Parmeshwar Metal Limited IPO presents an opportunity to invest in a company engaged in the manufacturing of copper wire and copper wire rods by recycling copper scrap. These products serve a wide range of industries, including power cables, transformers, automotive, building wires, and household cables, making it a crucial player in the copper industry.

The IPO is a Book Built Issue amounting to ₹24.74 Crores, consisting entirely of a fresh issue of 40.56 Lakh shares priced at ₹61 per share. The market capitalization at the offer price is expected to be ₹93.36 Crores. The lot size is 2,000 shares, with retail investors required to invest a minimum of ₹1,22,000. High-Net-Worth Individuals (HNIs) are required to invest a minimum of ₹2,44,000 (2 lots or 4,000 shares).

Business Overview

Parmeshwar Metal is involved in the production of copper wire and rods, using copper scrap as the base material. Their products are essential for various industrial applications, making the company a significant player in the metal sector. The business is led by experienced promoters, including Mr. Shantilal Kailashchandra Shah, with over 8 years of experience in the metal industry.

Financials and Performance Metrics

For the financial year ending October 31, 2024, Parmeshwar Metal reported a revenue of ₹75,730.83 Lakh, a consistent growth from previous years. The EBITDA for FY 2024 is ₹934.30 Lakh, with a Profit After Tax (PAT) of ₹570.29 Lakh. The company's pre-issue EPS stands at ₹6.42, with a post-issue EPS expected to be ₹4.72 for FY24.

Valuation and Key Metrics

The company’s pre-issue P/E ratio is 9.50x, while the post-issue P/E ratio stands at 12.93x. The industry P/E ratio is around 19x, indicating that the IPO is fairly priced relative to its peers. The company has an impressive ROCE of 17.51% and ROE of 21.49%, making it an attractive investment from a valuation perspective.

Grey Market Premium (GMP)

As of January 4, 2025, the GMP for Parmeshwar Metal IPO is ₹33, indicating a potential listing gain of 54.64%. This suggests a strong demand for the IPO, but investors should be cautious since GMP is an unregulated market indicator.

IPO Subscription and Allotment Status

As of January 3, 2025, the Parmeshwar Metal IPO has been subscribed 41.96 times on its second day of subscription, indicating high investor interest. The allotment date is scheduled for January 7, 2025, and investors can check their allotment status on the registrar’s website using their application number or PAN number.

Objectives of the IPO

Parmeshwar Metal intends to use the proceeds for:

1. ₹218.08 Lakh to set up a new manufacturing facility for producing Bunched Copper Wire in Gandhinagar, Gujarat.
2. ₹186.67 Lakh for furnace renovation.
3. ₹1,392.17 Lakh to meet working capital requirements.
4. The remaining funds will be used for general corporate purposes.

Recommendation and Conclusion

With strong financial growth and a fairly priced IPO, Parmeshwar Metal presents an appealing option for risky investors looking for potential listing gains. The 54.64% potential listing gain based on the GMP makes it an interesting pick for those willing to take on some market risk. However, we recommend caution and suggest considering long-term prospects before making an investment.

The Upcoming IPOs in this week and coming weeks are Indobell Insulation, Standard Glass Lining, Quadrant Future, Capital Infra Trust, Delta Autocorp, Avax Apparels and B R Goyal.

The Current active IPO are   Fabtech Technologies, Davin Sons and Parmeshwar Metal.

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