De Neers Tools Limited IPO

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i. De Neers is among the few key players in the hand tool industry as per the industry report of CareEdge. They provide a very broad range of hand tools in India with approximately two-third of their revenue geographically concentrated in the states of Delhi NCR, Gujarat, Telangana, Bihar & Uttar Pradesh (UP).

ii. They are also specialized in providing safety tools like non- sparking tools, insulated steel tools, non-sparking insulated tools, stainless steel & magnetic tools, titanium tools along with multiple other hand tools.

iii. Their ultimate clients include some of the leading OEM’s like Tata Steel, Indian oil, Larsen & Toubro, Assam Petrochemicals, Lohia Corporation, Polycab Cables, Indian Railways, etc.

iv. Following are some of the major products:

i. Double Open end Spanners
ii. BI-Hexagon Ring Spanners-Shallow
iii. Combination Ring & Open End Spanners
iv. Slogging Open end Spanner
v. Combination Pliers-Heavy Duty
vi. Long Nose Pliers
vii. Adjustable Wrenches
viii. Pipe Wrenches Stillson Pattern

v. Competitive Strengths

i. Experienced directors and management team
ii. Distribution system
iii. Quality and safety of products
iv. Repeat orders

Objects of the De Neers Tools Limited IPO:

The proceeds from the issue will be used for the following objects: 1. To meet the working capital requirements of the company. 2. For general corporate purposes and to meet the issue expenses.

De Neers Tools Limited IPO Details:

Open Date: Apr 28 2023
Close Date: May 03 2023
Total Shares: 2,276,800
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 23.00 Cr.
Lot Size: 1200 Shares
Issue Price: ₹ 95-101 Per Equity Share
Listing At: NSE Emerge
Listing Date: May 11 2023

Promoters And Management:

Mr. Neeraj Kumar Aggarwal, aged 48 years, is the Promoter and Managing Director of the Company. He completed his honours degree in Commerce from Shri Ram College of Commerce, Delhi University in 1994. Mr. Neeraj joined his family business early in his childhood and became an acclaimed name in the hand tools industry both by virtue of integrity and by scale of growth. With over 30 years of experience in the industry and with a vision to create high-end brand, Mr Neeraj formed ‘Deneers’. In the company, Mr. Neeraj manages Business Development and procurement whilst meeting global standards and targeting to be a market leader. Mr. Kanav Gupta, aged 28 years, is the Chief Financial Officer and Whole Time Director of the company. He has completed his bachelor’s in commerce from Delhi University. He further attended a course in strategic management from London School of Economics, UK. Mr. Kanav began widening his grass root industry view early in his career specifically focusing on tools industry. Three years later Deneers Tools was formed envisioning a quality hand tools brand. Mr Kanav is now managing Finance and all India sales, and is keen to make ‘Deneers’ a global name. Mrs. Shilpy Aggarwal aged 46 years, is the Whole Time Director of the company. She has pursued her graduation from Anwar-ul-loom college, Hyderabad. Having an experience of more than 10 years, she is now looking after marketing and Human resource Management.

Financials of De Neers Tools Limited IPO:

