0:00 Say hi everyone. Welcome to primary market chatter brought to you by Sunday investing. This is our July last week IPOs edition. We'll be covering three IPOs Loya Externet and Indomim the three mainboard IPOs and then we'll also be talking about one SM silver. We might do one more space later where we might talk about Manipal and Puja precision because that is also this week but it's it was too early and we already had uh three four IPs which would take more time. uh so we'll do it in second branch per say but uh for today we'll do these before we actually get started just want to highlight we are not say be registered registered none of what we say are say is qualified opinion uh we can be wrong
0:47 and have been wrong in the past multiple times financial advisor decision none of what we are saying applies to you because we don't know which situation you are in we just like to talk about companies before they actually go uh public uh so that uh we don't have any stake in the game. That is how we usually kind of uh manage uh this per second thing if you haven't joined our YouTube channel link is in the pinned comments please YouTube channel join post so that you can listen to these companies uh review at your own leisure. Um today Rohit will not be present. So it will be tan by me and Sachin who will be covering. Uh in terms
1:33 of like we'll start with silver storm parks and then probably go forward. The setting of silver storm parks for uh Sachin uh incorporated in 1998 companies integrated amusement and tourism company operating amusement parks, water parks, snow parks and hospitality services in India. Adharapali uh waterfall flagship uh park amusement park uh famous amusement park of south in terms of the IPO it's a 82 cr IPO all of which is a fresh issue uh it's coming at a market cap of 301.6 6 crores. So uh they are diluting like whatever was the minimum required uh 28% type 26 27% be in terms of the uh financials financials
2:20 about company has done a top line of 44 crores in FI26 and a PAT of 19 crores. So very healthy pat margins. We'll try and understand how sustainable they look. Uh but close to 45% pat margin. Uh but this is a capex heavy model. So uh VRO financial services. So with that over to you Sachin to talk about Silvertorm. Before you actually get started we have also spoken with the management. The link is in the pinned comments. You can listen to management promoter interaction as well uh at your leisure.
3:05 >> Uh am I audible? >> Yes. >> Yes. All right. So uh silver storm parks as you rightly mentioned key uh this is one of the famous tourist destinations in south India near thatali uh waterfall region. So for in the memory location they have set up the they have got one free old land around 17 acres and there they have set up this whole theme park where they have tried to create different avenues of uh entertainment you can say. Uh there they have theme park they have also created one proprietary snow park. Then they have also added a cable car etc. And in and around that region they have also created forest villages. Given that the location supports all of these different types of entertainment revenues, they try to create everything that they can
3:52 to attract more tourists and so that uh which whatever tourists are coming in to visit uh uh whatever tourists are coming in Kerala to visit uh this Atraali region becomes the primary attraction uh for this location and there they have made all of these revenues. uh so Atraali becomes the prime attraction for all of these people coming in for a tourist destination in Kerala. So what this company is primarily doing is they have this amusement park where they have set up some uh they are trying to offer different types of rides uh wave pools, aqua pools, some different family attractions when they have also started providing food and beverages in that in and around that region. So earlier they
4:39 used to do this food and beverages outside and now they are doing that inhouse as well. So that is adding to the margins that we see in the current years. In 2027, in 2017 and 2018, they made one new uh uh venture for entertainment venture where they created in-house snowstorms because what their thesis was that South people do not know what the sto snow storm is and the what do you say below 0° C they haven't seen those temperatures yet. So let's try and create some different and generally novel idea for south people to create some snowstorm. So that is one thing that they created and given the Ara pali region and this waterfall region is mostly both mostly based near that
5:26 western guard region. So there they have created some in-house forest etc and cable roar etc. For that they have done already done the capex and now that is visible in the financials for this company. Now this all of this similar model they are trying to repeat in different locations in and around India like in Jamshedpur they have already set up this snowstorm uh in the last year and from this year they are looking to scale that up uh in one another region of Lucknau they are further trying to set this snowstorm theme. So what they're saying that we would not go with theme parks in any of the other regions in India because that requires land pass to be present and that requires more capex than required and now we are going for this asset snowstorm uh thing and from there we will already likely scale
6:12 up to other cities as well. So given what the revenues are coming from like 50 to 60% of the revenues in that Kerala and AI region is coming from these uh institutions where colleges school etc. these sales guys of uh Silvertorm are pitching into these colleges and schools and from there they are attracting what you say repeated clients like there is a thing in Kerala that uh there is a or what you can say a general notion or mandate that uh schools and colleges have to take children to outside and out for sightseeing etc for tourism places. So that helps uh uh for them to generate more revenues from these institutions and the rest 40 35 to 40% is this walking crowd like in festivals or in
6:58 the second half of the year you see more crowds walking in. So that likely scales up in the second half of the year. So that is benefiting these guys for around 35 to 40% of the revenue. uh now around what their revenue uh structure has changed from the last year uh where earlier they used to do this FNV segment or merch etc that they used to outsource now they have started to do that inhouse only so from FI25 and into FI26 72 to 75% is the ticketing revenue and the rest is this non- ticketing FM merchandise etc there is some nearby resorts and banquetss so that is also helping these guys Now currently what they are saying that we are charging around 650 670 uh average
7:46 revenue per user and they are likely to scale this this up to around 1,000 plus in the coming years and that is their uh first primary target to scale this to thousand plus as they grow from Kerala to jump to Lucknau. So that is on their uh business structure overall. Now coming to their financials from 18 CR in FI24 they have grown to around 43 CR in FI26 and steadily this is around 40 50% C kind of growth uh in FI24 and before that the margins were suppressed because they used to do this FNV segment uh they used to outsource that and in FI25 only they started to do this in inhouse and in FI26 also it reflected so because of that we see that both Aida and Pat Margin are 60% plus but going on on a
