Sharp Chucks and Machines LTD. IPO - Review, Valuation & GMP Today

Sharp Chucks and Machines Limited - Complete Overview

Established in 1994, Sharp Chucks and Machines Limited specializes in the manufacturing of a wide range of products, including forging items, casting products, and machined components. These products have diverse applications across various industries, such as tractors, automobiles, material handling and earth-moving equipment, railways, defence, machine tools, and the DIY industry, among others.

Their product offerings are categorized as follows:

1. Forging products: This category comprises items like gears, dog clutches, scaffolding, C-clamp spanners, wrenches, axes, hammers, mauls, hatchets, combination spanners, splitting axes and wedges, fireman axes, and more.
2. Casting products: This category includes brake housings, piston trumpet housings, wheel hub kits, rear covers, bell housings, front axle brackets, gearboxes, shaft carriers, brake drums, planetary carriers, steering arms, PTO housings, flywheels, cylinder blocks, and various other components.
3. Machine components: This category encompasses power chucks, lathe chucks, drill chucks, and machine tools accessories.

The company operates two manufacturing units located in Jalandhar. These facilities consist of three foundries with an installed capacity of 30,000 MTPA and machining facilities equipped with VMC, CNC, and other machinery with an installed capacity of 14,400 MTPA. Additionally, they have a forging unit equipped with hammers, billet heaters, and more, with an installed capacity of 3,600 MTPA.

 

What does the company do?

Sharp Chucks and Machines Limited specializes in the manufacturing of a wide range of products, including forging items, casting products, and machined components.

 

 

Company Products 

The product offerings of the company are categorized as follows:

1. Forging products: This category comprises items like gears, dog clutches, scaffolding, C-clamp spanners, wrenches, axes, hammers, mauls, hatchets, combination spanners, splitting axes and wedges, fireman axes, and more.
2. Casting products: This category includes brake housings, piston trumpet housings, wheel hub kits, rear covers, bell housings, front axle brackets, gearboxes, shaft carriers, brake drums, planetary carriers, steering arms, PTO housings, flywheels, cylinder blocks, and various other components.
3. Machine components: This category encompasses power chucks, lathe chucks, drill chucks, and machine tools accessories.

 

IPO Overview

The Sharp Chucks and Machines Limited IPO date is scheduled to take place from September 29, 2023, to October 4, 2023. This IPO is categorized as a Fixed Price Issue IPO.

The upcoming SME IPO is expected to be listed on October 12, 2023. The Sharp Chucks and Machines Limited IPO price is fixed at Rs. 58 per share, with a face value of Rs. 10 per share.

The total issue size for this SME IPO amounts to Rs. 16.84 crore. Out of this total issue size, the company will allocate 50% to retail investors and the remaining 50% to other investors.

 

Sharp Chucks and Machines Limited IPO timetable (Tentative)

Events	Date
IPO Opening Date	29 September 2023
IPO Closing Date	4 October 2023
IPO Allotment Date	9 October 2023
Refund initiation	10 October 2023
IPO Listing Date	12 October 2023

 

Sharp Chucks and Machines Limited IPO Details

IPO Opening & Closing Date	29 September to 4 October 2023
Face value	Rs. 10 per share
Issue Price	Rs. 58 per share
Lot Size	2000 Shares
Price of 1 lot	Rs. 116,000
Issue Size	2,904,000 Shares (aggregating up to Rs. 16.84 Cr)
Offer for sale	1,928,516 Shares of Rs.10 (aggregating up to Rs. 11.19 Cr)
Fresh issue	975,484 Shares (aggregating up to Rs. 5.66 Cr)
Listing at	NSE SME
Issue Type	Fixed Price Issue IPO
Registrar	Skyline Financial Services Pvt. Ltd.

