Unlocking Opportunities: A Deep Dive into Classic Electrodes (India) Ltd. IPO
The Indian stock market is constantly buzzing with new opportunities, and for discerning investors, Initial Public Offerings (IPOs) often present an exciting avenue to participate in a company's growth journey right from its inception. This August, the spotlight turns to Classic Electrodes (India) Ltd., a well-established manufacturer in the welding consumables sector, as it prepares to launch its SME IPO. Let's explore what makes this offering noteworthy and what potential investors should consider.
Company Spotlight: Classic Electrodes (India) Ltd.
Established in 1997, Classic Electrodes (India) Ltd. has carved a significant niche in the manufacturing of welding consumables. Headquartered in Kolkata, West Bengal, the company is a recognized name for its range of electrodes and MIG wires, catering to both domestic and international clientele.
About the Company's Operations
- Classic Electrodes excels in producing a diverse portfolio of welding consumables, including:
- Mild Steel Electrodes for general applications.
- Stainless Steel Electrodes for corrosion-resistant needs.
- Cast Iron Electrodes for specialized repairs.
- Deep Penetration Electrodes for heavy-duty welding.
- MIG Wires crucial for metal inert gas welding processes.
- The company operates two manufacturing units: Unit I in Dhulagarh, West Bengal, and Unit II in Jhajjar, Haryana. These strategic locations ensure efficient logistics for raw materials and product distribution.
- As of July 31, 2024, the company maintained a robust team of 78 permanent employees.
Key Business Strengths
Classic Electrodes boasts several compelling strengths that underpin its market position:
- A strong and recognized brand synonymous with quality and reliability in the industrial welding sector.
- Comprehensive product range addressing varied industrial welding requirements.
- Modern and automated production facilities contributing to efficient operations.
- A steadfast focus on quality assurance and relevant industry certifications.
- An effective supply chain bolstered by strong dealer networks, ensuring timely deliveries.
- Dedicated in-house Research & Development initiatives for continuous innovation.
Diving into the IPO Details
The Classic Electrodes IPO is a book-built issue, entirely comprising a fresh issue of shares. Here are the crucial details for prospective applicants:
| IPO Parameter | Detail |
|---|---|
| Issue Price Band | ₹82.00 to ₹87.00 per share |
| Face Value per Share | ₹10 |
| Total Issue Size | ₹41.51 Crores |
| Shares Offered | 47,71,200 shares |
| Fresh Issue Component | Entire Issue |
| Listing Exchange | NSE SME |
| Market Maker Reserve | 2,78,400 shares (aggregating ₹2.42 Cr) |
| Net Offer to Public | 44,92,800 shares (aggregating ₹39.09 Cr) |
Understanding the Lot Size and Investment
The IPO is structured with specific lot sizes for different investor categories. Investors can bid for a minimum of 1,600 shares and in multiples thereof.
| Investor Category | Minimum Lots | Minimum Shares | Minimum Amount (at upper price band) |
|---|---|---|---|
| Individual Retail Investor | 1 Lot | 1,600 Shares | ₹1,39,200 |
| High Net Worth Individual (HNI) | 2 Lots | 3,200 Shares | ₹2,78,400 |
IPO Allotment Reservation Structure
The allocation of shares across investor categories for the IPO is planned as follows:
| Investor Category | Percentage of Net Issue |
|---|---|
| Qualified Institutional Buyers (QIB) | Not more than 50% |
| Retail Investors | Not less than 35% |
| Non-Institutional Investors (NII) | Not less than 15% |
IPO Journey: A Tentative Timeline
For those looking to participate, here is a tentative schedule of key dates for the Classic Electrodes IPO. Please note that these dates are subject to change.
Financial Health Check
A look at the company's financial performance provides insights into its growth trajectory and operational efficiency.
