Megatherm Induction intends to raise Rs. 53.91 crores. The issue is entirely a fresh issue of 49.92 lakh shares.Megatherm Induction Limited manufactures induction heating and melting products using electrical induction. and is a subsidiary of Megatherm Electronics Private Limited.

About Megatherm Induction Limited:

• Megatherm Induction Limited manufactures induction heating and melting products using electrical induction. These include induction melting furnaces and induction heating equipment. The company was incorporated in 2010 and is a subsidiary of Megatherm Electronics Private Limited.
• Induction heating is a non-contact heating process which utilizes the principle of electromagnetic induction to produce heat inside the surface layer of the metal. Induction hardening is a widely used process for the surface hardening of steel.
• Megatherm Induction’s manufacturing unit is located in Kharagpur.
• The company exports products to South America, Africa, the Gulf region, Europe, SAARC and Southeast Asia.
• It has a production capacity of ~300 furnaces and transformers as of March 31, 2023.
• As at July 31, 2023, the company had 285 permanent employees.
• Shesadri Bhusan Chanda, Satadri Chanda and Megatherm Electronics Private Limited are the promoters of the company.

Financials: Megatherm Induction IPO

Anchors: Megatherm Induction IPO

Megatherm Induction IPO: Salient Points

• The promoters current shareholding shall stand diluted to from 100% at present. to 72.71%.
• They export products to South America (e.g. Argentina, Brazil, etc), Africa (e.g. South Africa, Kenya, Tanzania, Ghana, Nigeria), Gulf (e.g. Saudi Arabia, UAE), Europe (e.g. Poland, France), SAARC (e.g. Bangladesh, Nepal, Bhutan) and South East Asia (e.g. Indonesia, Malaysia). For Fiscals 2023, 2022 and 2021 exports were Rs. 6826.20 lakhs, Rs. 3743.40 lakhs and Rs. 3784.77 lakhs which constituted 25.67%, 19.93%, and 34.72% of revenue from operations respectively.
• They plan to expand export operations globally.
• The Net Proceeds are proposed to be utilized in the manner set forth below:

• Megatherm’s key market segments are Secondary steel producers that recycle scrap, primary steel producers that convert iron ore into sponge iron and then convert it into steel through induction melting, automotive suppliers, Ordnance factories and railroads, DI pipe manufacturers, and various engineering industries that produce critical parts in their own casting, forging and metal processing facilities..
• Clients: The firm, caters to clients such as Indian Railways and Tata Motor. Demand for the products manufactured by the company is majorly from steel and auto component industry

• Peers: Its listed peer Electrotherm (India) Ltd was in loss last year but has come to good profitability now, but is ruling at very low TTM PE .
• They bave implemented a SAP system, towards streamlining operational, accounting and administrative functions.
• Overall capacity utilization was 54%.
• Cost of raw materials consumed for period September 30, 2023 was Rs. 11773.71 lakhs which represents 80.16% of revenue from operations.
• As of December 31, 2023, Company’s has an order book of over Rs. 28000 Lakh at order value less amount billed representing manufacturing and supply of metal melting, hardening equipment and transformers
• Megatherm Induction IPO is coming at a PE ratio of 14.5x(fy23 earnings) and 13.4x (fy24 annualized earnings)
• I intend to apply in Megatherm Induction IPO subject to availability of funds. They have experienced significant growth in the past few years.
• GMP as reported on social media has been Rs. 135 .
• Hem securities is the Lead Manager to the issue. The IPOs lead managed by them have given a good return to the investors. These include names like Shri Balaji Valve Components Limited, Shanti Spintex, SJ Logistics,Siyaram Recycling Industries Limited, Deepak Chemtex Limited, Paragon Fine And Specialty Chemicals, E Factor Experiences Limited, Arabian Petroleum Limited, ,Saakshi Medtech and Panels Limited, Kahan Packaging Limited, Asarfi Hospital Limited, Kaka Industries, Green Chef, Vasa Denticity, Chaman Mettalics, Hemant Surgicals, Labelkraft, Concord Control Systems Limited, Earthstahl & Alloys Limited, Silicon Rental Solutions Limited, Krishna Defence and Allied Industries, Prevest Denpro Limited etc.
• SME IPO are much more risky and volatile than mainboard IPOs.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared 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. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.