SP Refractories Limited was founded in 2006, and it started its operation in 2007 with the manufacturing of castable and refractory cement. Company in October 2021, changed its status from private limited to public limited. It is a company engaged in the manufacturing and supplies of refractory materials. The company makes the refractory by using hydrated lime and Calcined Alumina as their main raw materials. The company is also engaged in the production of Refractory cement, which is its core business and the normal refractory. The company has a strong reach and client base in the steel & construction industries due to the refractory. In this article, we take a closer look at the SP Refractories IPO details and its possible future prospects
SP Refractories Limited also produces a special type of high thermal conductivity, heat resistance, and maximum strength refractory tiles used for many industrial purposes. It operates its business by purchasing clinkers from an outsourced vendor and crushing these clinkers into the blend and pack powder facility for its manufacturing and production facility. SP Refractories Limited manufacturing facility is situated in Hingna, Nagpur. The capacity of their manufacturing plant is 4000 MT clinkers per year and 6000 MT per year for clinkers crushing.
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the company’s loans, which be availed on a consolidated basis.
- To meet corporate targets.
- To fund the working capital requirement.
- The company also has an objective to fund its CAPEX Plan to expand its existing manufacturing units and develop new facilities.
- The company also intends to fund various investments and strategic acquisitions.
SP REFRACTORIES IPO DETAILS:
SP Refractories recently got approval from SEBI to float their IPO in the market under the NSE- SME platform. The company’s IPO is a mix of an OFS being brought forward by the company’s promoters and the issue of the new equity shares. The IPO size is Rs.4.92 crores which correspond to 547,200 equity shares. Check Day by Day IPO Subscription Details (Live Status)
Post the IPO been brought by the company; their current paid-up equity capital will be Rs. Rs. 1.79 crores. It will signify that the company will reach a market capitalization of Rs. 16.11 crores are making it currently to trade at a valuation of P/E ratio of 21.48.
| IPO Offer Opening Date | March 9, 2022 |
| IPO Offer Closing Date | March 11, 2022 |
| Issue Type | Fixed Price Issue IPO for Book Building |
| Face Value | Rs.10 per equity share |
| IPO Price | Rs.90 per equity share |
| Market Lot | 1 lot of 1600 equity shares |
| Minimum Order Quantity | 1 lot of 1600 equity shares |
| Minimum Order Price | Rs. 144,000 |
| Maximum Order Quantity | 1 lot of 1600 equity shares |
| Maximum Order Price | Rs. 144,000 |
| Listing At | NSE – SME platform |
| Issue Size | 547,200 equity shares of the company that corresponds to the sum of Rs. 4.92 Crores |
| Fresh Issue | 297,600 equity shares of the company that corresponds to the sum of Rs. 2.68 Crores |
| Offer for Sale | 249,600 equity shares of the company that corresponds to the sum of Rs. 2.25 Crores |
| Retail Quota Shares Offered | 50% of the IPO Offer |
| NII (HNI) Shares Offered | 50% of the IPO Offer |
| Basis of Allotment Date | March 16, 2022 |
| Initiation of Refunds | March 17, 2022 |
| The Credit of Shares to Demat Account | March 21, 2022 |
| IPO Listing Date | March 22, 2022 |
COMPETITIVE STRENGTHS OF SP REFRACTORIES IPO:
- SP Refractories Limited has an experienced promoter and a team of innovative experts in the management, technical, and operations departments of the company.
- The company has a long-standing relationship for their product with their clients and the suppliers.
- SP Refractories has had very good financial parameters over the last few years. It justifies the fact that the company has a strong balance sheet.
- The company benefits a lot from its strategically located setup for its manufacturing and store collection facility in Nagpur.
- The company registered an average EPS of Rs. 3.65 from the last three fiscal years. The company also registered an average RoNW of around 12.44%.
- While the issue is priced at a valuation of P/B ratio of 2.50 so, based on it, the NAV of the company comes out to be around Rs. 36.02.
WEAKNESS AND THREATS OF SP REFRACTORIES IPO:
- SP Refractories Limited is engaged in a highly competitive and very fragmented business segment.
- The company also has a tiny paid-up equity which is their post-IPO. It indicates longer gestation for its migration to the mainboard stream at the NSE platform.
- The company also threats from their super-profits for the first half of the FY22, which raises sustainability concerns.
- Its core strength lies in its quality product service, customized solutions for its clients, and a diversified large product line.
- SP Refractories Limited has a dedicated setup of semi-automatic machines and skilled operators. It helps them in the checking of the raw materials along with the Finished Goods. Is the overall aspect helps the company improve their procurement process, which reduces wastages, other costs, and returns.