Key Financial Highlights (₹ Crore - Consolidated)
| Period Ended | March 31, 2024 | March 31, 2023 | March 31, 2022 |
|---|---|---|---|
| Total Assets | 92.27 | 76.79 | 74.99 |
| Total Income | 194.41 | 151.13 | 134.37 |
| Profit After Tax (PAT) | 12.28 | 2.08 | 1.45 |
| Net Worth | 33.92 | 21.64 | 19.55 |
| Total Borrowing | 45.73 | 43.11 | 39.21 |
Key Performance Metrics (as of March 31, 2024)
| Indicator | Value |
|---|---|
| Return on Equity (ROE) | 24.66% |
| Return on Capital Employed (ROCE) | 17.68% |
| Debt/Equity Ratio | 1.23 |
| Return on Net Worth (RoNW) | 21.95% |
| Profit After Tax (PAT) Margin | 5.10% |
| EBITDA Margin | 10.24% |
Promoter Information & Issue Objectives
Meet the Driving Force: Company Promoters
The promoters leading Classic Electrodes (India) Ltd. are:
- Mr. Hanuman Prasad Agarwal
- Mr. Sushil Kumar Agarwal
- Mr. Nitesh Agarwal
- Mr. Sunil Kumar Mittal
- M/s Alltime Suppliers Private Limited
Promoter Shareholding Snapshot
| Holding Stage | Percentage of Shares |
|---|---|
| Pre-Issue Shareholding | 97.73% |
| Post-Issue Shareholding | 71.77% |
Purpose of the Public Offering
The company intends to utilize the net proceeds from the IPO for the following key objectives:
- Funding capital expenditure, specifically for the purchase of new Plant and Machinery (₹100 Million).
- Repayment of a portion of its existing outstanding borrowings (₹100 Million).
- Meeting the working capital requirements of the company (₹166 Million).
- General corporate purposes.
Key Stakeholders in the IPO Process
IPO Lead Manager
Guiding Classic Electrodes through this public offering is GYR Capital Advisors Pvt.Ltd., acting as the book running lead manager.
IPO Registrar
Responsible for the crucial process of share allotment and managing investor records is MUFG Intime India Pvt.Ltd., the registrar for this issue.
Company Contact Information
For official inquiries, Classic Electrodes (India) Ltd. can be reached at:
- Address: 1 A, Bonfield Lane, Kolkata, West Bengal, 700001
- Phone: +91 8336007981
- Email: compliance@classicelectrodes.com
- Website: http://www.classicelectrodes.com/
Strategic Analysis: SWOT for Classic Electrodes
Understanding the internal and external factors influencing Classic Electrodes can offer a broader perspective on its market position and future prospects.
| Category | Key Points |
|---|---|
| Strengths (Internal) |
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| Weaknesses (Internal) |
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| Opportunities (External) |
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| Threats (External) |
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Applying for the IPO: Your Guide
Participating in an IPO requires a demat account and a trading account. You can typically apply for an IPO either through the ASBA (Application Supported by Blocked Amount) facility via your bank's net banking portal or through the UPI mechanism offered by various brokerage platforms.
When applying, ensure you have sufficient funds in your bank account, as the application amount will be blocked until the allotment process is complete. In case of non-allotment, the blocked amount will be unblocked.
Final Thoughts & Outlook
Classic Electrodes (India) Ltd. presents an interesting proposition for investors keen on the industrial manufacturing sector. The company demonstrates a strong market presence, a diversified product range, and a consistent growth trajectory, particularly noteworthy in its recent jump in profitability. While the SME nature and debt levels warrant careful consideration, the clear objectives for capital utilization – funding expansion, debt reduction, and working capital – suggest a strategic approach to enhancing future growth. As with any investment, it's prudent for potential investors to conduct their own thorough due diligence, align it with their financial goals, and consider the inherent risks associated with market participation.
Ready to Explore Investment Opportunities?*Disclaimer: This blog post is for informational purposes only and does not constitute financial advice. Investors should consult with a qualified financial advisor before making any investment decisions.*