Ratnaveer Precision Engineering Limited is a stainless steel (“SS”) product manufacturer focused on producing finished sheets, washers, solar roofing hooks, pipes, and tubes. Their products find application across various industries and their products are used in both commercial and residential sectors and are sold within India and overseas.
OBJECTS OF THE ISSUE
- Funding working capital requirements of the company.
- General corporate purposes.
Vijay Ramanlal Sanghavi
Chairman, Managing Director and Chief Financial Officer of the Company. He has been associated with the Company since its incorporation. He has over two decades of experience in ferrous and nonferrous metal industries.
Babulal Sohanlal Chaplot
Whole time Director of the Company. He has over four decades of experience and has worked in different sectors such as metals, agriculture, automobile etc. He has been associated with the Company since past fifteen years and has been acting as a Director on the Board since 2011. He oversees production as well as commercial functions.
Prerana Rajeshbhai Trivedi
Company Secretary & Compliance Officer of the Company. She is an associate member of the Institute of Company Secretaries of India. She has over 5 years of experience in secretarial and compliance field.
Nanubhai Panchal
Chief Operating Officer of the Company. He has been associated with the Company since 2011. He holds Diploma degree in Mechanical Engineering. He has over 50 years of experience in terms of consultant as well as employee of the various Company.
COMPANY PROFILE
- Ratnaveer precision engineering limited operates out of four manufacturing units, out of which two (Unit-I and Unit-II) are located at GIDC, Savli, Vadodara, Gujarat, one (Unit-III) is located at Waghodia, Vadodara, Gujarat and the other one (Unit-IV) is located at GIDC, Vatva, Ahmedabad, Gujarat..
- They manufacture SS finishing sheets, SS washers and SS solar mounting hooks at their Unit I and SS pipes and tubes at their Unit II. Unit III and Unit IV are dedicated for the backward integration process. They intend to expand their portfolio of SS washers by adding circlips into the product line. They currently offer over 2500 SKUs of SS washers to their customers including inner ring washers, spring washers, nord lock washers, retaining rings, internal tooth washers and external tooth washers of different sizes and specifications.
- The Company has undertaken R&D activity for developing circlips, has developed the required tools, and identified prospective customers.
COMPETITIVE STRENGTHS
- Synergistic Business Model focused on Backward Integration. Consistent financial performance.
- Wide product portfolio and multiple designs. R&D set up for new product development. Customer Diversification.
- Synergy of young and experienced management team with a committed employee base. Effective quality control checks.
KEY STRATEGIES
- Diverse, longstanding, and growing global customer base.
- Continue to add to the product portfolio by introducing new designs.
- Technology integration and plant automation for cost efficiency and improved productivity.
KEY CONCERNS
- Pricing in the steel industry is subject to market demand, volatility, and economic conditions. Fluctuations in steel prices may have a material adverse impact on their business.
- They are dependent on a few customers for a major part of their revenues.
- Their business requires a significant amount of working capital primarily as a considerable amount of time passes between the purchase of raw materials and the collection of receivables post-sales to customers.
- This business is a high-volume low-margin business.
- They operate in a highly competitive and fragmented industry with low barriers to entry. The Company has a high debt to equity ratio.
COMPARISON WITH LISTED INDUSTRY PEERS (AS ON 31ST MARCH 2023)
FINANCIALS (RESTATED CONSOLIDATED)
OUTLOOK & VALUATION
Ratnaveer Precision Engineering Limited is a manufacturer of stainless steel products with a wide range of products and multiple designs. The company has a backward-integrated business model, which gives it control over the supply chain, and a research and development (R&D) setup for new product development. It has also reported strong financial performance in the last three years.
However, the steel industry is subject to market volatility and economic conditions. Additionally, it is a highly competitive industry. The major concern for investors here is the high debt-to-equity ratio and low-margin business. However, the IPO is coming at a fair price-to-earnings (P/E) valuation of 13.49x.
Thus, after considering all the factors, we suggest applying for this IPO for listing gain.