FINANCIALS OF THE COMPANY:
| Particulars | For the year ending with amount in lakhs | ||||
| 30-Sep-21 | 31-Mar-21 | 31-Mar-20 | 31-Mar-19 | ||
| Total Assets | 1,232.20 | 1,057.17 | 898.33 | 792.01 | |
| Total Revenue | 1,447.64 | 2,572.48 | 2,099.59 | 1,855.95 | |
| Profit After Tax | 80.74 | 75.35 | 39.93 | 20.59 |
| Earnings Per Share (Rs) | 5.05 | 8.03 | -37.10 |
| CEPS (Rs) | 6.64 | 4.18 | 58.69 |
| DPS (Rs) | 0.00 | 0.00 | 0.00 |
| Book NAV/Share (Rs) | 31.31 | 78.77 | -60.25 |
| Tax Rate (%) | 27.93 | 27.70 | 0.82 |
| Core EBITDA Margin (%) | 5.68 | 5.68 | 0.10 |
| EBIT Margin (%) | 4.88 | 4.75 | 2.64 |
| Pre-Tax Margin (%) | 4.07 | 2.63 | 54.45 |
| PAT Margin (%) | 2.93 | 1.90 | 53.97 |
| Cash Profit Margin (%) | 3.85 | 2.98 | 29.48 |
| ROA (%) | 7.71 | 4.72 | 63.12 |
| ROE (%) | 17.55 | 10.74 | 63.38 |
| ROCE (%) | 15.18 | 13.01 | 16.73 |
| Asset Turnover (x) | 2.63 | 2.48 | 5.94 |
| Sales/Fixed Asset (x) | 6.27 | 5.30 | 18.15 |
| Working Capital/Sales (x) | 8.53 | 17.42 | -51.04 |
| Fixed Capital/Sales (x) | 0.16 | 0.19 | -15.37 |
| Receivable days | 81.16 | 73.81 | 9.95 |
| Inventory Days | 19.22 | 21.90 | -12.25 |
| Payable days | 13.34 | 6.46 | 106.68 |
| EV/Net Sales (x) | 0.21 | 0.22 | -6.78 |
| EV/Core EBITDA (x) | 3.54 | 3.78 | -6.38 |
| EV/EBIT (x) | 4.21 | 4.64 | -9.18 |
| EV/CE (x) | 0.50 | 0.51 | -2.91 |
| Net Sales Growth (%) | 22.56 | 13.16 | 71.40 |
| Core EBITDA Growth (%) | 22.04 | 35.15 | -37.29 |
| EBIT Growth (%) | 25.80 | 46.53 | -44.55 |
| PAT Growth (%) | 88.71 | 93.93 | -5.56 |
| EPS Growth (%) | -37.10 | 93.93 | -139.50 |
| Total Debt/Equity (x) | 0.81 | 1.05 | -23.07 |
| Current Ratio (x) | 1.54 | 1.26 | 22.56 |
| Quick Ratio (x) | 1.29 | 0.98 | 32.27 |
| Interest Cover (x) | 6.04 | 2.24 | 168.93 |
COMPANY PEERS
| Name of Company | Face Value in Rs. | EPS- Basic in Rs. | P/E Ratio | NAV latest as on March 31, 2021 in Rs. |
| SP Refractories Limited | 10 | 5.41 | 16.63 | 36.02 |
| Morganite Crucible (India) Ltd | 5 | – | – | 182.92 |
| Rhi Magnesita India Ltd | 1 | 8.44 | 43.45 | 66.71 |
| IFGL Refractories Limited | 10 | 12.44 | 25.29 | 155.14 |
PROMOTERS OF THE COMPANY:
The promoters of the company are as follows:
- Namita Prabodh Kale
- Shweta Prabodh Kale
- Prajakta Prabodh Kale
| Pre- Issue Share Holding | 100% |
| Post Issue Share Holding | 69.42% |
COMPANY CONTACT INFORMATION:
SP Refractories Limited
M-10, M-11/1 & M-11/2, MIDC Industrial Area,
Hingna Road, Nagpur – 440016
Phone: 07104-235388/99
Email: info@sprefractories.com
Website: http://www.sprefractories.com/
SP REFRACTORIES IPO REGISTRAR:
Bigshare Services Pvt Ltd
Phone: +91-22-6263 8200
Email: ipo@bigshareonline.com
Website: http://www.bigshareonline.com
SP REFRACTORIES IPO LEAD MANAGER(S):
Aryaman Financial Services limited
