SM Auto Stamping Ltd IPO

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(i) Incorporated in 2006, they are auto-component manufacturers located in Nashik catering to the sheet metal components and sub-assemblies requirements of automobile parts/equipment manufacturers.

(ii) The range of products primarily covers sheet metal pressed components for clutches, brakes, engine mountings, chassis, shaft drive, body trims, bearings, etc. which are used in passenger cars, commercial vehicles, and tractors.

(iii) The Promoters, Mr. Milind Kulkarni and Mr. Suresh Fegde promoted a partnership firm, M/s Spam Fab Technocrats in 1995 for engaging in job work of sheet metal components. Later, another partnership firm in the name of M/s SM Industries was also formed by the same promoters in 1998 to carry on the manufacturing and job work of press parts. Subsequently, the Company in the name of SM Auto Stamping Private Limited was incorporated in 2006 which took over both the partnership firms in 2007. SM Auto Stamping Private Limited was converted into a public limited company and renamed as SM Auto Stamping
Limited w.e.f. December 19, 2019.

(iv) They have three manufacturing units, all ideally located at Nashik, Maharashtra.

(v) Some of its reputed customers include JBM Auto Ltd., SKF India Ltd., Mahindra CIE Automotive Ltd., Haldex India Pvt Ltd, Reliable Autotech Private Limited and ABB India Ltd. to whom we have supplied products in F.Y. 2018-19.

Objects of the SM Auto Stamping Ltd IPO:

The company intends to utilize the proceeds of the Issue to meet the following objects: 1. To meet Working Capital requirements 2. General Corporate Purpose 3. To meet issue expenses

SM Auto Stamping Ltd IPO Details:

Open Date: Mar 03 2020
Close Date: Mar 05 2020
Total Shares: 3,840,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Issue
Issue Size: 6.91 Cr.
Lot Size: 8000 Shares
Issue Price: ₹ 18 Per Equity Share
Listing At: BSE SME
Listing Date: Mar 13 2020

Promoters And Management:

(i) Mr. Mukund Narayan Kulkarni– Chairman& Managing Director. (ii) Mr. Suresh Gunwant Fegde – Whole Time Director.

Financials of SM Auto Stamping Ltd IPO:

( Figures in Lakhs )
Year Revenue EBITDA OPM PAT NPM Shares EPS
2017 5336 469 8.8% -125 -2.3% 142.878 -0.87
2018 6589 611 9.3% 110 1.7% 142.878 0.77
2019 7630 705 9.2% 254 3.3% 142.878 1.78
Footnote:
Pre-IPO Shares 1,04,47,832
IPO 38,40,000
Total Shares after IPO 1,42,87,832
1. The company has shown good growth in revenue in the last 3 years. 2. In 2017, they were in the loss but shown good improvement in the bottom line in the next 2 years. 3. Debt as on 30.09.2019, is ~13 Cr, on Net-worth of 10.8 Cr. So, Debt/NW is more than 1 before the IPO. It will come down below 1, after IPO. 4. The company has a comfortable Current Ratio. 5. The average EPS of the last 3 years ( 2017,2018, and 2019) is 0.55. 6. P/E based on this is 32. 7. RONW based on post-IPO Net-worth and PAT of FY18-19, it stands at 14%, which is decent.

Recommendation on SM Auto Stamping Ltd IPO:

Review and Recommendation of InvestorZone is:4/10 Pros: 1. The company has shown good growth in revenue in the last 3 years. 2. The company is generating free cash which is a good sign for any business. 3. The valuation based on Mcap/Revenue shows the asking price is undervalued. Cons: 1. The company is dependent on the auto sector, which is struggling lately. 2. 50% of revenue comes from only one client. 3. The market condition is very bad due to the coronavirus effect.

Lead Manager of SM Auto Stamping Ltd IPO:

  1. Hem Securities Limited

Registrar of SM Auto Stamping Ltd IPO:

  1. Bigshare Services Private Limited

Discussion on SM Auto Stamping Ltd IPO:

    The company is coming up with an IPO at Mcap of 25 Cr. The company has clocked a revenue of 76 Cr in the FY18-19, so based on Mcap/Revenue, the company is undervalued.