Rajeshwari Cans Limited IPO

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Rajeshwari Cans Limited is engaged in the business of manufacturing round-printed tin containers of various sizes which are used as packing material. The company was started with single-line production and manufacturing of tin containers with different capacities ranging from 50 gm to 500 gm for packing tobacco material and up to 5 Litres for the paint industry. The company also performs printing work on tin sheets supplied by the customers. The Company supplies the majority of its product to the tobacco manufacturing company.

Promoters Bharatkumar Vora and Harshadkumar Vora are involved in the business of trading iron and steel, tin plate, and scrap for more than three decades. The company has a manufacturing unit at Mahagujarat Industrial Estate and Shree Ganesh Industrial Estate in Ahmedabad.

Competitive Strengths
i. Experience and knowledge of Promoters
ii. Location of Manufacturing Unit
iii. Quality Assurances
iv. Increasing Operation Efficiency

 

Objects of the Rajeshwari Cans Limited IPO:

Company is raising the funds from the IPO for the following purpose. (i) Meeting incremental working capital requirement of the business (ii) General corporate purposes.
DRHP of Rajeshwari Cans Limited IPO

Rajeshwari Cans Limited IPO Details:

Open Date: Mar 31 2021
Close Date: Apr 06 2021
Total Shares: 20,16,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Issue
Issue Size: 4.03 Cr.
Lot Size: 6000 Shares
Issue Price: ₹ 20 Per Equity Share
Listing At: BSE SME
Listing Date: Apr 15 2021

Promoters And Management:

(i) Mr. Bharatkumar Vora Aged 61 years, Promoter and Managing Director of the Company. He possesses a degree of Bachelor of Science from Gujarat University. He has experience of more than three decades in the field of selling and marketing of tin and metals business. He is associated with the Company since 2006. (ii) Mr. Harshadkumar Vora  Aged 56 years, Promoter and Whole Time Director of the Company. He possesses a degree of Bachelor of Science from Gujarat University. He has experience of more than three decades in the field of Finance, Production, and Management of the tin and metals business. He is associated with the Company since 2006. He is a Regional Committee Member of the Indian Small-Scale Paint Association of Gujarat Region. (iii) Mr. Siddharth Vora Aged about 29 years, Promoter and Non-Executive and Non-Independent Director of the Company. He has approximately 5 years of experience in the Tin Manufacturing business. (iv) Mr. Chandrakant Kamdar Aged  73 years, is a Non-Executive and Independent Director of the Company. He possesses a degree of Bachelor of Arts from Gujarat University. From the year 1968 to 2005, he worked with the government department and thereafter working with District Panchayat and was thereafter promoted to Taluka Development Officer (TDO). During the tenure, he has worked in Revenue, Disaster and Legal Department.  

Financials of Rajeshwari Cans Limited IPO:

Particulars(in Cr) Mar-18 Mar-19 Mar-20
Sales 18.5 21.0 22.0
COGS 11.6 15.0 12.0
Change in Inventory -0.2 -0.8 1.0
Employee expense 3.0 3.3 4.0
Other Expenses 2.6 2.1 3.4
Operating Profit 1.5 1.3 1.6
OPM % 0.1 0.1 0.1
Other Income 0.5 0.4 0.8
Interest 0.67 0.69 0.65
Depreciation 0.53 0.73 0.7
Profit before tax 0.23 0.23 0.28
Net Profit 0.11 0.15 0.18
No. of shares 0.5234 0.5234 0.5234
EPS in Rs 0.21 0.29 0.34

Comparison With Peers:

Peer (Cr) Revenue EBITDA OPM RONW P/E Mcap
Tinplate Company of India Ltd 2100 146 7% 13% 15x 1600
Hindustan Tin Works Ltd. 300 20 7% 6% 13x 65
Kaira Can Company Limited 157 12 7% 6% 22x 100

Recommendation on Rajeshwari Cans Limited IPO:

Review and Recommendation of InvestorZone are 3/10 1. The asking valuation is very high. Fair value of stock is Rs.5 per share, if we give same valuation as compared to peers. 2. High D/E of more than 2, whereas all the peers in the listed segment are either debt-free or D/E less than 1. 3. Very less moat in the business. 4. Hardly any growth shown by the company. And, with again lockdown happening in many cities, the business would face challenges.

Lead Manager of Rajeshwari Cans Limited IPO:

  1. Fedex Securities Limited

Registrar of Rajeshwari Cans Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

96, Mahagujarat, Industrial Estate, Moraiya, Ta: Sanand, Ahmedabad -382210, Gujarat, India

Discussion on Rajeshwari Cans Limited IPO:

4 Comments

    Competitive strengths

    High-quality tin containers of different sizes.
    Highly experienced promoters.
    Strategically located manufacturing unit.

    Reply

    Cash-flow position:

    (i) In the last 3 years (FY18 to FY20), the company has generated Cash flow from operations= 3.85 Crores.

    (ii) Free-cash generated in the last 3 years is 1.1 Crores.

    Reply

    Balance Sheet Position ( as on 31.12.2020)

    1. Debt = 5.76 Crores

    2. Net-worth = 2.21 Crores

    3. D/E = 2.60x (high)

    4. Current Ratio = 1.33x ( manageable)

    5. Trade Receivables Days = 66 Days ( manageable)

    The company has large debt. Risky…

    Reply

    Valuation of the IPO:

    (i) Total shares outstanding = 52.34 Lakh

    (ii) IPO Price = 20

    (iii) Mcap = 11 Crores

    (iv) Mcap/Sales = 0.47x ( anything less than 2 is under-valued)

    (v) P/E = 58x ( reasonable valuation)

    Overall Valuation seems to be very high.

    Reply

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