TLDR;
This YouTube video by Sunday Investing discusses five IPOs: Sampat Aluminium, Airfloa Rail Technology, VMS TMT, TechD CyberSecurity, and Euro Pratik. The video provides a detailed analysis of each company, covering their business operations, financials, risks, and potential investment opportunities. The speakers share their personal opinions and strategies regarding these IPOs, emphasizing the importance of due diligence and individual decision-making.
- Sampat Aluminium: SME, part of a larger group, faces risks like tax litigations and fluctuating financials.
- Airfloa Rail Technology: SME, a key supplier to Indian Railways, shows strong growth potential but has high working capital requirements.
- VMS TMT: Mainboard, a TMT bar manufacturer, is considered an avoid due to high debt and expensive valuation.
- TechD CyberSecurity: SME, a cyber security service provider, has high margins and growth potential, making it an attractive investment.
- Euro Pratik: Mainboard, a decorative wall panel and laminate seller, has a strong brand but faces concerns about valuation and a recent warehouse fire.
Opening Remarks [0:00]
The video starts with a welcome to "Primary Market Chatter" by Sunday Investing, focusing on the IPOs for the third week of September. Five IPOs will be discussed: two mainboard IPOs (VMSTM and Euro Pratik) and three SME IPOs (Sampat Aluminium, TechD CyberSecurity, and Airfloa Rail Technology). The speakers clarify that their opinions are not qualified advice and emphasize the importance of individual due diligence. The discussion is purely for educational purposes, and viewers should not take their opinions as definitive market predictions.
Sampat Aluminium (SME) [1:49]
Sampat Aluminium, incorporated in 1999, manufactures aluminium long products like wires and rods using aluminium ingots and recycled aluminium. The IPO involves a 30% dilution with a market cap of ₹102 crores. FY25 financials show a revenue of ₹133 crores and a PAT of ₹7 crores. The company is part of the larger Diora Group from Gujarat, which has multiple other businesses. The company's manufacturing facility has a capacity of 8,400 metric tons per annum, managed by only 26 employees. The utilization rate of the facility has fluctuated, with a combined utilization of 63-65% in FY24. The IPO aims to raise ₹23 crores for a new manufacturing facility, which will increase the existing capacity fourfold by March 2026. There are ongoing tax litigations of around ₹20 crores. The IPO is priced around ₹120 per share, leading to a valuation of 15-16 times earnings.
Airfloa Rail Technology (SME) [8:35]
Airfloa Rail Technology, incorporated in 1998, is a key supplier to Indian Railways, manufacturing high-precision components and interior furnishings for rolling stock. They also serve the aerospace and defense sector. The IPO is a fresh issue of ₹91 crores with a market cap of ₹336 crores, resulting in a dilution of approximately 27-28%. The company's financials show a top line of ₹193 crores and a bottom line of ₹25.5 crores, resulting in a P/E ratio of around 13. The company manufactures interior parts for trains, such as chairs, seats, AC ducts, windows, doors, luggage racks, and toilets. They supply parts to companies like Jupiter Wagons and Titagarh, and also work directly with Indian Railways for turnkey installations. The company's order book is around ₹370 crores, with an additional ₹1,500 crores in bids. The company is raising funds primarily to fund working capital. The anchor book was interesting as it mimicked flybs. The company is coming at just 13x, which is obviously very cheap very very similar to flybs.
VMS TMT (Mainboard) [20:08]
VMS TMT, incorporated in 2013, manufactures TMT bars and deals in scrap and binding wires, primarily sold within Gujarat. The IPO is a fresh issue of ₹150 crores with a market cap of ₹491 crores. The company has a retail agreement with Kamdhenu Limited, allowing them to sell products under the Kamdhenu brand in Gujarat. In September 2024, the company underwent backward integration to manufacture billets, which would ideally save some margins. The company has a capacity of 2 lakh metric tons per annum. Out of the ₹148.5 crores raised, ₹115 crores will be used for debt repayment and ₹33.5 crores for general corporate purposes. The company's debt increased by ₹60 crores in Q1. The company did a revenue of 882 crores in F23 in pat of 4.2 2 crores a beta margin was 2 and a half%. and PAT was.5% PAT margin. The speaker considers the IPO an avoid due to high debt, expensive valuation, and the fact that one of the promoters is a politician in Gujarat.
TechD CyberSecurity (SME) [27:53]
TechD CyberSecurity, incorporated in 2017, provides a wide range of cyber security services, including MSSP solutions, cyber program management, and compliance services. The IPO is a ₹39 crore issue, all of which is a fresh issue, with a market cap of ₹144 crores. FY25 financials show a top line of ₹30 crores and a bottom line of ₹8.4 crores, resulting in very healthy margins of 25%. The company is majorly a service based organization where they use the products of their OEMs and they offer services to their clients. The services that they offer are broadly into three categories. One is this MSSP managed service security services provider. Another services is vulnerability assessment. The third services that this tech defense provides is security operation centers. The company has nine university collaborations, providing a talent pipeline. The company has increased its client base to over 450-500 customers. The IPO is priced at ₹193 per share, around 17-18 times trailing earnings and 10-12 times forward earnings.
Euro Pratik (Mainboard) [40:49]
Euro Pratik, incorporated in 2010, is engaged in the business of decorative wall panels and laminates. The IPO is an offer for sale of ₹450 crores with a market cap of ₹2525 crores. FY25 financials show a revenue of ₹292 crores and a PAT of ₹76 crores. The P/E ratio is around 35, which is considered very high for a trading business. The company sells and markets decorative wall panels and laminates, with wall panels contributing 66% of the revenue and laminates contributing 25.6%. The company has 36 contract manufacturers in China, South Korea, the US, Turkey, Romania, Indonesia, and Portugal. The company has distribution in 116 cities via 180 distributors in 25 states and five union territories. The company saw a fire in its largest warehouse in Bhiwandi in Q1 of this year, which saw inventory losses of 33.6. The speaker is cautious about the company due to the high valuation, the warehouse fire, and the fact that it is a trading company rather than a manufacturer.
Closing Remarks [1:00:04]
The video concludes with a summary of the five IPOs discussed. The speakers mention that next week should be interesting with a lot of IPOs expected to be announced. They thank everyone for joining and express their intention to cover most of the upcoming IPOs.