Sealmatic India SME IPO Overview

Sealmatic India IPO comprises of a Fresh Issue by the Company and an Offer for Sale by the Promoter and Promoter Group Selling Shareholders aggregating 56.2 crore. Sealmatic India is in the business of designing and manufacturing mechanical seals with domestic and international customers in over 45 countries. Sealmatic mechanical seals are supplied to industry leaders in oil & gas, refinery, petrochemical, chemical, pharmaceutical, fertilizer, power, mining, paper, aerospace, marine, and other industrial applications.

IPO open:17-Feb-23
IPO Close:21-Feb-23
IPO Size (Rs.)~  ₹56.24 Crores
IPO Size (shares)2,499,600
fresh issue shares1,850,000
OFS shares649,600
Face Value:₹10 
IPO Price :₹220 to ₹225
Minimum Lot600
Listing AtBSE SME
QIB40% of  Net Issue
NII Quota18% of  Net Issue
Retail Quota42% of Net Issue
 Lead ManagerISK ADVISORS 
Market MakerSunflower Broking Pvt. Ltd
RegistrarKFIN Technologies
  • Anchor Investor Bidding Start Date is Feb 16, 2023 and Anchor Investor Size is Rs.12.81 crore
  • Company was originally incorporated as Seal Matic India Private Limited on December 02, 2009 at Mumbai, Maharashtra as a private limited company
  • Subsequently, the name of the company was changed to “Sealmatic India Private Limited” on March 12, 2021 and to “Sealmatic India Limited” on November 03, 2022.
  • Sealmatic designs and manufactures mechanical seals and associated products, sealing support systems mainly for the oil & gas, refinery, petrochemical, chemical, pharmaceutical, fertilizer, power, mining, pulp & paper, aerospace, marine and many more industrial applications.
  • With a wide range of products and services, Sealmatic has solutions for every sealing requirement – such as Pusher Seals, Standard Cartridge Seals, Elastomer Bellows Seals, Metal Bellows Seals, Engineered Seals, Split Seals, Gas-Lubricated Seals and many more.
  • Its existing manufacturing unit is located at Building A, Indiplex IV, Survey No-12, Hissa No-9A, Village Ghodbunder, Shanti Vidya Nagri Road, Mira Road (E), Thane – 401104. India. The Company has also planned to set up its second manufacturing unit at Industrial gala 1 to 7 ground floor Empire Estate-1 unit no. 2 Khindipada Village Vasai East, Thane 401208.
  • Promoters of the Company are Mr. Mohamed Hanif Chaudhari, Mr. Umar A K Balwa and Mr. Rafiq H. Balwa .

Major Customers:

Sealmatic India supplies products to Industry leaders of oil and gas industry, Power sector, Pharma sector. Customers include fortune 500 companies and are spread across all the continents with 100% retention rate.

Sealmatic India IPO: Financials

Particulars/Rs. LacsH1fy23202220212020
Total Revenue2,582.124,276.803,557.013,358.88
Profit After Tax543.45841.46649.76494.13
Share Capital720202020
Reserves & Surplus2,830.152,995.892,154.431,504.67
Net-Worth3,550.153,015.892,174.431,524.67
Basic & Diluted EPS7.55420.73324.88247.06
NAV49.311507.951087.22762.33
Total Borrowings224.3993.56272.62278.3
Post issue Share Capital905
FV10
IPO price225
EPS FY229.30
PE Fy2224.20
EPS annualized12.01
PE18.73
Market cap in Lacs20363
Market Cap/sales4.76

