Rajnandini Metals NSE SME IPO review (Apply at your own risk)

Review By Dilip Davda on Sep 19, 2018

•    Company is engaged in the business of trading of scrap.
•    It follows B2B model of working.
•    Its financial data shown inconsistency.
•    Issue appears fully priced discounting all near term positives.

ABOUT COMPANY:
Rajnandini Metal Ltd. (RML) is in business of trading of scrap of all types of ferrous and Non ferrous Metals such as Copper Wires, ingot scrap, and other related items used in various electrical and industrial applications. It works as a crucial business interface, networking between manufacturers / processors / yards and consumers / traders across the country. The company operates as an important intermediary in the Metals Supply Chain whereby it purchases materials such as Annealed/Un-Annealed Copper Wires, Copper Wires, Brass Scrap, Aluminium ingot, Zinc ingot etc. from various suppliers and supply the same to customers in the Metal Business. Company’s business model is based on B2B model wherein the Company sells the scrap to the business enterprises who further transform the scrap in to finished product as per their requirements.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital, general corpus fund needs, RML is coming out with a maiden IPO of 1644000 equity shares of Rs. 10 each at a fixed price of Rs. 26 per share. The company mulls mobilization of Rs. 4.27 cr. with this issue. Issue opens for subscription on 24.09.18 and will close on 27.09.18. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 26.76% of the post issue paid up capital of the company. Issue is solely lead managed by Corporate Capital Ventures Pvt. Ltd. while Bigshare Services Pvt. Ltd. is the registrar to the issue. Its entire equity is issued at par. Average cost of acquisition of shares by the promoters is Rs. 10 per share. Post issue its current paid up equity capital of Rs. 4.50 cr. will stand enhanced to Rs. 6.14 cr.

FINANCIAL PERFORMANCE:
On performance front, for last four fiscals, RML has posted turnover/net profits of Rs. 109.84 cr. / Rs. 0.55 cr. (FY15), Rs. 136.55 cr. / Rs. 0.32 cr. (FY16), Rs. 127.31 cr. / Rs. 0.55 cr. (FY17) and Rs. 141.16 cr. / Rs. 0.94 cr. (FY18). It has inconsistency in top and bottom lines. It suffered a setback in turnover for FAY17 but posted higher bottom line. For last three fiscals, it has posted an average EPS of Rs. 1.57 and an average RoNW of 9.27%. Issue is priced at a P/BV of 1.46 on the basis of its NAV of Rs. 17.84 and at a P/BV of 1.3 on the basis of post issue NAV of Rs. 20.02.If we consider FY18 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 17. Thus issue is fully priced discounting near term positives.

COMPARE WITH LISTED PEERS:
As per offer documents, it has no listed peers to compare with.

MERCHANT BANKER’S TRACK RECORDS:
On merchant banker’s front, this is the 7th mandate from its stable in last two fiscals. Out of last 6 listings, 1 opened at discount, rest at a premium ranging from 0.70% to 8.75% on the day of listing.


Conclusion / Investment Strategy

Fully priced issue with inconsistent track record makes it a risky bet. Cash surplus, risk savvy investors may consider investment at their own risk.

Review By Dilip Davda on Sep 19, 2018

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. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. 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 own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


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.

Email: dilip_davda@rediffmail.com

Rajnandini Metal IPO FAQs

  1. 1. Why Rajnandini Metal IPO?

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

  2. 2. How is Rajnandini Metal IPO?

    Read the Rajnandini Metal IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Rajnandini Metal IPO what should investors do?

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

  4. 4. Is Rajnandini Metal IPO good?

    Sorry, we didn't rate the Rajnandini Metal IPO.

  5. 5. Is Rajnandini Metal IPO worth Investing?

    Our lead analyst Mr. Dilip Davda didn't rate the Rajnandini Metal IPO.

  6. 6. When will Rajnandini Metal IPO allotment status?

    The Rajnandini Metal IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Rajnandini Metal IPO allotment status to check.

  7. 7. When will Rajnandini Metal IPO list?

    The Rajnandini Metal IPO will list on Monday, October 8, 2018, at NSE SME.








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