Started in 1987, Mumbai based Supreme Engineering Limited (SEL) is a company engaged in the business of manufacturing special alloys and special wire products. The company has two manufacturing units Unit I being the Special Steels division, located at Khopoli, and engaged with the manufacturing of special alloys such as super alloys, precipitation hardening steels, martensitic stainless steel, austenitic stainless steel, ultra high strength steel and high speed steels which have their end use in sectors such as aerospace, space, defence, nuclear power thermal power, oil & gas, and heavy engineering; and Unit II being the Wire division, located at Rabale, Navi Mumbai, engaged with the manufacturing of wires, bright bars, fine wires, and profiles. These products find their end use in sectors such as automotive, oil & gas, industrial machinery, and hand tools industries. In the year of 2004, Supreme Special Steels was set-up with a special emphasis on the manufacturing of special steels and exotic alloys. This resulted in a dramatic expansion of the company's offerings. Today, SEL offers Nickel-based Superalloys, Duplex & Super-duplex steel, Super-austenitic stainless steel, hot and cold work die steel and high-speed steel bars for various applications both domestically and internationally. The company has developed exotic alloy steel bars indigenously; thereby making it the only manufacturer of exotic alloys steel bars in the private sector in India. The Company has 36 full-time employees in addition to the management, who look after the administrative, secretarial, legal, marketing, accounting functions, business operations and factory management. Apart from these permanent employees, it has also hired approximately 100 contract labor for the processing units. As per financial performance SEL has posted turnover/net profits of Rs. 72.28 cr. / Rs. 0.19 cr. (FY14), Rs. 79.60 cr. / Rs. 0.74 cr. (FY15), Rs. 113.65 cr. / Rs. 1.12 cr. (FY16), Rs. 120.86 cr. / Rs. 2.15 cr. (FY17) and Rs. 152.26 cr. / Rs. 4.65 cr. (FY18). Thus company has show consistent growth in top line and bottom line. Issue is priced at a P/BV of 2.03 on the basis of its NAV of Rs. 15.76 as on 31.03.18 and RoNW is 13.58% for last three fiscals. If we take latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 17.19 against industry composite of 29.31 P/E as per DRHP. As per offer documents, it has shown Mishra Dhatu Nigam Limited and Bharat Forge Limited as its listed peers. Any of these peers are not strictly comparable with the SEL. On BRLM's front, for CKP Financial Services Private Limited this is the 2nd IPO and last IPO opened at par and currently trading above issue price. ( As on 17.08.18 ) As per financials, company's performance is good, RoNw is 13.58% for last three fiscal and issue is fully priced as per latest earnings. Company has shown good growth in bottom-line since FY16. So we give NEUTRAL rating to this SME IPO as per current market situation.
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