Salient Points

  • The global mechanical seals market stood at USD 3.20 billion in 2018 and is projected to reach USD 4.77 billion by 2026, exhibiting a CAGR of 5.2% during the forecast period. Growth is attributed to the growing manufacturing as well as industrial sectors.
  • Asia-Pacific is anticipated to lead the mechanical seals market share and is projected to depict exponential growth over the coming years due to the increasing industrial applications in the emerging countries including India and China.
  • The Industrial seals market in India has shown significant growth in the past two decades and is expected to grow moderately in the coming future as well. Industrial Seals market was valued at USD 12.3 billion in 2020 and is projected to reach USD 16.5 billion by 2028, growing at a CAGR of 3.6 per cent from 2021 to 2028.
  • Few of the major factors that have led to high demand for mechanical seals in India include, rapid industrialization which has led to high demand for Power and infrastructure sector, One of the other factor is that seals help in reducing leaks and are help in efficiency further reduces cost of maintenance, Thus Indian Oil and Gas, Power sector and other capital intensive industry have started using mechanical seals for bringing efficiency in the process and thereby reducing overall operational cost.
  • Seals help in reducing leaks which leads to significant savings that comes from less waste, reduces pump failure and eases maintenance. One major factor of using mechanical seals by Indian companies in recent years is that such use reduces hazards to pump operators and adverse environmental conditions, high rotational speed and pressure levels place demanding requirements on sealing technology employed in the process industry.
  • The Objects of the Net Issue is to raise funds for:
    • 1) Purchase of Plant and Machinery
    • 2) Product Development
    • 3) Marketing and after Sales Support
    • 4) General Corporate Purpose
    • 5) Provisions and Contingency
    • 6) Working Capital Requirement
  • The company is looking to setup a second manufacturing unit to increase production capacity by about 60% of existing installed capacity. The company has taken space on lease at for second unit at Industrial Gala No. 1to 7, situated on the Ground Floor of the Empire Estate- 1, Khindipada, Kaman Village Vasai East, Thane- 401208, tenure of lease agreement starts from 15th October 2022. This unit will be ready during financial year 2022-23 and will be partly operational, it will be fully operational in financial year 2023-24.
  • This includes Cost of setting up office which includes furniture, fixtures, electrical fittings, computer systems etc in Delhi, Chennai, Kolkata and Hyderabad
  • Further company is setting up sales and service centre in USA & Europe.
  • Company is a Star Export House with Certification from Directorate General of Foreign Trade part of Ministry of Commerce and Industry, dated February 20, 2022.
  • Company is going ahead with the expansion to meet rising demand globally for such components.
  • Its turnover has 70:30 ratios for export and domestic revenues.
  • It is one of the few Indian Company Approved/ Registered as vendor with National & International customers
  • Company is importing raw material from third party suppliers from USA, Germany and UK from approved sources of various international sealing companies. Seal Faces such as carbon and silicon carbide are imported from USA & Germany. Elastomers are imported from Germany.
  • The company is importing raw material from third party suppliers from USA, Germany and UK from approved sources of various international sealing companies. Seal Faces such as carbon and silicon carbide are imported from USA & Germany. Elastomers are imported from Germany.
  • SKF (SKF AB), John Crane (Smiths Group Plc.), and Flowserve Corporation are the leading market players. SKF holds the largest market share, as per the mechanical seals market report.
  • Some of the other leading players include Trelleborge AB, EnPro Industries Inc. (Garlock Gmbh), Dover Corporation (Waukesha Bearings), SHV (ERIKS Group), Freudenberg SE, Tenneco Inc, Fenner Group Holdings Limited (Hallite Seals).
  • The promoter Mr Umar Balwa was the founding promoter of Burgmann India Pvt Ltd which was a subsidiary of Feodor Burgmann Dichtungswerke GmbH & Co KG in the years 1993. Burgmann India Pvt Ltd was a joint venture between Feodor Burgmann Dichtungswerke GmbH & Co KG and the Balwa family with 51:49% equity participation. Mr Umar Balwa successfully lead the company in India with a sizeable market share until 2007, when the parent company Feodor Burgmann Dichtungswerke GmbH & Co KG was taken over by the Freudenberg Group and under a friendly agreement the Balwa family sold their 49% shares in the company to the parent organisation.
  • Thus the promoters have good experience in the field.
  • Sealmatic has proven itself with its heavy-duty mechanical seals with innovative and tailor-made sealing solutions guaranteeing longer service.
  • Sealmatic products are globally recognized as a trusted brand in the process industry.
  • It has a satisfied base of over 1000 customers across the globe and exports the products to UK, Europe, America and other countries.
  • The company paid a maiden dividend of 10% for FY22.
  • Axis Bank, ICICI Bank, Canara Bank, Bank of Baroda, SBI are bankers to the company. It has availed term loans from SIDBI.
  • Social media reports indicate a GMP of about Rs. 20-30 on the issue price.
  • PE ratio is 24x (fy22 earnings)  and 18.7x (fy23 annualized)
  • Sealmatic India Revenues and Profits have improved consistently.
  • Sealmatic India IPO may see good subscription even as the issue size is of a good size in comparison to other SME issues..
  • I intend to apply in Sealmatic India IPO.
  • SME IPO are more volatile and I generally exit on the listing day, many times in pre open session.
  • About the Lead Manager, this is the 4th mandate from ISK Advisors in the last three fiscals (including the ongoing one). Out of the last 3 listings, all opened at premiums ranging from 1.86% to 41.27% on the day of listing. These IPOs were Technopack Polymers, Maruti Interior Product, Advait Infratech.
  • 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.

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