Metalman Auto Set to Enter Capital Markets with IPO Filing

Introduction: The IPO Filing

Metalman Auto Ltd., a prominent player in the Indian automotive sector, has officially filed its preliminary papers with the Securities and Exchange Board of India (SEBI) to raise funds through an Initial Public Offering (IPO). This strategic move marks a significant milestone for the company as it seeks to bolster its financial resources and expand its operational capabilities. The proposed IPO will consist of a fresh issue worth Rs 350 crore and an offer-for-sale component featuring 1.26 crore shares with a face value of Rs 2 each, as detailed in the draft red herring prospectus (DRHP).

Promoters and Shareholders: Key Players in the IPO

The IPO will witness the participation of several key promoters and shareholders. Among the selling promoters are Bikramjit Bembi, Navneet Jairath, Sachin Bembi, and Nishant Jairath. Additionally, Sonia Bembi Seth and Nisha Jairath, part of the promoter group, will also be selling their shares in the offering. 

Book-Running Lead Managers: Steering the IPO

To ensure a successful IPO process, Metalman Auto Ltd. has appointed Axis Capital Ltd., ICICI Securities Ltd., and Motilal Oswal Investment Advisors Ltd. as the book-running lead managers. 

Utilization of Funds: Driving Future Growth

The net proceeds from the IPO will be strategically allocated to various key areas. A significant portion will be directed towards financing capital expenditures for the procurement of new plants, enhancing the company’s production capacity. Additionally, the funds will be utilized to repay existing borrowings, thereby reducing the company’s financial liabilities. The remaining proceeds will be earmarked for general corporate purposes, providing the company with the financial flexibility needed to pursue growth opportunities and strengthen its market position.

Company Overview: A Legacy of Excellence

Established in 1986, Metalman Auto Ltd. has carved out a niche in the automotive manufacturing industry. The company specializes in the production of sheet metal, tubular fabrication, metal finishing, and component assembly for original equipment manufacturers (OEMs) in the automotive sector. Over the years, Metalman Auto has built a reputation for delivering high-quality metal components across various vehicle segments, including two-wheelers, internal combustion engines, three-wheelers, passenger vehicles, and commercial vehicles. With nine manufacturing units spread across five states in India, the company has established a strong presence in the market.

Market Position: Dominating the Two-Wheeler Segment

In FY24, Metalman Auto Ltd. solidified its position as a key supplier in India’s thriving two-wheeler market. The company’s clients, including industry giants such as Hero, Bajaj, Honda, and TVS, collectively accounted for over 80% of the annual two-wheeler sales in the country. Notably, Metalman Auto supplied frames and chassis for one in four high-speed electric scooters sold in India, one in five motorcycles exported, and one in ten two-wheelers sold domestically. This impressive market penetration underscores the company’s importance in the two-wheeler segment and its growing influence in the automotive industry.

Financial Performance: Steady Growth Amidst Challenges

Metalman Auto Ltd.’s financial performance in FY24 highlights its resilience and growth trajectory. The company reported a revenue of Rs 1,508 crore, a significant increase from Rs 1,051 crore in the previous fiscal year. However, despite the revenue growth, the company’s EBITDA stood at Rs 131.72 crore, only slightly higher than the Rs 117.84 crore reported in FY23. Net profit for FY24 was Rs 50 crore, down from Rs 63.11 crore in the previous year. The decline in net profit can be attributed to various factors, including increased operational costs and market fluctuations, but the overall revenue growth indicates a positive trend for the company’s future.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.