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Rhetan TMT BSE SME IPO review (Avoid)

Review By Dilip Davda on August 16, 2022

•    RTL is engaged in the manufacturing and marketing of TMT and Round Steel Bars.
•    It started generating a net surplus from FY21. FY22 witnessed a sudden boost in margins.
•    The issue is aggressively priced based on its super earnings for FY22. 
•    Two group companies Lesha Ind. And Ashoka Metcast has a languishing performance. 
•    Investors may ignore this IPO being a costly bet. 

Rhetan TMT Ltd. (RTL) is a part of a Gujarat-based diversified business group promoted by Mr Shalin Ashok Shah and his family. The group has business interests in various sectors including Oil and Gas, Steel, Infrastructure, Electronic Equipment, and Chemical Products.

RTL owns and operates a Steel Rolling Mill with an aggregate installed capacity of 30,000 MTPA. It is an IS 1786: 2008 certified company and manufactures TMT Bars and Round Bars, primarily used in the construction industry. Its products have been used to construct dams, bridges, residential and commercial towers, and major infrastructure projects in Gujarat.

The plant is fully geared with the latest technologies to provide good quality steel products and the plant is operating smoothly since 2019.RTL has the vision to become of one the trusted brands in TMT Bars manufacturing. 

As of March 31, 2022, it had 42 employees on the payroll. Apart from this, the company also engage contract labourer to facilitate its manufacturing operations. The group company Lesha Industries Ltd. and Ashoka Metcast Ltd. are already listed on BSE and have languishing performance.  

To part finance its needs for CAPEX (Rs. 12.00 cr.), working capital (Rs. 30.46 cr.), general corporate purposes (Rs. 12.54 cr.), RTL is coming out with a maiden IPO of 8000000 equity shares of Rs. 10 each at a fixed price of Rs. 70 per share to mobilize Rs. 56.00 cr. The issue opens for subscription on August 22, 2022, and will close on August 25, 2022. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 37.65% of the post-IPO paid-up capital of the company. RTL is spending Rs. 1.00 cr. for this IPO process. 

The issue is solely lead managed by Aryaman Financial Services Ltd., Bigshare Services Pvt. Ltd. is the registrar to the issue.  Aryaman Capital Markets Ltd. is also a market maker for this IPO. 

Having raised initial equity at par and the company issued further equity at a price of Rs. 70 per share in January 22 and March 22. The average cost of acquisition of shares by the promoters is Rs. 12.03 and Rs. 70.00 per share. 

Post-IPO, RTL's current paid-up equity capital of Rs. 13.25 cr. will stand enhanced to Rs. 21.25 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 148.75 cr. 

On the financial performance front, for the last three fiscals, RTL has posted turnover/net profits of Rs. 20.08 cr. / Rs. - (0.58) cr. (FY20), Rs. 52.13 cr. / Rs. 0.13 cr. (FY21) and Rs. 67.03 cr. / Rs. 2.35 cr. (FY22). The sudden boost in margins for FY22 raises eyebrows.

For the last three fiscals, RTL has reported an average EPS of Rs. 0.81 and an average RoNW of - (26.38%). The issue is priced at a P/BV of 4.01 based on its NAV of Rs. 17.46 as of March 2022 and at a P/BV of 1.88 based on its post-IPO NAV of Rs. 37.24 per share. 

If we attribute FY22 higher earnings on post IPO fully diluted paid-up equity capital, then the asking price is at a P/E of around 63.64 making it an aggressively priced IPO with concern over the sustainability of margins reported. 

As per the offer document, RTL has shown Incredible Ind., Hariom Pipe, Supershakti Metaliks, and Kamdhenu Ltd. They are currently trading at a P/E of 34.04, 18.20, 23.42, and 17.69 (as of August 16, 2022). However, they are not truly comparable on an apple-to-apple basis. 

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

This is the 13th mandate from Aryaman Financial in the last three fiscals (including the ongoing one). Out of the last 10 listings, all opened with premiums ranging from 0.02% to 5% on the day of listing. Thus it has an average track record.

Conclusion / Investment Strategy

Though the company’s top line shows growth, the sudden boost in margins for FY22 raises eyebrows. The segment is highly competitive and fragmented. Two listed group companies have not fared up to the mark. The issue is priced aggressively and hence there is no harm in giving it a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on August 16, 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: ).


  1. 1. Why Rhetan TMT IPO?

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

  2. 2. How is Rhetan TMT IPO?

    Read the Rhetan TMT IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Rhetan TMT IPO what should investors do?

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

  4. 4. Is Rhetan TMT IPO good?

    Our recommendation for Rhetan TMT IPO is to avoid.

  5. 5. Is Rhetan TMT IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Rhetan TMT IPO.

  6. 6. When will Rhetan TMT IPO allotment status?

    The Rhetan TMT IPO allotment status will be available on or around August 30, 2022. The allotted shares will be credited in demat account by September 2, 2022. Visit Rhetan TMT IPO allotment status to check.

  7. 7. When will Rhetan TMT IPO list?

    The Rhetan TMT IPO will list on Monday, September 5, 2022, at BSE SME.