 

Sharp Chucks and Machines Limited IPO Lot Details 

Minimum Lot Investment (Retail)	1 Lot
Maximum Lot Investment (Retail)	1 Lot
Minimum Lot Investment (HNI)	2 Lot

 

Sharp Chucks and Machines Limited IPO Reservation

Other Investors share Portion	50%
Retail Investors share Portion	50%

 

Company Financial

Amount in Lakhs

Period	FY 21	FY 22	FY 23
Total Assets	13,397.98	18,392.09	18,003.58
Total Revenue	13,583.11	15,252.23	17,931.45
PAT	330.96	452.62	506.50
Net worth	4,275.67	4,728.29	5,234.79
Reserve & Surplus	3,297.24	3,749.86	4,256.36
Total Borrowings	6,305.37	10,269.35	9,034.20

 

Segment-wise Revenue

(Amount in Lakhs)

Particulars	FY 23	FY 22	FY 21
Machine Tools	440.12	2317.35	522.89
Forging	2017.67	2322.01	2332.21
Casting	15187.18	10551.41	10690.98
Total	17644.97	15190.78	13546.08

 

Geography-wise Revenue

(Amount in Lakhs)

Particulars	FY 23	FY 22	FY 21
Domestic	16904.99	14098.04	13002.70
Export	739.98	1092.74	543.38
Total	17644.97	15190.78	13546.08

 

Objective of the Issue

The company intends to use the Net Proceeds generated from the Fresh Issue for the following purposes:

• Meeting our working capital needs.
• Addressing general corporate requirements.

 

Promoters and Management of Sharp Chucks and Machines Limited

Ajay Sikka and Gopika Sikka are the promoters of the company.

Pre-issue Promoter Shareholding	80.28%
Post-issue Promoter Shareholding	73.00%

 

Peer Comparison

Below are the listed peers of Sharp Chucks And Machines Limited

Company Name	Total Income (Rs. in Lakhs)	P/E	Diluted EPS (Rs.)
Sharp Chucks And Machines Limited	17,931.45	11.20	5.18
Pritika Engineering Components Limited (Consolidated)	8244.80	18.79	3.78
Nelcast Limited (Consolidated)	1,28,011.84	42.88	3.42
Bhagwati Autocast Limited (Standalone)	15,422.09	21.07	26.80

 

IPO's Valuations

To evaluate the IPO valuation, the company has furnished data in its DRHP. The Sharp Chucks And Machines Limited IPO price is set at Rs. 58 per share, and the EPS is Rs. 5.18. Calculating based on the issue price, the company's PE ratio stands at 11.20.

 

Dividend Policy

The company has not distributed dividends on its equity shares in the past, and any future dividend payments will be contingent on the financial performance of the company.

 

IPO's Strengths

• Utilization of in-house manufacturing facilities and machining centres.
• Offering a comprehensive product range and tailor-made product options.
• Extensive expertise of the promoters.
• Diverse customer base.
• Efficient quality control procedures.

 

IPO Weaknesses

• The company, as well as one of its Independent Directors, are involved in ongoing tax proceedings.
• The company's performance is heavily reliant on the tractor and automobile industries.
• A significant portion of its revenues depends on its top five clients.
• The company provides substantial credit terms to its customers, exposing it to counterparty credit risk.
• The company's products adhere to stringent quality control standards.
• Negative cash flows are observed in the company's operating, investing, and financing activities.
• The company requires various approvals, licenses, registrations, and permits to conduct its business.
• Pricing pressures from customers could adversely impact gross margins, profitability, and pricing flexibility.
• Some corporate records and documents of the company cannot be traced or have discrepancies.
• The company has experienced inaccuracies in regulatory filings with the RoC.

 

 

IPO GMP Today

Latest GMP of Sharp Chucks And Machines SME IPO GMP today is Rs.24.

 

Conclusion 

Sharp Chucks And Machines Limited offers a comprehensive product range. The company has a good customer base and has generated significant revenue over the years. However, it has also observed negative cash flows. Hence, it is advisable to invest in this issue after a thorough analysis of all the factors.

 

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

 

To Read the Prospectus of the Company Click Here to Download the DRHP.

 

 

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