Supershakti Metaliks Limited IPO

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(i) Supershakti Metaliks Limited has a state of art integrated steel plant at Jamuria Industrial Estate, West Bengal, India producing Pallets, Sponge Iron, Billets, Slabs, Ferro Alloys, HR coils, ERW Pipes, TMT Bar, Angle, Channels and allied products under the brand name of “Super Shakti”.

(ii) Supershakti Metaliks Limited Product usages
a) Billet: Used in Rolling Mill, infrastructure etc.
b) Wire Rods: Used in nails, nuts, electrodes, Wire, Power Industry etc.
c) HB Wire: Used in construction, binding, Weld Mesh, welding electrodes, cycle spokes and other uses such as cement pipes, poles, bridges and handicrafts etc.
d) Binding Wire: Used in construction
e) TMT bars- Backbone of every civil construction deep-rooted into the foundation.

(iii)  The Group Companies of Supershakti Metaliks Limited are:

a) SSL( Super Smelters Limited)- Promoters of Supershakti Metaliks hold 94.51% Stakes in SSL. It is not a listed company.
b)
 SEPL(Sai Electrocasting Private Limited)- Promoters of Supershakti Metaliks hold 94.51% Stakes in SEPL. It is not a listed company.

(iv) The Company has some prominent name from Private and Govt. agencies as its Clientele:
DLF, NBCC, BHEL , Coal India,  L&T, SAIL, NPCC, India Railways and MES(Military Engineering Services) & NHAI( National Highway Authority of India)

(v) The company has presence in PAN India market and sold in West Bengal, Bihar, Jharkhand, Odisha, Rajasthan, Delhi, Punjab, Uttar Pradesh & North Eastern Region, Super Shakti’s products are also exported to Europe, South East Asia, Middle East & Far Eastern Countries. It has been also accredited with 2 Star Export house.

Objects of the Supershakti Metaliks Limited IPO:

Objective of

Supershakti Metaliks Limited IPO

are: (i) The Offer for Sale of 8,00,000 Equity Shares.  The Company will not receive any proceeds of the Offer for Sale by the Promoters and Promoter Group Selling Shareholders. (ii) The Fresh Issue of 8,00,200 Equity Shares at an Issue price of 375. (a) Working Capital Requirements (b) Funding expenditure for General Corporate Purposes

Supershakti Metaliks Limited IPO Details:

Open Date: Jul 17 2018
Close Date: Jul 20 2018
Total Shares: 16,00,200
Face Value: ₹ 10 Per Equity Share
Issue Size: 60.0075 Cr.
Lot Size: 300 Shares
Issue Price: ₹ 375 Per Equity Share
Listing At: BSE SME
Listing Date: Jul 30 2018

Promoters And Management:

Promoters of Supershakti Metaliks Limited Company are: (i) Mr. Dilipp Agarwal, aged 46 years, is the Chairman and Non-Executive Director of the Company. He holds a Bachelor Degree in Commerce. He is having more than 2 decades of experience in the steel industry. (ii) Mr Deepak Agarwal, aged 44 years, is the Non-Executive Director of the Company. He holds Bachelor’s Degree in Commerce. He has over 2 decades of experience in the steel industry. He has been the guiding force behind the growth and business strategy of the Company. He has been instrumental in the consistent growth of the Group’s performance and overall development.

Capital Structure:

(i) Authorized Share Capital (60,00,000 Equity shares at FV@10) 6 Cr
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue (49,62,439 Equity Shares at FV@10) 4.962 Cr
(iii) Fresh Issue ( 8,00,200 Equity Shares at FV@10) 80.02 Lacs
(iv) Offer For Sale ( 8,00,000 Equity Shares at FV@10) 80 Lacs
(v) Market Maker 80,400 Equity Shares FV@10. 8.04 Lacs
(vi) Net Issue to Public 1519800 Equity Shares FV@10 1.5 19 Cr
(vii) Reservation for QIB & HNI[7,59,000] Shares at FV@10 50%
(viii) Reservation for Retail  [7,59,000] Shares at FV@10 50%
(ix) Paid Up Share Capital after the issue 5.762 Cr