A) Balance Sheet
Particulars (in Lakh) Mar-20 Mar-21 Mar-22
Equity Share Capital ₹3.00 ₹3.00 ₹1,728
Reserves ₹701 ₹317 ₹654
Borrowings ₹1,353 ₹2,169 ₹3,644
Trade Payables ₹3,471 ₹3,575 ₹3,555
Other Liability ₹40.94 ₹45.41 ₹351
Total Liability ₹5,570 ₹6,111 ₹9,933
Fixed Assets Block ₹41.80 ₹59 ₹182
CWIP ₹0.00 ₹0.00 ₹0.00
Investments ₹0.00 ₹0.00 ₹0.00
Other Assets ₹0.00 ₹0.00 ₹0.00
Total Non-Current Assets ₹41 ₹59 ₹182
Receivables ₹4,010 ₹2,989 ₹3,473
Inventory ₹1,329 ₹2,675 ₹5,394
Cash and Cash Balance ₹35 ₹73 ₹126
Other Assets ₹147 ₹290 ₹728
Total Current Assets ₹5,521 ₹6,028 ₹9,722
Total Assets ₹5,570 ₹6,111 ₹9,933
B) P&L Statement
Particulars (In Lakh) Mar-20 Mar-21 Mar-22
Income Statement
Sales ₹7,349 ₹6,211 ₹7,898
Sales Growth 0.00% -15.48% 27.16%
COGS ₹6,756 ₹5,576 ₹6,496
COGS % of Sales 91.93% 89.77% 82.24%
Gross Profit ₹593 ₹635 ₹1,402
Gross Margins 8.07% 10.23% 17.76%
Employee Benefit & Other Expenses ₹420 ₹379 ₹661
S&G Sales % 5.72% 6.10% 8.37%
EBITDA ₹172 ₹256 ₹741
EBITDA Margins 2.35% 4.13% 9.39%
Interest Cost ₹99 ₹143 ₹102
Interest %of Sales 1.35% 2.30% 1.30%
Depreciation ₹13 ₹18 ₹41
Dep %of Sales 0.18% 0.30% 0.53%
EBIT Margins 2.17% 3.83% 8.86%
Other Income 0.02 0 109.96
Earnings Before Tax ₹60 ₹94 ₹707
EBT % Sales 0.82% 1.52% 8.95%
Tax ₹16 ₹28 ₹202
Effective Tax Rate 27.14% 30.41% 28.65%
PAT ₹43 ₹65 ₹504
NPM 0.60% 1.06% 6.39%
No. of Equity Shares 0.3 0.3 172.8
Earning Per Share ₹146 ₹219 ₹2.92
EPS Growth % 0.00% 49.74% -98.67%
Dividend Per Share ₹0.00 ₹0.00 ₹0.00
Dividend Payout Ratio 0.00% 0.00% 0.00%
Retained Earnings 100.00% 100.00% 100.00%
C) Cash Flow Statement
Cash Flow Statement
Particulars (In Lakh) 2020 2021 2022
Net Cash Flow from Operations -₹656 -₹134 -₹2,711
Cash Flow from Investing Activity -₹41 -₹51 -₹164
Cash Flow from Financing Activity ₹719 ₹223 ₹2,929

Comparison With Peers:

Name of the Peer Revenue(Cr) Profit(Cr) EPS P/E CMP MCap
De Neer Tools 96.03 6.63 7.71  13.10 101 86.93
Taparia Tools 753 74 245.18 12x 3000 910.72

Recommendation on De Neers Tools Limited IPO:

Review and Recommendation of De Neer from IZ team is 6/10 1. DE NEERS is one of the leading hand tools suppliers in India and they are into the business from 7 decades. 2. Since 1952, De Neers has been a prominent name in the Hand Tool Industry. Today the company is run by the fourth generation of the Aggarwal family, Mr. Neeraj Kumar Aggarwal, whose hard work and passion for continuous improvement have made De Neers one of the top industrial tool suppliers. 3. They procure material from fully equipped entities in Jalandhar and Ludhiana, spreading over a total area of 31000 sq meters. All these entities are backed with advanced technology from Germany and Taiwan, and incorporate both capital and labor-intensive techniques. 4. They have products like Spanners, Pliers, Wrenchers, Cutters, Hammers, Screwdrivers, Allen keys, etc. At present, company has approximately 250 dealers throughout India and also looking for export possibilities. 5. They provide a very broad range of hand tools in India with approximately two-third of the revenue geographically concentrated in the states of Delhi NCR, Gujarat, Telangana, Bihar & Uttar Pradesh (UP). 6. As on 30.11.2022, they have total 92 employees. 7. The revenue has gone up from 73 Crores in Fy20 to 79 Crores in Fy22. 8. The PAT has gone up from 43 Lakhs in Fy20 to 5 Crores in Fy22. 9. The main issue is the very high cash conversion cycle. The debtor days and inventory days are high due to which company is not able to generate cash from operations and relying heavy on debt. Though interest coverage ratio is enough to cover the finance cost. 10. Due to high working capital requirement as mentioned due to high cash conversion cycle company is raising 23 Crores from the IPO. 11. The IPO is coming at P/E of 13x and Mcap of 86 Crores.

Registrar of De Neers Tools Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

De Neers Tools Limited P.No. 468, Ground Floor, Industrial Area, Patparganj, Delhi – 110 092 Phone: 011 47072555 Email: compliance@den Website

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