Mangalam Alloys Limited IPO

Apply 0
Avoid 0

i. Mangalam Alloys is having an unique integrated stainless steel, special steel & higher alloys steel melting and further processing unit i.e. up to bright bar fasteners. The Company is a stainless steel unit manufacturing SS Ingots, Round Bar, RCS, Bright bar, different sections/ profiles like square, hex, angle, patti, etc, Forging and making fasteners. The Company is having integrated stainless steel manufacturing unit covering 40,000 sq. meters land with an installed capacity of 25,000 TPA (Melting Capacity) with a turnover of Rs. 30,292.25 Lakhs in the financial year ending in 2023. Having situated in Ahmedabad, Gujarat, the fastest growing city of India and the third in the world, the location of the Company is one of the primary factors of its growth.

ii. For more than 3 decades, the Company has demonstrated an unwavering commitment to performance along with integrity. In the span of years, The Company has expanded into new businesses and new regions building a colossal record of sustained growth. As nearly 200 manpower are working in the Company, the Company has given highest priority to them. Having been quality driven organization, the Company believes in maintaining the right environment for their employees resulting in high quality products. The important factor for Company‘s working policy is its core value of innovation, intelligence, inspiration and integrity.

iii. The Company is awarded by various certificates and ISO 9001:2015 and PED certificate also recognized with Two Star Export House by DGFT, India.

iv. Furance is an enclosed structure in which material can be heated to very high temperature. The stainless steel ingots are produced though induction furnace by melting of stainless steel scrap. This is continuous process controlled by uniform heating with the help of electricity. The Stainless Steel scrap is put into the crucible and the temperature is raised up to 1500 0C with help of electricity and then use rgon Gas and Nitrogen treatment for secondary refining. The liquid metal then poured into cast iron moulds and the ingots so produced from furnace.

v. The company manufactures stainless steel ingots through three furnaces by melting of stainless steel scrap, rolling of ingots to stainless steel rounds & flats followed by heat treatment annealing furnace and bright bar unit.

vi. The Company has established 2nd Furnace, Total Quality Management and 3rd Furance in the year 2004 and 2012 respectively. They have established 20 inch rolling mill,12 inch rolling mill and 17 inch rolling Mill in the year 2017 and 2018 respectively

vii. Currently, they have a head office and a factory located in Chhatral, GIDC, Gujarat. The company establishes a long- term relationship with their clients by providing good quality product, which will surely go a long way and benefit the company. The company is backed by a team of highly creative and experienced professionals who have an affinity for creating innovative designs. From processing to finish, the company tries its best to ensure the quality of every single product delivered by the company.

Competitive Strengths

i. Experienced promoters, Management Expertise and Skilled Workforce
ii. Zero Waste Philosophy
iii. Eligible for MAKE IN INDIA

Objects of the Mangalam Alloys Limited IPO:

The company intends to utilize the proceeds of the Issue to meet the following objects: i. Working capital requirements ii. Capital Expenditure for business expansion and research and Development; iii. General Corporate Purposes; and iv. To meet issue expenses. The total number of shares issues is: - a. Fresh issue of 6,126,400 shares. b. Offer for sale of 737,600 shares.
DRHP of Mangalam Alloys Limited IPO
RHP of Mangalam Alloys Limited IPO

Mangalam Alloys Limited IPO Details:

Open Date: Sep 21 2023
Close Date: Sep 25 2023
Total Shares: 6,864,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue IPO
Issue Size: 54.91 Cr.
Lot Size: 1600 Shares
Issue Price: ₹ 80 Per Equity Share
Listing At: NSE Emerge
Listing Date: Oct 04 2023

Promoters And Management:

Mr. Uttamchand Chandanmal Mehta, aged 69 years, was appointed as the Chairman and Whole Time Director w.e.f. July 1, 2023. He has been the lynch pin of the group companies in its journey through growth and success. Mr. Uttamchand Mehta, B.E.(Honours) in Chemical Engineering from Birla Institute of Technology and Science, Pilani, brings to the organization a wealthy experience of 40 years in the field of stainless steel industry. He is the ideator behind the concept of grades in the stainless steel melting industry having initialized the concept 30 years ago. His excellent leadership qualities, expertise in motivating his staff and dedication towards work act as a catalyst in delivering the best to the customers around the world. Besides, Mr. UttamChand Mehta has received one of the nation‘s most prestigious awards the Golden Peacock Award for his efforts in developing the Naroda Enviro Projects Limited. Moreover, he has been the director of Naroda Enviro Projects Limited and the founder chairman of Naroda Industrial Co Operative Bank Ltd. NIA Charitable Trust Hospital- Chairman from last 17 years. Mr. Tushar Uttamchand Mehta, aged 34 years, was appointed as the Managing Director and Whole Time Director w.e.f. July 1, 2023. He holds a Bachelor degree in Mechanical Engineering, the Managing Director of Mangalam Alloys Limited, being the face of Mangalam Alloys Limited, Mr. Tushar Uttamchand Mehta, with his strong technical knowledge, leadership qualities and marketing skills leads the Quality, Research & Development, Marketing, Purchase and Imports & Exports departmentsof the company. Ms. Pushpa Uttamchand Mehta, aged 63 years, was appointed as the Non Executive w.e.f. January 10, 2018. She holds a Bachelor degree in Commerce from Shreemati Nathibai Damodar Chackersey Women's University, Bombay. She is having a detailed knowledge in the human resource management

