SM Auto Stamping Limited

Started in 2006, Nashik-based SM Auto Stamping Ltd (SMASL) is a manufacturer of precision sheet metal stamping and deep drawn components such as welded assemblies & press tools. The company focuses on customer needs and provide a direct solution in the automobile & engineering sector. It has a specialization in dealing with complex sheet metal pressed design, components, welding fixtures, high-quality stamping dies, welded assemblies for vehicles, high tonnage stamped components, and welding fixtures. The SMASL supplies products to TS 16949 certified clients. It has three manufacturing units located at Nashik (Maharashtra), Mumbai and Pune which are producing 6 million components per year. Currently, it has 350 direct and indirect employees. Some of the components of the company are automotive clutches, automotive propeller shaft drive, automotive brake system, and automative body trims. On the financial performance front, for the last three fiscals, SM Auto has posted turnover/ net profits of Rs. 53.36 cr. / Rs. - (1.73) cr. (FY17), Rs. 65.90 cr. / Rs. 0.84 cr. (FY18) and Rs. 76.30 cr. / Rs. 2.65 cr. (FY19). For upto Q2 FY20, company had posted net profit of Rs 0.05 cr. on a turnover of Rs. 32.22 cr. For the last three fiscals. So company has shown improvement in top-line but bottom-line remained zig-zag, company has posted an average EPS of Rs. 1.26 and an average RoNW of 11.37%. The issue is priced at a P/BV of 1.42 based on its NAV of Rs. 12.71 post issue.  If we annualise latest earnings of FY20 and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 300 and if we consider FY19 super earnings, than its priced at P/E of 9.7. So issue looks fully priced as per FY19 earnings and aggressively priced as per FY20 earnings. The comparison between peers is shown in above table. On BRLM's front, for Hem Securities Limited this is the 27th IPO and from last 10 IPOs, nine opened around or above issue price with 0% to 10% premium on the day of listing. As of now, from last 10 IPOs, 4 are trading below issue price and remaining above or at par issue price. ( As on 27.02.20 ) Company has shown average results and issue is priced at P/E of around 10 as per FY19 super earnings, which looks fully priced. But as per FY20 earnings IPO is very aggressively priced. The performance of BRLM is average, So we give AVOID rating to this SME IPO.

• 1 Mr. Mukund Narayan Kulkarni
• 2 Mr. Suresh Gunwant Fegde
• 3 Mrs. Alka Mukund Kulkarni