Sunlite Recycling Industries Limited is engaged in the business of manufacturing of copper rods & wires, copper earthing wires, copper earthing strips, copper conductors, copper wire bars etc. through recycling of copper scrap. Further, they are also engaged in providing job work services for processing of various products of copper, wherein the customers provide them with the copper scrap and they are converting the copper scrap into copper wire and copper wire rod as per customer's requirement. Company currently operates through the Registered office and manufacturing unit situated Dantali, Kheda, Gujarat, India with a total area of approx. 12,152 sq. mtr. They started the business operations in 2012 as a proprietorship concern and manufacturing only one product i.e. oxygen-free copper rods. Later in year 2015-16, they expanded the area of operation by developing one more shed and installing copper strip machine with an installed capacity of 350 MT, which was imported from China, thereby started manufacturing of copper strips along with copper rods. Then in year 2017-18, they purchased wire-drawing machine and started manufacturing of copper wire. Subsequently, after entering into the partnership firm to expand the business operations, they purchased Copper CCR Machine in year 2020, with resulted into a significant surge in the revenue from operations. As on the date of this Red Herring Prospectus, they have a total of 20 machines to manufacture wide range of copper products. The Product Portfolio offers a diversified product range which includes variety of grades, thickness, widths and standards, in all types of copper products according to customer specifications. The approach involves recycling copper scrap utilizing electricity sourced from solar generation and clean natural gas, thus mitigating the pollution associated with conventional oil-based energy sources. As per financial performance, Sunlite Recycling Industries Limited has posted total income / net profits of Rs 937.91 Cr / Rs 4.26 Cr (FY22), Rs 1,150.39 Cr / Rs 5.60 Cr (FY23) and Rs 1,166.55 Cr / Rs 8.90 Cr (FY24). So as per previous financials data, company has shown good growth, but sudden rise in net-profit just before IPO raises doubts. Company has posted an average EPS of Rs 16.12 and average RoNW of 79.92% for last three fiscals. Issue is priced at a P/BV of 2.41 as per NAV of 42.55 as on 31.03.24. If we attribute latest earnings of FY22, FY23 and FY24 on fully diluted equity post issue, then asking price is at a P/E of around 26.82, 20.39 and 12.83 respectively, which looks fully priced. As per RHP, comparision between listed peers is shown in above table. On BRLM's front, Hem Securities Limited is associated with this SME IPO and handled 48 IPOs in last 2 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 06.08.24 ) As per financials, Sunlite Recycling Industries Limited has shown good growth, RoNW is 44.43% and P/E is respectively 26.82, 20.39 and 12.83 as per FY22, FY23 and FY24 earnings. So, issue looks fully priced, but sudden rise in net-profit just before IPO raises doubts. Company is engaged in business of recycling copper scrap and manufacturing of copper rods & wires, copper earthing wires, copper earthing strips, copper conductors, copper wire bars etc, which is highly fragmented and competitive business segment. 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.
✍️ Post a Comment