Financials of Supershakti Metaliks Limited IPO as per DRHP:

1. Assets and Liabilities Key Parameters
Year Asset(lacs) Liabilities (lacs) Net Worth(lacs) Book Value D/E RONW Debtor days
FY16 15,665.25 11,501.18 4,164.07 83.91 2.8 2% 67
FY17 16,699.84 12,477.93 4,221.91 85.08 3.0 1% 63
FY18 11,902.75 6,442.76 5,459.99 110.03 1.2 23% 26
Post Issue 8,460.74 147 0.8 15%
2. Profit n Loss Key Parameters
Year Revenue(lacs) PAT(lacs) EBITDA Margins Profit Margins Outstanding Shares(lacs EPS
FY16 24,566.87 71.85 4.22% 0.29% 49.62 1.45
FY17 30,102.41 57.84 2.68% 0.19% 49.62 1.17
FY18 36,008.73 1,238.08 7.44% 3.44% 49.62 24.95
Post Issue 57.63 21.48
3. Cash Flow Statement(all figures in lacs)
Particulars FY18 FY17 FY16
(i) Net Cash Generated from Operation 4,331.62 -279.06 2,320.91
(ii) Net Cash Generated from Investment -7.17 -292.88 -1095.59
(iii) Net Cash Generated from Financing Activity -3,427.85 508.69 -1,651.11
(iv) Total[ (i)+(ii)+(iii) ] 896.60 -63.25 -425.79
(v) Cash and Cash Equivalents at the Beginning of the Year 44.4 107.65 532.78
(vi) Cash and Cash Equivalents at the end of the Year 941.00 44.40 106.99
Key Notes a) The Revenue is growing at CAGR of 21.07% from FY16 to FY18. b) The PAT is growing at CAGR of 315.11% from FY16 to FY18.  It looks quite fancy to have such wonderful growth but then word of caution-  the PAT has gone from 57 Lacs in FY17 to 12 Cr in FY18 on mere 20% growth in revenue, indicates some manipulation may have done just before the IPO. c) The Annualized EPS(post issue) for FY17-18 is 21.48 d) P/E(post issue)= 17.45 at Cutoff price of 375 e) P/B(post issue)= 2.25 at cutoff price of 375 f) The company has debt of around 23 cr on 54 cr Equity. So debt/equity is manageable. g) Mcap/Sales(ideally <2)= .6 on FY18 sales( Ideally priced). h) The Company's EBITDA Margins have improved considerably in FY18. The reason same as we discussed at point number (b). i) The Company is not generating positive cash flows from operations in last 3 years.

Comparison With Peers:

Name of the Company FV EPS P/E RONW
Adhunik Industries Limited 10 0.82 70.21 3.46%
Supershakti Metaliks Limited 10 21.48 17.45 15.00%

Recommendation on Supershakti Metaliks Limited IPO:

Supershakti Metaliks Limited IPO Rating by InvestorZone team = 5/10 1-5: Fair 5-7: Good 7-10: Excellent

Lead Manager of Supershakti Metaliks Limited IPO:

  1. Aryaman Financial Services Limited

Registrar of Supershakti Metaliks Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Supershakti Metaliks Limited 39, Shakespeare Sarani, 3rd Floor, Kolkata, West Bengal-700017 Phone No. +91 33 2289 2734/35 Fax No.: +91 33 2289 2736 Email Id. info@ssml.in Website. www.supershaktimetaliks.com

Bid Details of Supershakti Metaliks Limited IPO as on
20 Jul 2018 | 06:18:03 PM

Category No.of shares offered No. of shares bid
759,900 1,422,600
759,900 315,600
80,400 80,400
1,600,200 1,818,600
QIBs No
QIBs+HNIs Subscription 1.87X
Retail Subscription 0.42X
Total Subscription 1.09X

Discussion on Supershakti Metaliks Limited IPO:

    Profit jumped 21 times in FY18 as compared to last year on mere 20% Revenue growth put enough doubts on management to avoid such issue.