Shri Balaji Valve Components Limited is an ISO 9001-2015 certified company, is engaged in the business of manufacturing of ready to assemble valve components catering to manufacturing of the valves which are used in different industries and in different size depending on the customer's specifications. They manufacture and supply various types of valve components which are used in manufacturing of ball valves, butterfly valves and other valve including forging products. They are into machining of components and delivering 'Ready to assemble' valve components according to customers designs and specifications. Currently, the company is operating from its 2 manufacturing facilities located at Pune, Maharashtra. One of the manufacturing facilities is located at Bhosari, Pune which is equipped with the forging capabilities and heat treatment capabilities, the second manufacturing facility is located at Chakan MIDC, Bhamboli, Pune which undertakes the machining work. Most of the valves components are made as per the requirements specified by the customers'. They manufacture valve components using the forging method, bar routing method and casting methods. In case of any casting products, they generally get the casts manufactured from the customers nominated vendors or outsourcing. The manufacturing facility situated at Bhosari, Pune is equipped with forging plant of upto 1.5 metric tonne hammer, oil fired furnace, trimming press, heat treatment furnace etc. which can be used for functions like annealing, hardening, tempering and normalizing along with manufacturing forging components. During the year 2023, they established the second manufacturing unit at Chakan MIDC, Bhamboli, Pune which is a two floored shop facility, equipped with machines like air compressor, ball grinding machine, multi spindle drilling machine, bandsaw machine, tool grinding machine, lathe machine, VMC machine, CNC machine, surface polishing machine, HMC machine, radial drilling machine, bench grinder, fiber laser marking machine etc. The facilities are equipped with crane, centralised air and coolant line, material movement vehicles etc for material movement and ease in operations. The facilities also have fire system for safety of the infrastructure and the employees. During the last 3 years they have exported the valve components to different countries namely Dubai, Germany, Singapore, Taiwan, Italy, South Africa, USA, United Kingdom, Qatar & Pennsylvania. As is reflected in the restated revenue which has grown from Rs. 1607.11 lakhs in Fiscal 2021 to Rs. 6232.33 lakhs in Fiscal 2023 and the restated profit after tax has increased from a loss of Rs. 3.22 lakhs in Fiscal 2021 to profit of Rs. 647.60 lakhs in Fiscal 2023. As per financial performance, Shri Balaji Valve Components Limited has posted total income / net profits of Rs 16.16 Cr / Rs (0.03) Cr (FY21), Rs 39.06 Cr / Rs 1.53 Cr (FY22), Rs 62.94 Cr / Rs 6.43 Cr (FY23) and Rs 16.55 Cr / Rs 1.85 Cr (upto Q1 FY24). So as per previous financials data, company has shown good growth, but sudden rise in net profit raises doubts. Company has posted an average EPS of Rs 6.21 and average RoNW of 76.12% for last three fiscals. Issue is priced at a P/BV of 6.15 as per NAV of 16.26 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 53.16, 12.69 and 11.03 respectively, which looks fairly priced. As per RHP, there are no listed peers. On BRLM's front, Hem Securities Limited is associated with this SME IPO and handled 35 SME IPOs in last 3 years. From last 10 IPOs, all opened above issue price or at par on the day of listing. As of now from last 10 IPOs, all are trading above issue price. ( As on 20.12.23 ) As per financials, Shri Balaji Valve Components Limited has shown good growth, RoNW is 81.50% and P/E is respectively 53.16, 12.69 and 11.03 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced. But sudden rise in net profit just before IPO raises doubts. Company is in business of manufacturing of ready to assemble valve components catering to manufacturing of the valves which are used in different industries. 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.
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