Siyaram Recycling Industries Limited established in 2007, they are primarily engaged in (i) segregation of brass scrap (ii) manufacturing of brass ingots, billets and brass rods and (iii) manufacturing of brass based components (plumbing and sanitary parts). Manufacturing of brass based components - They manufacture various brass components such as brass inserts, brass ceramic cartridges, brass valves, extension nipples etc. as per the customer’s requirements, from the two manufacturing units (Unit-I and Unit-II) located at Lakhabaval, Jamnagar. Some of the renowned brands which are the customers include Hindware, ROCA, Eauset, Somany, Supreme, AGI Greenpac and Ashirvad Pipes. For Fiscal 2022, 2023 and six months period ended Sept 23, the revenue from brass based components were Rs 5,277.44 lakhs, Rs 3,550.52 lakhs and Rs 2,223.34 lakhs respectively, which contributed 12.47%, 7.20% and 10.34% respectively of the revenue from operations. Manufacturing of brass ingots, billets and rods – They manufacture brass ingots, billets and rods through brass scrap from the manufacturing unit-II located at Lakhabaval, Jamnagar. They mainly export these products to China. Additionally, they supply brass ingots to esteemed customers in India such as Astral Limited, Kajaria Bathware and AGI Greenpac. For Fiscal 2022, 2023 and six months period ended Sept 23, The revenue from sale of brass ingots, billets and rods were Rs 13,337.55 lakhs, Rs 19,864.72 lakhs and Rs 4,186.42 lakhs respectively, which contributed 31.51%, 40.30% and 19.47% respectively of the revenue from operations. Segregation of brass scrap – They procure brass scrap mainly from international market such as USA, UK, Europe and Middle East. Post procurement, segregation of brass is done at the unit located at unit-III Lakhabaval, Jamnagar. Post segregation, the segregated brass is termed as Brass scrap honey. The brass scrap is mainly sold in Gujarat. For Fiscal 2022, 2023 and six months period ended Sept 23, the revenue from sale of brass scrap were Rs 23,646.29 lakhs, Rs 25,830.18 lakhs and Rs 15,084.82 lakhs respectively, which contributed 55.87%, 52.41% and 70.14% respectively of the revenue from operations. Company currently operate through 3 facilities, all of which are located in the district of Jamnagar, which is considered as a hub of brass components. They manufacture brass billets & ingots, brass rods and brass components (plumbing parts) from the unit situated at land of 4970 sq. mtrs. and the brass components (sanitary parts) are manufactured from the unit-II situated at land of 3629 sq. mtrs. And, our Unit, situated at land of 3346 sq. mtrs. is used for segregation of scrap.They have an installed capacity to produce 9,900 Mt for manufacturing of brass billets and ingots, 8,250 Mt for manufacturing brass rods and 3,300 Mt for manufacturing of brass components. Currently, they sell products to around 18 states & Union Territories in India of which majority portion of the revenue comes from the state of Gujarat. They also export the products to countries such as China, Germany, Belgium and Oman. The revenue from exports for six months period ended Sept 23, fiscal 2023 and 2022 was Rs 1912.22 lakhs, Rs 16235.87 lakhs and Rs 11335.13 lakhs respectively which constituted 8.82%, 32.94% and 26.78% of the revenue from operations for the respective fiscal/period. As per financial performance, Siyaram Recycling Industries Limited has posted total income / net profits of Rs 139.73 Cr / Rs 1.42 Cr (FY21), Rs 426.44 Cr / Rs 3.22 Cr (FY22), Rs 497.86 Cr / Rs 7.65 Cr (FY23) and Rs 215.11 Cr / Rs 3.97 Cr (upto Q2 FY24). So as per previous financials data, company has shown average growth, but sudden rise in net profit just before IPO is very surprising. Company has posted an average EPS of Rs 3.72 and average RoNW of 11.68% for last three fiscals. Issue is priced at a P/BV of 1.18 as per NAV of 39.02 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 26.81, 11.30 and 10.89 respectively, which looks fairly priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Hem Securities Limited is associated with this SME IPO and handled 33 SME IPOs in last 3 years. From last 10 IPOs, all are opened above issue price or at par on the listing day. As of now from last 10 IPOs, all are trading above issue price. ( As on 08.12.23 ) As per financials, Siyaram Recycling Industries Limited has shown good growth, RoNW is 16.49% and P/E is respectively 26.81, 11.30 and 10.89 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced. Also sudden rise in net-profit raises doubts. Company is in business of segregating brass scrap, manufacturing brass ingots, billets, and brass rods, and producing brass-based components, specifically plumbing and sanitary parts, which is highly competitive and fragmented segment. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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