TLDR;
This YouTube video by Sunday Investing discusses two IPOs: Mittal Sections (SME) and LG Electronics India (Mainboard). The speakers share their analysis, covering financials, risks, and potential investment strategies. They also discuss expected subscription rates and market sentiment towards these IPOs.
- Mittal Sections: Concerns about financial tweaks, regional focus, and high valuation.
- LG Electronics India: Positive outlook due to market leadership, strong financials, and growth potential.
- IPO Analysis: Focus on fundamentals, risks, and potential returns, with a disclaimer that it's not a qualified opinion.
Opening Remarks [0:00]
The video is part two of the October first week IPOs edition. The hosts are covering Mittal Sections SME and LG Electronics India IPOs. They clarify that they are not registered research analysts and advise viewers to do their own due diligence. The discussion aims to help viewers understand the fundamentals of the companies. They also mention that they may have conflicting views, which is part of an honest and collaborative learning environment. They encourage viewers to join their YouTube channel and follow them on Instagram for more reviews and updates.
Mittal Sections (SME) [2:24]
Mittal Sections, incorporated in 2009, manufactures mild steel sections and structural steel products under the brand MSL Metal. The IPO size is ₹53 crore with a market cap of ₹165 crore. The company primarily operates in Gujarat, with most of its revenue coming from there. They have a capacity of 36,000 metric tons per annum, which they are looking to increase to 96,000 metric tons via the IPO. In FY23, they had ₹167 crore in revenues with a 0.5% PAT margin. By FY25, revenues fell to ₹137 crore, but the PAT margin grew to 2.5%, with some financial adjustments. The cash from operations was barely positive in FY25. Risks include high dependence on Gujarat, existing debt, and minor litigations. The IPO proceeds will be used for capacity expansion (₹20 crore), loan repayment (₹5 crore), and working capital (₹15 crore). The lead manager is Wealth Mind, and there are no anchors in this issue with only 5% QIB. The speaker is not interested in this IPO due to a lack of understanding of why the company is getting listed.
LG Electronics India (Mainboard) [10:34]
LG Electronics India, incorporated in 1997, manufactures and distributes home appliances and consumer electronics (excluding mobile phones). The IPO is ₹11,500-11,600 crore, entirely an Offer For Sale (OFS), with a market cap of ₹77,000 crore. The dilution is around 15%, with South Korean promoters exiting. In FY25, the revenue was ₹25,000 crore, with a PAT of ₹2,200 crore (8-9% PAT margin). The company is a market leader in washing machines, panel televisions, inverter air conditioners, and refrigerators. They have a 33.5% market share in their core four segments. They have 36,000 B2C touchpoints and partnerships with major retailers. LG has been in India for 28 years and is a dominant player in its categories. The company has consistent cash flows and is almost debt-free. The speaker expects a topline growth of 5-6% and a PAT growth of 1% lower due to capex. The IPO is priced at roughly 33.5 times FY26 earnings. The speaker feels that LG is positioned as a premium company and is a direct beneficiary of India's increasing premiumization and rural demand. They expect a good listing and advise applying for the IPO.
Closing Remarks [30:00]
The discussion shifts to questions about LG, including royalty payments (1.8% of sales to the parent company), in-house vs. outsourced manufacturing (3/4 in-house), and export margins (assumed to be 2% better than domestic). The speakers discuss expected subscription rates, with retail expected to be 2.8 to 3.1 times in terms of applications and 3.5 to 3.7 times in terms of money. Big HNI is expected to be 3.8 to 4.2 times application-wise and 18 to 20 times in terms of money. The speakers anticipate that the LG IPO will be heavily oversubscribed due to cancelled funding for the Tata Capital IPO. They reiterate the importance of following them on Instagram for more updates and reviews.