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Review By Dilip Davda on March 7, 2017
Sarthak Metals Ltd. (SML) is engaged into manufacturing of wide variety of Cored wires, Aluminum Flipping coils, Industrial Oxygen gas, having wide application in various industries including Steel plants, Fabrication units, and Foundries. SML is also manufacturer and supplier of wire feeder machines that are known for drawing wires of 9 mm to 15 mm diameter. The company is also engaged in the business of trading of iron & steel and of carbon dioxide gas. SML commenced its operations in the year 1997 to manufacture industrial oxygen gas. Later in the year 2002, it diversified its product base by manufacturing cored wires and aluminum flipping coils. SML also started manufacturing of wire feeder machines since 2012.
To part finance repayment of existing working capital, general corpus fund needs, the company is coming out with a maiden IPO of 3636000 equity shares of Rs. 10 each at a fixed price of Rs. 30 per share to mobilize Rs. 10.91 crore. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Issue opens for subscription on 10.03.17 and will close on 17.03.17. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Guiness Corporate Advisors Pvt Ltd. and Bigshare Services Pvt Ltd is the registrar to the issue. From MoA in 1996 till January 2003 and on 30.03.2012 it issued equity at par. From March 2003 to March 2014 it issued equity in a price range of Rs. 20 to Rs. 100 per share. It has also issued bonus shared in the ratio of 2 for 1 (March 2012), 1 for 1 (March 2013) and 1 for 2 (March 2014). Its current paid up equity capital of Rs. 12.09 crore will stand enhanced to Rs. 13.69 crore post issue.
On performance front, it has posted turnover/net profits of Rs. 113.29 cr. / Rs. 2.39 cr. (FY2013), Rs. 147.22 cr. / Rs. 2.60 cr. (FY2014), Rs. 151.49 cr. / Rs. 2.87 cr. (FY2015) and Rs. 128.72 cr. / Rs. 3.67 cr. (FY2016). In FY16 despite witnessing setback in top line, it posted higher net. For first half of current fiscal it has earned net profit of Rs. 2.47 crore on a turnover of Rs. 73.96 crore. If we annualize these earnings and attribute on fully diluted equity post issue, then asking price is at a P/E of around 8 plus and at a P/BV of around 1.3, the issue is priced reasonably. It has no listed peer to compare with.
On merchant banker's front, this is the 27th mandate from its stable and in last three fiscals till date it has handled 15 issues that have shown mixed trends.
Conclusion: Cash surplus investors may consider investment for long term.
Review By Dilip Davda on March 7, 2017
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 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: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Sarthak Metals Ltd offers an early investment opportunity in Sarthak Metals Ltd. A stock market investor can buy Sarthak Metals IPO shares by applying in IPO before Sarthak Metals Ltd shares get listed at the stock exchanges. An investor could invest in Sarthak Metals IPO for short term listing gain or a long term.
Read the Sarthak Metals IPO recommendations by the leading analyst and leading stock brokers.
Sarthak Metals IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Sarthak Metals IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Sarthak Metals IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Sarthak Metals IPO.
The Sarthak Metals IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Sarthak Metals IPO allotment status to check.
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