What you must know about Mandeep Auto Industries IPO?

About Mandeep Auto Industries Ltd

Mandeep Auto Industries Ltd was incorporated in 2000 engaged in the manufacture and supply of sheet metal components, auto parts, sprocket gears, and machined components; to cater to the automobile industry. While the basic focus is on the automobiles sector, Mandeep Auto Industries also supplies to other related sectors like tractors, earth moving equipment, material handling equipment, Indian railways, defence, machine tools etc. Its broad focus is in the press and machining components. The company has a fairly impressive client list that includes domestic and global OEMs (original equipment manufacturers). Some of its clients include JL Auto Parts Tube Investments of India, Rockman Industries, Manvi Automobiles, Jain Industrial Products etc. it employs over 50 personnel on its rolls and also has additional contract workers working for it.

Highlights of the Mandeep Auto Industries IPO

Here are some of the highlights of the Mandeep Auto Industries IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 13th May 2024 and closes for subscription on 15th May 2024; both days inclusive.
   
• The stock of the company has a face value of ₹10 per share and it is a fixed price issue. The fixed price for issue is set at ₹67 per share. Being a fixed price issue, the question of price discovery does not arise.
   
• The IPO of Mandeep Auto Industries Ltd has only a fresh issue component and no offer for sale (OFS) portion. While fresh issue portion is EPS dilutive and equity dilutive, but OFS is just a transfer of ownership and  hence it is not EPS or equity dilutive.
   
• As part of the fresh issue portion of the IPO, Mandeep Auto Industries Ltd will issue a total of 37,68,000 shares (37.68 lakh shares), which at the fixed IPO price of ₹67 per share aggregates to fresh fund raising of ₹25.25 crore.
   
• Since there is no offer for sale (OFS) portion, the fresh issue size will also double up as the overall IPO size. Therefore, the overall IPO size will also comprise of the issue of 37,68,000 shares (37.68 lakh shares) which at the fixed IPO price of ₹67 per share will aggregate to overall IPO size of ₹25.25 crore.
   
• Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 1,90,000 shares. Aftertrade Share Broking Private Ltd will be the market maker to the issue. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs, post listing.
   
• The company has been promoted by Gurpal Singh Bedi, Nidhi Bedi, and Rajveer Bedi. The promoter holding in the company currently stands at 99.97%. However, post the fresh issue of shares, the promoter equity holding share will get diluted to 63.53%.
   
• The fresh issue funds will be used by the company towards expansion of existing manufacturing facility at Faridabad, including civil construction and purchase of plant and machinery. The funds will also be used for repayment of loans and working capital needs. Part of the funds will also be allocated towards general corporate expenses.
   
• Jawa Capital Services Private Ltd will be the lead manager to the issue, and Cameo Corporate Services Ltd will be the registrar to the issue. The market maker for the issue is Aftertrade Share Broking Private Ltd.

The IPO of Mandeep Auto Industries Ltd will be listed on the SME IPO segment of the NSE.

Mandeep Auto Industries IPO – Key Dates

The SME IPO of Mandeep Auto Industries Ltd IPO opens on Monday, 13th May 2024 and closes on Wednesday, 15th May 2024. The Mandeep Auto Industries Ltd IPO bid date is from 13th May 2024 at 10.00 AM to 15th May 2024 at 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is 15th May 2024.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account. The credit of shares to the demat account on May 17th 2024, will be visible to investors under the ISIN Code – (INE0R3T01013). This allocation to the demat account is only applicable to the extent of the allocation of shares and if no allocations are made in the IPO, then no credit would be visible in the demat account.

IPO allocation and minimum investment lot size

Mandeep Auto Industries IPO has already announced the market maker allocation at 1,90,000 shares as inventory for market making. Aftertrade Share Broking Private Ltd will be the market maker for the IPO. The breakdown of the overall IPO of Mandeep Auto Industries Ltd in terms of allocation to various categories are captured below.

Data Source: Company RHP filed with SEBI

The minimum lot size for the IPO investment will be 2,000 shares. Thus, retail investors can invest a minimum of ₹1,34,000 (2,000 x ₹67 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 4,000 shares and having a minimum lot value of ₹268,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

Financial highlights: Mandeep Auto Industries Ltd

The table below captures the key financials of Mandeep Auto Industries Ltd for the last 3 completed financial years.

Data Source: Company RHP filed with SEBI

Here are some of the key takeaways from the financials of the company for the last 3 years.

• The revenues have grown nearly 2-fold over FY21. That is robust growth in top line over the last two years. The profits have also grown, but remain quite low with the PAT margins at around 3.61%.
   
• While net margins of the company have been subdued, return on equity (ROE) has grown to over 23.13% in the latest year, while FY23 return on assets (ROA) is at 5.34%. It remains to be seen if it can sustain shareholder ratios after the dilution
   
• The asset turnover ratio or the sweating ratio has been steady at 1.48X in the latest year and that is a good sign that sales have picked up to cover the asset outlays. However, this sweating ratio gets magnified by the robust levels of return on assets (ROA).

The company’s has not reported EPS for the recent years and has only reported for the first half of FY24 and for the first 9 months of FY24. That is not sufficient data to take call on the issue and hence investors will have to take a calculated and calibrated risk while putting money in the IPO.