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Baheti Recycling NSE SME IPO review (Apply)

Review By Dilip Davda on November 23, 2022

•    BRIL is an aluminium recycling company catering to various industries. 
•    After average trends for the previous two fiscals, it posted bumper results for FY22 which raises concern. 
•    Based on its FY23 earnings, the issue appears reasonably priced. 
•    Aluminium industry is gaining ground hinting at bright prospects for BRIL.
•    Investment may be considered for medium to long-term rewards. 

Baheti Recycling Industries Ltd. (BRIL) is an aluminium recycling Company, primarily engaged in processing aluminium-based metal scrap to manufacture (i) aluminium alloys in the form of ingots and (ii) aluminium de-ox alloys in the form of cubes, ingots, shots and notch bar. The versatile properties of aluminium and its alloys result in it being used in various industries, which include automobiles, construction, electrical transmission application, food packaging etc. Aluminium alloys are used in automobile components due to their stiffness, corrosion resistance and excellent strength-to-weight ratio. The Aluminium de-ox alloys are used as deoxidizers in steel manufacturing units.

Aluminium is more environment-friendly than steel, plastic and other materials. It has widespread uses throughout the economy and is equally important to both the industrial and consumer sectors. Key sectors to drive aluminium consumption in India are Auto, Power, Electronics, Railways, Aerospace & Defence Construction, Solar Energy and Aluminium packaging. Aluminium is 100% recyclable and consumes 95% less energy and releases 95% less greenhouse gases as compared to primary aluminium and there is no loss of properties or quality during the recycling process. (Source: Indian Bureau of Mines).

As of the date of this Prospectus, its manufacturing unit, situated at Dehgam (Gandhinagar, Gujarat) has a 12,000 MT installed capacity for processing aluminium scrap. The unit has a well-equipped laboratory, modern technology and testing equipment with a supportive environment and facilities, to ensure that the products conform with the pre-determined standards. Its manufacturing facility is strategically located near some of its customers' manufacturing facilities allowing it to optimize deliveries, reduce lead times and facilitate greater interaction with customers.

BRIL is also engaged in trading scrap materials such as aluminium scrap, brass scrap, copper scrap, zinc scrap etc. As of October 31, 2022, the company has 275 employees on its payroll. 

To part finance its needs for modernization and expansion of existing manufacturing unit (Rs. 2.55 cr.), working capital (Rs. 7.00 cr.), and general corporate purpose (Rs. 1.90 cr.), BRIL is coming out with a maiden IPO of 2760000 equity shares of Rs. 10 each at a fixed price of Rs. 45 per share to mobilize Rs. 12.42 cr. The issue opens for subscription on November 28, 2022, and will close on November 30, 2022. The minimum application to be made is for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.62% of the post-issue paid-up capital of the company. BRIL is spending Rs. 0.97 cr. for this IPO process. 

The sole lead manager to this issue is Hem Securities Ltd., and Purva Sharegistry (India) Pvt. Ltd. is the registrar of the issue. Hem Finlease Pvt. Ltd. is the market maker for the company. 

The company has issued/converted most of its equity at par and has also issued bonus shares in the ratio of 1 for 4 in February 2000, and 2 for 3 in June 2022. The average cost of acquisition of shares by the promoters is Rs. 1.07, Rs. 1.94, and Rs.4.28 per share. 

Post-IPO, BRIL's current paid-up equity capital of Rs. 7.61 cr. will stand enhanced to Rs. 10.37 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 46.66 cr.

On the financial performance front, for the last three fiscals, BRIL has posted turnover/net profits of Rs. 105.96 cr. / Rs. 0.19 cr. (FY20), Rs. 127.80 cr. / Rs. 0.48 cr. (FY21), and Rs. 249.26 cr. / Rs. 2.92 cr. (FY22). Thus sudden jump in the bottom line in the pre-IPO year raises concern. For the first two months of FY22 ended on May 31, 2022, it earned a net profit of Rs. 0.57 cr. on a turnover of Rs. 57.57 cr. Thus it has posted super results for the last 14 months of working. 

For the last three fiscals, BRIL has reported an average EPS of Rs. 2.22 and an average RoNW of 10.53%. The issue is priced at a P/BV of 1.98 based on its NAV of Rs. 22.70 as of May 31, 2022, and at a P/BV of 1.57 based on its post-IPO NAV of Rs. 28.63. 

If we annualize FY23 earnings and attribute it to post-IPO fully diluted equity capital, then the asking price is at a P/E of around 13.55. 

The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects. 

As per the offer document, BRIL has shown Arfin India and Nupur Recyclers as their listed peers. They are currently quoting at a P/E of 35 and 50.63 (as of November 23, 2022). However, they are not truly comparable on an apple-to-apple basis. 

This is the 18th mandate from Hem Securities in the last three fiscals (including the ongoing one). Out of the last 10 listings, all opened with premiums ranging from 1.47% to 104.87% on the day of listing.  

Conclusion / Investment Strategy

BRIL is in the aluminium recycling segment having bright prospects ahead. Of late we are witnessing rising interest in the aluminium industry. Based on FY23 earnings, the issue appears reasonably priced. Investors may consider investment for the medium to long-term rewards.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on November 23, 2022

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

Baheti Recycling Industries IPO FAQs

  1. 1. Why Baheti Recycling Industries IPO?

    The initial public offer (IPO) of Baheti Recycling Industries Limited offers an early investment opportunity in Baheti Recycling Industries Limited. A stock market investor can buy Baheti Recycling Industries IPO shares by applying in IPO before Baheti Recycling Industries Limited shares get listed at the stock exchanges. An investor could invest in Baheti Recycling Industries IPO for short term listing gain or a long term.

  2. 2. How is Baheti Recycling Industries IPO?

    Read the Baheti Recycling Industries IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Baheti Recycling Industries IPO what should investors do?

    Baheti Recycling Industries IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Baheti Recycling Industries IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Baheti Recycling Industries IPO good?

    Our recommendation for Baheti Recycling Industries IPO is to subscribe.

  5. 5. Is Baheti Recycling Industries IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Baheti Recycling Industries IPO.

  6. 6. When will Baheti Recycling Industries IPO allotment status?

    The Baheti Recycling Industries IPO allotment status will be available on or around December 5, 2022. The allotted shares will be credited in demat account by December 7, 2022. Visit Baheti Recycling Industries IPO allotment status to check.

  7. 7. When will Baheti Recycling Industries IPO list?

    The Baheti Recycling Industries IPO will list on Thursday, December 8, 2022, at NSE SME.


1. Mansharam     Link|November 29, 2022 7:45:17 AM
Can ship to Sher only on the day of listing. Is there any lock in period in this?