Shubham Polyspin Limited

Started in 2012, Shubham Polyspin Limited is Mehsana Gujarat based company engaged into manufacturing of Polypropylene multifilament yarn (twisted and air intermingled yarn), Shubhlon bag closing threads, PP webbings & narrow woven fabrics. The yarn produced from the company are used in various fields like Geo-Textiles, Filter Cloth, HDPE, In FIBC, PP Bags, Narrow Woven Fabrics (webbings & tapes) etc. All the products are marketed under the Trade Name SHUBLON. It sell Its products directly to the end users in India and directly and through merchandise in Overseas. Initially, company started by selling 100% of the products in the state of Gujarat. As the production capacity increased, company expanded sales to nearby states like Rajasthan, Madhya Pradesh & Maharashtra and also ventured in Export Markets like Belgium, Uganda, Zimbabwe, Africa, Poland, Italy, Turkey, Katar, Srilanka, Bangladesh, Tanzania, Nigeria, Madagascar and Kenya. Company has manufacturing unit at Kadi - Gujarat with production capacity of 2400 MT per annum with capacity utilisation around 88.42% for FY18. Company plans to expand its manufacturing capacity to 3000 MT per annum in FY20 with 90% capacity utilisation aim.  As on the July 31, 2018 company has 31 employees excluding contract labours. As per financial performance, Shubham has posted total income/net profits of Rs. 6.26 cr. / Rs. 0.02 cr. (FY14), Rs. 13.55 cr. / Rs. 0.20 cr. (FY15), Rs. 15.40 cr. / Rs. 0.25 cr. (FY16), Rs. 17.71 cr. / Rs. 0.22 cr. (FY17) and Rs. 28.27 cr. / Rs. 1.48 cr. (FY18). So company has shown growth in top-line, but bottom-line remain almost static and just before IPO sharp jump in top-line and bottom-line in FY18 which raises questions. Trade receivables stands near to 8% of total revenue in FY18. For last three fiscals it has posted an average EPS of Rs. 2.23 and an average RoNW of 14.74%. Issue is priced at a P/BV of 1.81 on the basis of NAV of Rs. 22.08 post issue. If we consider latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 15 and as per RHP listed peer Garware Technical is trading at P/E of around 22. So issue looks fully priced as per current market situation. On BRLM's front, for Beeline Broking Limited this is the 2nd IPO. Last IPO, Ranjeet Mechatronics Limited was listed at 10% premium. ( As on 26.09.18 ) Company has shown consistent growth over the years and than sudden rise in FY18, RoNW is 14.74% and issue looks fully priced with respect to current earnings. The industry is very competitive with large number of organised players, but there is also good opportunity for growth. For BRLM it's just 2nd IPO and if company may repeat its FY18 super performance that also need to be watched. So we give NEUTRAL rating to this SME IPO.

• 1 Mr. Anil Devkishan Somani
• 2 Mr. Ankit Anil Somani
• 3 Mr. Akshay Anilbhai Somani