Shri Bajrang Power IPO Review

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Shri Bajrang Power and Ispat Limited Basic Details

Here are some basic details and data points related to Shri Bajrang Power IPO for your reference:

 

Shri Bajrang Power and Ispat Limited Background

Shri Bajrang Power and Ispat Limited is the flagship company of Goel group of companies. It is engaged in the production of long steel products in India like TMT bars, wire rod, sponge iron, pellets etc.

They sell their products under well-known brands “Goel TMT”, under which TMT Bars are sold and “Goel TMT WireX”, under which HB Wires are sold. They mainly cater to the infrastructure and construction industry in the country, primarily across the central and western regions.

The company has 6 distributors and a network of 385 dealers.

The company has 3 manufacturing facilities strategically located at Raipur in Chhattisgarh, the state which is rich in coal and iron ore that are the main raw materials used for the business of Shri Bajrang Power and Ispat Limited.

The business is launching an IPO in the next few days across NSE and BSE. In this detailed review, we will talk about different aspects related to this IPO with information on financial health, strengths, risks, background etc.

Hopefully, by the end of the review, you will be able to take a call on whether to go ahead with this IPO investment or not.

Shri Bajrang Power and Ispat Limited Management Information

Currently, there are 10 Directors on the Board of Shri Bajrang Power and Ispat Limited.

Suresh Goel is the Executive Director and Chairman of the company. He is a Commerce graduate from Ravishankar Vishwavidyalaya, Raipur. He has held his position in the company since its incorporation on July 25, 2002.

Shri Bajrang Power IPO Data Points

Shri Bajrang Power IPO will open on (undisclosed) and close for subscription on (undisclosed).

The IPO size will be of (undisclosed) lakh Equity shares and the face value of shares will be ₹10 each share. The price band has been set at ₹(undisclosed) per share. The offer price includes a premium of ₹(undisclosed) and is (undisclosed) times the face value of the equity shares.

The IPO size is expected to be up to ₹500 crores.

Out of the (undisclosed) lakh equity shares, (undisclosed) lakh equity shares, aggregating up to ₹(undisclosed) lakhs will be reserved for market makers and the rest (undisclosed) lakh equity shares, aggregating up to ₹(undisclosed) lakhs will be issued to the public.

Out of these (undisclosed) lakh shares, (undisclosed) lakh equity shares, aggregating up to ₹(undisclosed) lakhs will be allocated to retail investors for up to ₹(undisclosed) lakh. The market lot size is of (undisclosed) equity shares and the shares will be listed on the National Stock Exchange and the Bombay Stock Exchange.

Pursuant to a resolution passed on September 2, 2018, the issue has been authorised by the Board of Directors and pursuant to a special resolution of the shareholders at the Extraordinary General Meeting held on September 3, 2018, the offer has been approved by them.

Shri Bajrang Power and Ispat Limited Financial Performance

The company has been showing increasing revenues and profits for the last 3 fiscal years.

 

Revenues grew from ₹1415.37 crores in the financial year ended March 31, 2016, to ₹1864.43 crores in the financial year ended March 31, 2018, while profit after tax increased from a loss of ₹19.47 crores to ₹37.12 crores during the same period.

There was an 18.53% increase in total revenues and 30.72% increase in restated profit from the year 2017 to 2018. The return on net worth of the company for the years ended March 31, 2018, March 31, 2017, and March 31, 2016, is 5.47%, 6.36% and (4.7)% respectively.

Shri Bajrang Power IPO Objectives

The main objectives of the Shri Bajrang Power IPO are as follows:

• For repayment or prepayment of some loans taken by the company from banks and financial institutions
• For meeting expenses related to the general corporate operations.

Other than the above-mentioned objectives, the company will also benefit in terms of enhanced corporate image, brand name and increased visibility through Shri Bajrang Power IPO.

Looking at the IPO objectives, it does not really give a positive signal towards usage of the funds. In a sense, Shri Bajrang Power is looking to get rid of its debts by raising this public funding. In other words, the onus of these debts will then be falling on the retail investors’ holdings instead of the company itself.

If in case the company performs well with time, only then an investor may look at a positive return from his/her investment.

Shri Bajrang Power IPO Events

If in case you are looking to apply to this IPO, you need to be aware of some specific dates when different events are going to happen related to this IPO.

Here is the summary:

 

Shri Bajrang Power IPO Recommendation

Let us now discuss some of the key strengths and risks related to the business of Shri Bajrang Power and Ispat Limited.

One of the biggest strengths is their well-known brands Goel TMT and Goel TMT WireX.

The company focuses on the quality of its products which is reflected in various certifications received by it like ISO 9001:2015, ISO 14001:2015 and OHSAS 18001:2007.

Another major strength of the company is the location of its manufacturing facilities in the state of Chhattisgarh which alone produces around 18.15% of India’s total coal reserves and around 19.59% of India’s total iron ore reserves.

The company also has good financial health which is reflected in its numbers. As per restated consolidated financial statements, it grew at a CAGR of 9.48% in revenue from operations and at a CAGR of 21.72%  in EBITDA from fiscal 2017 to fiscal 2018.

As per restated standalone financial statements, the company has a debt to equity ratio of 1.44. As of May 10, 2017, the company enjoys a rating of BWR A-/A2+ with outlook stable as per the Brickwork ratings and has already made an application for review of its credit rating.

The future strategies of the company related to enhancing of their production capacities and cost optimization look promising.

Now, let us discuss some of the important risk factors that the company faces.

The company is involved in certain criminal proceedings and any adverse ruling in them may pose a risk to the overall image and profitability of the company.

The company depends on coal for manufacturing of its products. Some of the coal blocks allocated to the company had been cancelled by the Supreme Court of India in the year 2004.

Any such issues resulting in interruptions in the supply of raw material or non-availability of raw material at competitive prices may affect the operations and overall financial health of the company.

Two of the three manufacturing facilities of the company are on lease for 99 years. After the completion of the tenure, any failure in renewing leases may significantly disrupt operations of the company and will have adverse effects on the earnings of the company.

Any disruption in manufacturing schedules due to accidents, labour unrest, etc. may negatively affect the operations and growth of the company. The company is exposed to execution risks related to quality services, equipment and supplies, etc. due to dependence on third parties.

The company has not yet obtained approval for the IPO from one of its lenders, Bank of Maharashtra.

All the manufacturing facilities of the company are concentrated in the state of Chhattisgarh. Any adverse development in this region may adversely affect the operations and financial health of the company. The company does not have enough insurance coverage to protect against possible future economic losses.

After analysing different factors about the company, it can be said that the investors should remain cautious and may choose to avoid any investment in Shri Bajrang Power IPO. If in case you have a reasonable risk appetite, you may choose to invest ONLY with a long-term expectation.

In case you are looking to apply to this IPO, let us assist you in taking the next steps forward. Just fill in some basic details in the form below, a callback will be arranged for you:

 

Shri Bajrang Power IPO Advisors Information

IDBI Capital Markets & Securities Limited, SBI Capital Markets Limited

and Equirus Capital Private Limited are acting as Book Running Lead Manager to the issue. Link Intime India Private Limited is acting as the Registrar and J. Sagar Associates is acting as legal advisor for the Shri Bajrang Power IPO.