive and fragmented segment. Performance of BRLM is average. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Sanjiv Girdharlal Vasant
• 2 Soham Sanjiv Vasant
• 3 Shivam Sanjiv Vasant