What You Must Know About Sunlite Recycling IPO: Price Band ₹100 to ₹105 Per Share

About Sunlite Recycling Industries Limited

Sunlite Recycling Industries Limited, established in 2012, specialises in manufacturing copper products by recycling copper scrap. The company caters to various industries, including power generation, transmission, distribution, and electronics. Its product portfolio encompasses a diverse range of copper items, including copper rods and wires, copper earthing wires, copper earthing strips, copper conductors, and copper wire rods.

The company's manufacturing facility is strategically located in Kheda, Gujarat, spanning an area of approximately 12,152 square meters. This facility houses over 20 machines dedicated to producing various copper products. Sunlite Recycling Industries prides itself on its ability to manufacture products according to customer specifications, offering various grades, thicknesses, and widths that adhere to industry standards.

As of 31st March 2024, the company employed 38 people and recorded a total revenue from operations of ₹85,168.31 lacs.
 

The Objective of the Issue

Sunlite Recycling IPO intends to utilize the proceeds of the Issue for the following objectives:

• Funding of capital expenditure towards the installation of new Plant & Machinery.
• Repayment and/or pre-payment, in full or part, of certain borrowings availed by the company.
• General Corporate Purpose.

Highlights of Sunlite Recycling IPO

Sunlite Recycling Industries IPO is set to launch with a book-built issue of ₹30.24 crores. The issue comprises a fresh issue of 28.8 lakh shares with no offer-for-sale component. Here are the key details of the IPO:

• The IPO opens for subscription on 12th August 2024 and closes on 14th August 2024.
• The allotment is expected to be finalised on Friday, 16th August 2024.
• The company will list on NSE SME, tentatively listing on Tuesday, 20th August 2024.
• The price band is set at ₹100 to ₹105 per share.
• The minimum lot size for the application is 1200 shares.
• Retail investors need to invest a minimum of ₹126,000.
• The minimum investment for High-Net-Worth Individuals (HNIs) is 2 lots (2,400 shares), amounting to ₹252,000.
• Hem Securities Limited is the book-running lead manager for the IPO, while Cameo Corporate Services Limited serves as the registrar. Hem Finlease has been appointed as the market maker for the issue.

Sunlite Recycling IPO - Key Dates

The timeline for the Sunlite Recycling Industries IPO is as follows:

The cut-off time for UPI mandate confirmation is 5 PM on 14th August 2024

Sunlite Recycling IPO Issue Details/Capital History

The Sunlite Recycling Industries IPO aims to raise ₹30.24 crore through an Initial Public Offering (IPO). The issue comprises 2,880,000 equity shares with a face value of ₹10 each, priced between ₹100 and ₹105 per share. Investors can apply for a minimum of 1200 shares. The company's shares will be listed on the NSE SME post-issue. The pre-issue shareholding stands at 8,000,000 shares, which will increase to 10,880,000 shares post-issue.

Sunlite Recycling IPO Allocation & Minimum Investment Lot Size

The IPO shares are allocated across different investor categories as follows:

Investors can bid for a minimum of 1200 shares and in multiples thereof. The table below shows the minimum and maximum investment by retail investors and High Net Worth Individuals (HNI) in terms of shares and amount:

SWOT Analysis: Sunlite Recycling Industries IPO

Strengths

• Established Presence: With over a decade of experience since its establishment in 2012, Sunlite Recycling Industries has built a strong presence in the copper recycling and manufacturing industry.
• Diverse Product Portfolio: The company offers a wide range of copper products that meet the specifications of various industries and customers.
• Strategic Location: The manufacturing facility in Kheda, Gujarat, provides logistical advantages and access to key markets.
• Growth Trajectory: The company has shown consistent growth, with revenue increasing by 1.4% and PAT rising by 58.92% between FY23 and FY24.
• Customer-Centric Approach: The ability to manufacture products according to customer specifications enhances customer satisfaction and loyalty.

Weaknesses

• Limited Geographic Presence: The company's operations are primarily centred in Gujarat, which may limit its ability to efficiently serve customers in other regions.
• Dependence on Copper Scrap: The company's reliance on copper scrap for manufacturing makes it vulnerable to scrap availability and price fluctuations.
• Small Workforce: With only 38 employees as of 31st March 2024, the company may face challenges in scaling up operations quickly.
• High Debt-to-Equity Ratio: The company's debt-to-equity ratio 1.74 indicates a significant reliance on debt financing, which could be a concern for some investors.

Opportunities

• Growing Demand: The Increasing Demand for Copper Products in the Power Generation, Transmission, Distribution, and Electronics Industries presents growth opportunities.
• Government Initiatives: Infrastructure development projects and initiatives promoting renewable energy could drive demand for copper products.
• Technological Advancements: Investing in advanced recycling technologies could improve efficiency and product quality.
• Export Markets: Exploring international markets could provide expansion and revenue growth avenues.
• Value-Added Products: Developing and introducing value-added copper products could enhance profit margins.

Threats

• Market Volatility: Fluctuations in copper prices and scrap availability could impact profitability.
• Regulatory Changes: Stricter environmental regulations or changes in recycling policies could affect operations and increase compliance costs.
• Competition: Intense competition from organised and unorganised copper recycling industry players could pressure margins.
• Economic Slowdown: Any downturn in key industries served by the company could reduce demand for copper products.
• Currency Fluctuations: If the company expands into export markets, currency exchange rate fluctuations could impact profitability.
   

Financial Highlights: Sunlite Recycling Industries Ltd

Sunlite Recycling Industries has demonstrated strong financial growth over the past three fiscal years. The company's revenue has shown a consistent upward trend, increasing from ₹93,227.27 lakhs in FY22 to ₹116,655.09 lakhs in FY24.

The Profit After Tax (PAT) has also shown remarkable improvement, rising from ₹426.03 lakhs in FY22 to ₹890.36 lakhs in FY 2024. This significant increase in profitability indicates the company's ability to manage costs effectively while scaling up operations.

The company's total assets have grown from ₹4,802.05 lakhs in FY22 to ₹6,321.24 lakhs in FY24. This asset growth reflects the company's ongoing infrastructure and capacity expansion investments.
Sunlite Recycling Industries' net worth has increased substantially, rising from ₹1,158.58 lakhs in FY22 to ₹2,003.90 lakhs in FY24. The rising net worth underscores the company's ability to retain earnings and strengthen its financial position yearly.

It's worth noting that the company's total borrowings have increased from ₹2,532.38 lakhs in FY22 to ₹3,491.74 lakhs in FY24. While this increase in borrowings indicates the company's efforts to fuel growth, monitoring the debt levels is important to ensure they remain manageable.

Sunlite Recycling Industries IPO has shown strong financial growth, with significant increases in revenue and profit over the past three years. Their improving net worth and assets make them an attractive proposition for investors. However, investors should note the rise in borrowings and assess how this debt is being utilised for growth. It will be important to watch how the company manages its debt levels and maintains profitability as it expands its operations.