Visaman Global Sales Ltd. (VGSL) is a notable entity in the metal products supply sector, offering a wide variety of products.
These include round, square, and rectangular pipes, diverse structural steels, and an array of coils and sheets such as BGL, GP(GI), HR, CR, and color-coated types. VGSL also provides roofing and wall PUF panels.
The company is known for its extensive customization options, catering to specific customer needs in terms of size, length, breadth, and thickness.
To enhance buying flexibility, VGSL extends a credit facility to customers with a solid financial history, allowing them to pay later.
Customization and Delivery Services at VGSL
VGSL collaborates closely with manufacturers to fulfill customized orders. If manufacturers cannot meet the required specifications, VGSL outsources these modifications to third-party process houses.
This ensures that all products meet the precise needs of their customers. Additionally, VGSL is committed to direct delivery services, ensuring products reach customer sites efficiently.
As a dealer for APL Apollo Tubes Limited, VGSL has built a reputable presence in the market. The company employs 41 individuals as of March 15, 2024.
Overview of the VGSL IPO
VGSL is launching its inaugural Initial Public Offering (IPO), comprising 3,732,000 equity shares at a fixed price of INR 43 per share, aiming to raise INR 16.05 crore.
The IPO subscription period is from June 24, 2024, to June 26, 2024, with a minimum application of 3,000 shares.
Following allotment, the shares will be listed on NSE SME Emerge, accounting for 27.02% of VGSL’s post-IPO paid-up capital.
Allocation of IPO Proceeds
The IPO process will incur a cost of INR 1.61 crore. The proceeds from the IPO will be allocated as follows:
- INR 7.22 crore for capital expenditure on a new manufacturing facility.
- INR 7.00 crore for working capital.
- INR 0.22 crore for general corporate purposes.
Shreni Shares Ltd. is managing the IPO, with Link Intime India Pvt. Ltd. serving as the registrar. Shreni Shares Ltd. is also acting as the market maker for VGSL.
Financial Performance of VGSL
Over the past three fiscal years, VGSL has demonstrated significant growth in its financial performance:
- In FY21, VGSL reported a total income of INR 136.36 crore and a net profit of INR 0.34 crore.
- In FY22, these figures increased to INR 324.07 crore and INR 0.95 crore, respectively.
- FY23 saw further growth, with total income reaching INR 376.05 crore and net profit hitting INR 1.13 crore.
- For the nine months ending December 31, 2023, VGSL earned a net profit of INR 1.02 crore on a total income of INR 206.91 crore.
Key Financial Metrics
The company’s average Earnings Per Share (EPS) over the last three years is INR 1.03, with an average Return on Net Worth (RoNW) of 11.46%.
The IPO is priced at a Price to Book Value (P/BV) ratio of 3.96 based on a NAV of INR 10.87 as of December 31, 2023, and a P/BV ratio of 2.34 based on the post-IPO NAV of INR 18.38 per share.
The Price-to-earnings (P/E) ratio, based on annualized FY24 earnings, stands at 43.87, suggesting that the IPO is aggressively priced.
Dividend Policy and Peer Comparison
VGSL has not declared any dividends since its inception. The company plans to adopt a prudent dividend policy in the future, based on its financial performance and growth prospects.
Compared to listed peers such as Shree Marutinandan Tubes, Swastik Pipe, and Hi-Tech Pipes, VGSL’s valuation appears high, with its peers trading at P/E ratios of 35.1, 32.3, and 47.4, respectively.
Conclusion
Investors interested in the VGSL IPO should conduct thorough research and consider the company’s financial performance, market position, and the risks associated with the aggressive pricing of the IPO.
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