Financials of Mangalam Alloys Limited IPO:

Particulars (Lakh) 2021 2022 2023
Revenue From Operations 27,126 30,937 30,292
Other Income 65 37 526
Total Income 27,191 30,974 30,818
Cost of Goods Sold 19476 21386 20818
Employees Benefit Expenses 1,971 1,861 1,485
Other Expenses 4,522 5,004 4,798.00
EBITDA 1,222 2,723 3,717
Depreciation 763 824 668
Finance Cost 1,365 1,288 1,747
EBIT 459 1899 3049
OPM 4.49% 8.79% 12.06%
PBT -906 611 1,302
Tax -252 105 288
PAT -654 506 1,014
NPM -2.41% 1.63% 3.29%
No. of Shares 246.85 246.85 246.85
EPS -2.65 2.05 4.11

Comparison With Peers:

Name of the Companies Revenue (cr) Profit (cr) EPS P/E CMP MCap (in cr)
Mangalam Alloys Limited 303 10 4.11 19 80 197.44
Ratnamani Metal & Tubes Ltd 4,673 560 79.5 33.8 2,685 18,817
Arfin India Ltd 544 10 0.65 63.4 39.5 628
India Steel Works Limited 5 -36 0.9 2.22 2 88
*All the data is as per FY23

Recommendation on Mangalam Alloys Limited IPO:

Review And Recommendation of Mangalam Alloy SME IPO by IZ team is 5/10

1. Business Model

Mangalam Alloys has a well-integrated stainless steel, special steel, and higher alloys steel manufacturing unit with a focus on ingots, round bars, and other specific forms. The company's location in Ahmedabad, Gujarat—a fast-growing city—provides strategic advantages.

2. Competitive Strengths

a) Experienced Management: Led by experienced promoters and a skilled workforce. b) Zero Waste Philosophy: This is significant in the steel industry, where waste management can be a significant cost. c) Eligibility for MAKE IN INDIA: This could avail them of various benefits, including tax advantages and easier regulatory clearances.

3. Management

Mr. Uttamchand Mehta, the Chairman, and Mr. Tushar Mehta, the Managing Director, have a wealth of experience and technical knowledge in the stainless steel industry. Ms. Pushpa Mehta, with her expertise in human resources, adds another layer of strength to the management team.

4. Financials

a) Revenue: The revenue showed an increase from ₹271 Cr in 2021 to ₹309 Cr in 2022, which is an approximately 14% growth. However, there was a slight dip in revenue in 2023, dropping to ₹302 Cr b) EBITDA: Significant improvement, especially in the year 2023, indicates operational efficiency. The EBITDA as a percentage of revenue has shown a consistent upward trend from 4.58% in Fy21 to 12.3% in Fy23. c) Earnings Per Share (EPS): Increased from -2.65 in 2021 to 4.11 in 2023, showing better earnings.

5. Peers Comparison

a) Ratnamani Metal & Tubes Ltd: Although it has a higher market cap and revenue, its P/E ratio is higher, making Mangalam Alloys appear relatively undervalued. b) Arfin India Ltd: Lower EPS and higher P/E ratio compared to Mangalam Alloys. c) India Steel Works Limited: Negative profitability and low market cap make it a less attractive peer.

6. Valuation

The issue price of ₹80 per equity share at a face value of ₹10 seems reasonable given the EPS of 4.11 and a P/E ratio of approximately 19. The total issue size of 54.91 Cr is also in line with the company's expansion plans and working capital requirements.

7. Objects of the IPO

The company plans to utilize the IPO proceeds for working capital, business expansion, R&D, and meeting issue expenses. This indicates a balanced use of funds for both immediate needs and future growth.

8. Summary

Mangalam Alloys appears to be a stable company with a solid business model, experienced management, robust financials and reasonable valuation. Its competitive strengths and eligibility for MAKE IN INDIA further add to its attractiveness. However, investors should consider the risks associated with the steel industry, such as commodity price volatility and regulatory changes, before making an investment decision.

Lead Manager of Mangalam Alloys Limited IPO:

  1. Expert Global Consultants Private Limited

Registrar of Mangalam Alloys Limited IPO:

  1. Skyline Financial Services Private Ltd

Company Address:

Mangalam Alloys Limited Plot No. 3123-3126, GIDC Phase III, Chhatral Dist. Gandhinagar - 382729 Phone: +91-2764 232064 Email: cs@mangalamalloys.com Website: https://www.mangalamalloys.com/

Discussion on Mangalam Alloys Limited IPO:

Leave a Reply