Shree Marutinandan Tubes Limited

Shree Marutinandan Tubes Private Limited is engaged in the business of trading of Galvanized Pipe, Electric Resistance Welding Mild Steel ('ERW MS') Pipes (round pipes, square and rectangular hollow sections) in various specifications, sizes ranging from 15 NB to 1000 NB and also in trading of Black Pipes and Solar Structural Pipes. The products have wide application in varied industries like Agriculture, Oil, Public Health, Housing, Irrigation, Engineering, Infrastructural, Industrial etc. Company has independent sales and distribution networks for the products. A substantial majority of the steel pipes are sold to wholesalers & Distributors in the domestic markets. They procure Steel Pipes from the manufacturers at domestic level. From FY 2023, they have taken a strategic step of forward integration to expand the business horizons and diversify the offerings. To achieve this, they have decided to accord with the group company, Shree Kamdhenu Machinery Private Limited, for the contract manufacturing of agricultural equipment. This move enables to provide a broader range of products to the clients, catering to the growing demand for agricultural machinery and equipment in the market. As per financial performance, Shree Marutinandan Tubes Limited has posted total income / net profits of Rs 35.97 Cr / Rs 0.13 Cr (FY21), Rs 47.18 Cr / Rs 0.06 Cr (FY22), Rs 47.23 Cr / Rs 2.02 Cr (FY23) and Rs 42.85 Cr / Rs 1.42 Cr (upto Q2 FY24). So as per previous financials data, company has shown almost static sales, but sudden rise in net profit just before IPO raises doubts. Company has posted an average EPS of Rs 51.27 and average RoNW of 44.41% for last three fiscals. Issue is priced at a P/BV of 2.91 as per NAV of 49.07 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 824.63, 24.52 and 17.42 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Swastika Investmart Limited is associated with this SME IPO and handled 8 SME IPOs in last 3 year. From last 7 IPOs, two opened below issue price and remaining opened above issue price or at par on the day of listing. As of now from last 7 IPOs, five are trading below issue price and remaining are trading above issue price. ( As on 09.01.24 ) As per financials, Shree Marutinandan Tubes Limited has shown average results, RoNW is 75.36% and P/E is respectively 824.63, 24.52 and 17.42 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced. But sudden rise in net profit just before IPO raises doubts. Company is in business of trading of steel pipes, which is highly competitive and unorganised segment. Performance of BRLM is poor post listing. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Mr. Vikram Shivratan Sharma
• 2 Mr. Bharat Shivratan Sharma 
• 3 Mrs. Kusumlata Shivratan Sharma