EarthStahl & Alloys IPO envisages to raise raise ₹12.96 Crores. EarthStahl & Alloys IPO is a BSE SME IPO. The issue is priced at ₹38 to ₹40 per equity share. Earthstahl & Alloys Limited is engaged in manufacturing Cast Iron Lumps and Ductile Iron Pipe Fittings.
IPO open:
27-Jan-23
IPO Close:
31-Jan-23
IPO Size (Rs.)
~ ₹12.96 Crore
IPO Size (shares)
3,240,000 shares
Face Value:
₹10
IPO Price Band:
₹ 38.00-40.00
Minimum Lot
3000
IPO Listing on:
BSE SME
QIB quota
30% of the Net Issue
NII Quota
35% of the Net Issue
Retail Quota
35% of the Net Issue
Lead Manager
Hem Securities Ltd
Registrar
Bigshare Services Pvt Ltd
Originally established in 2009,as a Greenfield project for production of cast iron lumps through submerged arc furnace route by first generation Entrepreneurs.
Earthstahl & Alloys Limited is engaged in the business of manufacturing Cast Iron Lumps and Ductile Iron Pipe Fittings.
Earthstahl & Alloys Limited uses waste generated in the steel plants to produce cast iron. The steel plants are holding huge dump of such material which, if not use productively, causes pollution.
Cast Iron Lumps are used as raw material in the steel foundries to manufacture products like: cast iron pipe fittings, machine components such as latche machines, fan components, manhole covers, decorative cast iron pieces, cast iron pipe fitting and other units engaged in manufacturing of steel or cast iron products.
Ductile Iron Pipe Fittings are used in public water supply systems as connectors of pipes
In addition to production of cast iron lumps, the company has put up a Lost Foam based Foundry for production of high end ductile iron, cast iron, steels, alloys, and non-ferrous castings which has plenty of uses such as-pellet plants, cement plants, sponge iron plants, power plants, automobiles, railways, mining, agriculture equipment, pipes and fittings.
The cast iron lumps produced by Earthstahl & Alloys Limited constitutes 85.62%, 80.43%, 77.20% and 98% of its revenue from manufactured goods for the period ended on September 30, 2022 and FY 2021-22, FY 20-21 and FY 19-20 respectively and is mainly used as a raw material for making steel or iron in foundries.
Company is promoted by Ravi Thakurdasji Laddha, Rajesh Somani, Prawin Somani and Padam Kumar Jain.
Aristo Bio-Tech and Lifescience IPO: Financials
Particulars/ Rs Lacs
H1FY23
2022
2021
2020
Revenue from operations
4,815.86
4,887.50
2,411.70
3,165.47
EBITDA
907.27
1,340.60
615.9
259.95
EBITDA Margin
18.84%
27.43%
25.54%
8.21%
PAT
580.47
745.48
267.31
-33.49
PAT Margin
12.03%
15.19%
10.88%
-1.05%
Equity Share Capital
300
300
300
300
Net worth
1,637.50
1,057.03
311.55
44.24
Net Asset Value
18.19
11.74
3.46
0.49
Total Borrowings
1,092.93
1,399.97
1,396.82
1,733.71
Earnings per Share
6.45
8.28
2.97
-0.37
Post issue Share Capital
1224
FV
10
IPO price
40
EPS FY22
6.09
PE Fy22
6.57
EPS annualized
9.48
PE
4.22
Market cap in Lacs
4896.00
Market Cap/sales
1.00
Salient Points
The public issue will constitute 26.47% of the equity share capital.
The proceeds of the Issue are intended to be used for:
Funding capital expenditure towards change in electricity supply voltage from 33 KV to 132 KV at the manufacturing facility.
To meet Working Capital requirements
General Corporate Purpose
To meet issue expenses
The plant is located in the village Duldula, near Simga on the Raipur – Bilaspur National Highway 200 in Chhattisgarh. The plant is located centrally where raw material is available abundantly and is surrounded by the plants where finished goods of the company are required / consumed.
Company intends to undertake expansion of existing manufacturing facility by setting up Briquetting Plant for production of briquettes of ferrous waste fines in backward integration. The briquettes shall be used as raw material feed for production of Cast Iron Lumps. It intends to finance the said project from internal accruals/ surplus funds available for general corporate purpose and/or from loan facilities for which we have moved an application with Yes Bank Limited which is under appraisal.
Its working capital loan has been sanctioned by Yes Bank Limited, while equipment loan from HDFC bank.
Company defaulted in servicing its debt obligations during FY 15-16 and FY 16-17 and such debt was settled as at March 31, 2018. This was due to delay in commissioning and stabilisation of foundry for manufacturing ductile iron pipe fittings and fall in the steel prices the company had shut down its operations from March 2015 till March 2018.
Earthstahl & Alloys Limited operates on submerged electric arc furnace route using electricity as energy for melting instead of coke used in the conventional route of iron making through blast furnace. Thus, electricity forms highest component in cost of production of cast iron and thus any disruption in power supply will impact its operations. It has significant electricity requirements and electricity cost constitutes a significant percentage of its total expenses which is 38.74%, 34.21% and 44.50% of total expenses for FY 21-22, FY 20-21 and FY 19-20 respectively.
In cast iron product segment it faces competition from companies like Vandana Global Limited. In the ductile iron pipe fittings segment we face competition from some of significant companies like: Electrosteel Casting Limited, Jindal Fittings Limited, Kejriwal Casting Limited.
Social media reports indicate a GMP of Rs. 20-30 on the issue price.
PE ratio is 6.57x (fy22 earnings) and 4.22x (fy23 annualized)
Earthstahl & Alloys IPO is likely to see heavy subscription due to good listings by SME IPOs in recent past.
I intend to apply in Earthstahl & Alloys IPO.
SME IPO are more volatile and I generally exit on the listing day, many times in pre open session.
SME IPOs with Hem securities as lead manager have in general performed well in the markets.
Please do your own diligence as SME IPOs are more volatile and risky than mainboard IPOs and need more funds.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.
