Tega Industries Limited

Tega Industries Limited a leading manufacturer and distributor of specialized 'critical to operate' and recurring consumable products for the global mineral beneficiation, mining and bulk solids handling industry, on the basis of sales for calendar year 2020. Globally, they are the second largest producers of polymer-based mill liners, on the basis of revenues for calendar year 2020. Company offer comprehensive solutions to marquee global clients in the mineral beneficiation, mining and bulk solids handling industry, through the wide product portfolio of specialized abrasion and wear-resistant rubber, polyurethane, steel and ceramic based lining components, used by the customers across different stages of mining and mineral processing, screening, grinding and material handling, including aftermarket spends on wear, spare parts, grinding media and power, which are regular operating expenses for the customers.  The Company has six manufacturing sites, including three in India, at Dahej in Gujarat and at Samali and Kalyani in West Bengal, and three sites in major mining hubs of Chile, South Africa and Australia, with a total built-up area of 74,255 Sq. mts. They also have 18 global and 14 domestic sales office locate close to the key customers and mining sites. Company products offering includes consumables required in the mines and mineral processing industry. In the sequence of their usage in the mineral processing value chain, after blasting to floatation, the products include chutes and its liners, grinding mill liners, trommels and screens, hydrocyclones, pumps and flotation parts and conveyor products. Company product range is engineered with a combination of mineral processing engineering, mechanical engineering and material sciences, while utilising our expertise in tribology. As per financial performance, Tega Industries Limited has posted total income/net profits of Rs 643.01 Cr / Rs 32.67 Cr (FY19), Rs 695.54 Cr / Rs 65.50 Cr (FY20), Rs 856.68 Cr / Rs 136.41 Cr (FY21) and Rs 179.39 Cr / Rs 11.88 Cr (Q1 FY22). So company has posted very good growth over last couple of years, but Q1 FY22 not matching FY21 results. Company has posted an average EPS of Rs. 14.34 and average RoNW of 17.19% for last 3 fiscals. Issue is priced at a P/BV of 4.19 as per NAV of 108.06 on 30.06.21. If we attribute latest earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 22 and if we annualise Q1 FY22, then on fully diluted equity post issue P/E is 63, which looks fairly priced. As per RHP, Comparison between listed peers are shown in above table. On BRLM's front, two lead manager is associated with this IPO, and have handled around 55 IPO in last three fiscals. From last 10 IPOs, four is opened below issue price and remaining are opened above issue on the day of listing. As of now, five are trading below issue price and other are trading above issue price. ( As on 25.11.21) As per financials, Tega Industries has shown good growth, RoNW is 22.33% and P/E is around 22 as per FY21 earnings, which looks fairly priced, but Q1 FY22 not as per FY21 earnings. Company is in niche product segment and expected to grow well. Performance of BRLM is bad. So, we are giving SUBSCRIBE rating to this IPO for listing gains.

• 1  Madan Mohan Mohanka
• 2  Manju Mohanka
• 3  Manish Mohanka
• 4  Mehul Mohanka
• 5 Nihal Fiscal Services Private Limited