Shiv Aum Steels Limited IPO

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(i) The Company, Shiv Aum Steels Limited, is engaged in the trading of mild steel products such as beams, angles, plates, channels, coils, and Thermomechanically treated (TMT) bars.

(ii) They are the authorized distributor for selling steel products of Jindal Steel & Power Limited (JSPL), have entered into MoUs with Steel Authority of India (SAIL) & Rashtriya Ispat Nigam Limited (RINL). They also procure steel products from various other steel manufacturers including Monnet Ispat & Energy Limited (MIEL) and Vandana Ispat Limited (VIL) to name a few, which gives them an exclusive market to trade in high quality and well-established brands of steel products.

(iii) They procure large array of steel products from the top manufacturers in bulk quantities and selling them to customers who require these steel products in specific quantities, sizes and dimensions. They play a connecting role and support the manufacturers’ demand generation activities through trade marketing.

Objects of the Shiv Aum Steels Limited IPO:

The Objects of the Net Issue is to raise funds for: (a) Repayment of Loans = 15.10 Cr (b) General Corporate Purpose = 23.75 Lakh

Shiv Aum Steels Limited IPO Details:

Open Date: Sep 19 2019
Close Date: Sep 23 2019
Total Shares: 3,600,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Issue
Issue Size: 15.84 Cr.
Lot Size: 3000 Shares
Issue Price: ₹ 44 Per Equity Share
Listing At: NSE Emerge
Listing Date: Oct 01 2019

Promoters And Management:

1.  Mr. Sanjay Bansal, aged 55 years, is the Whole-Time Director of our company. He has around 35 Years of rich and vast experience in the Steel Trading Industry. He was one of the founding members of Shiv Aum Steels Private Limited and was associated with the company from its Incorporation. He looks after the overall sourcing of raw materials domestically and as well as overseas. He is also responsible for the efficient mobilization of funds. 2. Mr. Ajay Bansal, aged 58 years, is the Whole-Time Director of the company. He holds a Bachelor of Commerce Degree from Mumbai University. He has around 35 years of rich and vast experience in the field of Steel Trading Industry and is also, one of the founders of Shiv Aum Steels Limited and is associated with the company right from its inception. He looks after the procurement of raw materials from domestic as well as international markets and is also actively involved in the day to day management of the Company.

Financials of Shiv Aum Steels Limited IPO:

( Fig. in Crs )
Year Revenue EBITDA OPM PAT NPM Equity EPS
2017 249 8.83 3.5% 2.93 1.18% 10.004 2.93
2018 277 13.49 4.9% 5.45 1.96% 10.004 5.44
2019 377 16.07 4.3% 5.72 1.52% 10.004 5.72
Post-Issue 13.604 4.20
Year Net-worth Debt Debt/Net-worth CA CL Current Ratio ROE
2017 35.45 39.75 1.12 69.28 31.81 2.18 8.3%
2018 40.9 63.1 1.54 101.6 51.81 1.96 13.3%
2019 46.63 76.86 1.65 200 59.67 3.35 12.3%
Post-Issue 61.97 61.48 0.99 9.2%
IZ View 1. The Company has shown a 23% CAGR growth in revenue in the last 3 years. 2. The Company has shown a 39.72% CAGR growth in PAT in the last 3 years. 3. EPS of FY18-19 stands at 5.72. The P/E multiple based on this is 7.69x. 4. The D/E post-issue would be 0.99. 5.  Mcap= ~60 Cr. Mcap/Rev= 0.15x( which looks attractive).

Comparison With Peers:

The company has shown SRU Steels as a listed peer in the market. The SRU Steels is currently trading at P/E multiple of 51x.

Recommendation on Shiv Aum Steels Limited IPO:

Review and Recommendation of InvestorZone is:  4/10 [ The valuation looks attractive. The company is the authorized distributor of many reputed Steel companies such as Jindal Steel & Power Limited (JSPL), Steel Authority of India (SAIL),  Rashtriya Ispat Nigam Limited (RINL), Monnet Ispat & Energy Limited (MIEL) and Vandana Ispat Limited (VIL). However, the slowdown in the steel sector might be the problem for the company in the coming quarters.]

Lead Manager of Shiv Aum Steels Limited IPO:

  1. Aryaman Financial Services Limited

Registrar of Shiv Aum Steels Limited IPO:

  1. Skyline Financial Services Private Ltd

Bid Details of Shiv Aum Steels Limited IPO as on
23-Sep-2019 17:00:00 IST

Category No.of shares offered No. of shares bid
1,704,000 3,846,000
1,704,000 729,000
192,000 192,000
3,600,000 4,767,000
QIBs Yes
QIBs+HNIs Subscription 2.26X
Retail Subscription 0.43X
Total Subscription 1.34X

Discussion on Shiv Aum Steels Limited IPO:

    The Company, as on March 31, 2019, has availed unsecured loan of 23.98 Cr at the interest rate of 15% pa from the director.

    The amount of 15.10 cr raised from the IPO will be used to cut down this loan.

    The slowdown in the steel sector is the main issue with the company:

    The wider economic slowdown is not likely to spare the domestic steel industry, with three credit rating agencies raising the alarm on falling profitability at steel mills.

    Profit margins for steel companies are expected to get further squeezed between weakening domestic steel consumption and a weak outlook for global growth amid escalating trade war tensions, rating agency Icra said in a report on Wednesday.

    Over the last four quarters, operating profit margins of the domestic steel industry have been on slippery ground, declining steadily from 22.6% in Q1 FY19 to 18.2% in Q1 FY20. This downward trend in profitability is expected to continue in Q2 FY20 as well, according to the latest Icra report on the steel sector.

    The Indian economy grew at only 5% in Q1 FY20, the slowest in the last six years. With steel demand growth being dependant on growth of gross domestic product (GDP), domestic steel consumption growth slowed down to 5.7% in April-July of FY20, against 7.5% and 7.9% in FY19 and FY18, respectively.