This post on MIDHANI IPO (Mishra Dhatu Nigam IPO) tries to bring out consolidated brokerage views, Grey Market Premium, Subscription information. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Mishra Dhatu Nigam Limited IPO or not.
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22/03/18 Grey Market Premium Rs. NIL
Angel Broking: “In terms of valuations, the pre-issue P/E works out to 30.9x 1HFY2018 annualized earnings (at the upper end of the issue price band), which is high considering MIDHANI’s historical two year CAGR top-line & bottom-line growth. Further, MIDHANI has an undersized order book which lacks revenue visibility, coupled with lower return ratios. Considering the above factors, we recommend NEUTRAL rating on the issue“
Capital Market: ” n FY 2018, the company has signed a MoU with the Union government to achieve an annual gross sales target of Rs 800 crore. This is lower than gross sales of Rs 810 crore in FY 2017. The lower target is due to the proposed revamping of critical and other old equipment and furnaces. The company’s target is to increase revenues to Rs 1000 crore in the short term and Rs 2000 crore by FY 2022. At higher price band of Rs 90, the P/E on FY 2017 EPS (on current diluted equity of Rs 187.34 crore) of Rs 6.8 works out to 13.2. There are no listed players engaged in the manufacturing of high value specialty steel, super alloys and titanium alloys in India. .”
Choice Broking:“ On valuation front, at higher price band, the company is demanding a P/E valuation of 13.3x (to its restated FY17 EPS of Rs. 6.7). The issue seems to be attractively priced considering its strategic importance, monopoly position in some of its products, virtually debt free operations and healthy financial performance. MDNL has not reported a decline in the revenue in the last 14 years. However, due to the shutdown of one of its hot press (to carry out repair & modernization works), this year (i.e. FY18) it is likely to report a drop in the business. Nevertheless, with the restart in the press in FY19, the company is once again expected to have normal operations. Thus considering the above observation we assign a “SUBSCRIBE” rating to the issue with long term investment horizon.”
Hem Securities: “Co is bringing the issue at p/e multiple of almost 29 on post issue H1FY18 annualized eps at price band of Rs 87-90/share. Although co has most advanced and unique facilities & capability to manufacture wide range of advanced product but weak order book size of Rs 517 Cr against strong topline in FY16 & FY17 doesn’t infuse optimisim in company. Hence, we recommend “Avoid” on issue.”
ICICIDirect Analysts: “At the higher price band of | 90, the issue is priced at 8x EV/EBITDA FY17 and 13.3x on FY17 EPS. Over the last four years, the topline and PAT have grown at a tepid CAGR of ~9% and ~8%, respectively. Furthermore, the order book visibility also remains thin (0.7x, order book of | 517 crore vs. FY17 revenue of | 773.3 crore). Hence, we recommend that investors AVOID subscribing to this IPO,”
Prabhudas Liladhar : “Given the strong outlook on Defence and Space sector, increasing product basket and high barriers to entry, OFS (offer for sale) of Midhani provides good long-term opportunity with attractive valuations,“
SMC : “Rating 2.5/5 Mishra Dhatu Nigam (Midhani) is a leading manufacturer of special steels, superalloys and the only manufacturer of titanium alloys in India.The Company enjoys virtual monopoly in its field. It has no listed peers to compare with. However, in Six month period ended September 30, 2017, its operations were adversely affected by delays in supplies from external sources, including receipt of outsourced production back from its sub-contractors. Along term investor may opt the issue. “
SP Tulsiyan website: “Dent in FY18 performance on account of maintenance shut-down as well as weak market conditions may constrain listing gains. However, given its unique story and sound fundamentals, company can be a good portfolio play, strictly with a medium to long term view.“
SSJ Finance: “MIDHANI has reported a CAGR of 8.1% and 7.7% on revenue and net profit fronts respectively over FY2013-2017. On its upper band of price of Rs 90, the issue is priced at PE ratio of 13.3x of its FY2017 EPS of Rs 6.7. We believe MIDHANI’s unique business model and marquee client base makes it a lucrative long term stock. Hence, we recommend to Subscribe the IPO. Y/E March (Rs cr) FY14 FY15.”
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.