8:34 forward basis if you look at FI27 and when this Jamshedpur and new luckno region will come in they will have their own setup cost in the initial period so these margins will likely subside or you say come down to around 60% a bit and around 30 to 35% so that is the sustainable uh margin figure that we'll be take forward while valuing this company now uh coming to what these guys are saying that we would not generally go into uh we would generally not go into those regions that are already populated by malls or there are local regional pairs that are trying to set up that have already set up their what do you say theme pulse and vision pulse in those regions and we would generally do some market study and region study and then we'll try to uh choose those new
9:21 locations where there is not much of local presence available and there is ample target or you can say ample population available who can spend on these entertainment ventures etc. So that would be the primary locations going forward. Uh now uh coming to their IPO usage uh it's a pure fresh issue 100%. uh for around 26 CR they are using to spend on the lacno park which which they are saying that they are targeting in the H2 of this year post Diwali 2026 construction and all is already underway around 15 cr they are spending to expand more into that region where they're setting a more banquet halls and restaurants etc around 24 cr they are using to repay their debt around 40 30 to 35% will be the debt
10:07 that is remaining after repayment So around 40 40 45% is a reduction in the debt level. So that will actually contribute to the margins going ahead. So that this is with respect to their IP usage. Now what are the positives we look at if you look at this company that the location advantage which is visible in that pali region. So that is one thing because uh the sightseeing and tourist attraction is already available and the that Kerala government has recently stated that they would likely create a pali falls like falls like we would put in night attraction into these falls. We will set up the required capac sector so that more tourists come in and after that 6 to 7 p.m. time in the night there are more people joining in and visiting this
10:54 fall. So that is a natural added advantage for these guys and they are already uh pitching into uh schools and institutions. So that uh repeat revenue is already built up. They have already started to do food and beverages in housing. So that is adding to their margins as well. And going forward they are trying we would likely be asset light because we are not spending on more theme parks and more land parcel. So that would benefit them going forward. uh some of the negatives in this uh IPO is that the time for break even for this luck now thing would be substantial and we may not see the best of effects in FI27 and FI28 we will uh it will be the uh final year where we see the most from uh this luck now coming in should ideally do well in the current year so that is one thing uh it
11:41 is a heavily skewed uh H2 business like 60 more than 70% you can say that it is it comes in second half of the year. So that should be kept in mind. Margins will come down from this point. So that I uh that I have already told. And now uh coming to this uh lead manager, the lead manager here is VRO. So they are a decent enough record and actually they're one of the good guys if you say in the theme lead manager positions. Now if we uh value this company against what you say Wonderla because that is the one pier that we see uh has which has actually done well in this amusement parking. So if you see the general reviews that are present in and around that region that they generally say that wonder is better because they have more
12:28 number of rides different rides the safety features are good. What you say the variety that you get as tourist that is more better in Wonderla. So that is one constraint that these guys are facing in that central region and this is likely why they're diversifying out of Kerala because the hold of wonderla in that region and in other regions as well in India has been very substantial. So because of that they're unable to grow not grow as much fast as we can in that prair region. Now given what these guys are have done this year it's the IPO is coming around at 16 times FI26 and if we assume their historical CG it would likely be around 10 to 11 uh times
13:14 in terms of P for FI27. So it's a good enough range to be in uh for the kind of business that they operating in and not generally going into the capex heavy model. uh footfall has been uh steadily increasing as well like from 3500 uh from the last year uh they have grown to 4500 if you look at that metric etc has uh what you say double the footfall of what these guys are doing around 12,000 to 16,000 they do on a footfall basis so we if you look at this uh these guys being in the theme segment these guys generally are what you say 40 to 50% uh lower in terms of what the scale of Wonderla is and that should ideally be the valuation point for these guys like
14:00 Wonderla trades at uh uh at a good number of what you say trades at more than 36 37 times in terms of price to earnings multiple and these guys are what if you put a 50% cut to that around 18 to 20 would be the ideal multiple for valuing this company. Now uh coming to the anchor book uh anchor book was a little disappointing for me like since the issue size is large uh not much conviction was seen in the anchor book by any of the pers like and the names that we see are not very what you can say um holding uh uh savvy people in the theme segment. So these are these guys are good but not generally who like to hold and they tend to switch into positions uh quite
14:46 frequently compared to other uh participants who have been in the anchor list. Uh so for the final thing I think that uh it's a good enough business if you can hold on to it and let that fact be flowing that uh it is a heavily skewed H2 business. So only then only you can get the most out of this issue and keep in mind that the issue size is large enough and there are other IPOs flowing in and the uh sheer number of IPOs that are flowing in is already high. So that should be kept in mind uh before applying this is all >> got it. Yeah, quite a few issues are there, right? So, it just becomes tricky. But otherwise, this and this is a big issue. Uh but otherwise the
15:33 company seems decent, right? Like uh like water business right if you look at that price chart as well it is already downward trending only. So scale they never got it. Wonderly I would think would be the best pair because Wonder is operating at much larger scale and they are profitable as well compared to this imag. >> Got it. Got it. >> Look in that region of the parking.
16:18 >> Okay. Got it. Got it. Uh the only worry I see is that now they saying that they will do this asset light business of snowstorm experience or geography they have done business in south right >> now they are saying that they will increase this snowstorm business in north and tier 2 tier three cities >> right that would be seen like they had location advantage for Akapali that they do not get in Lacno or maybe in Jamshed. So they are only relying in this snowstorm thing. So how they can scale up well and if they are able to scale up well then only it becomes a good enough
17:04 thing but that will need time to flow in right that is one thing. >> Got it. Got it. that is with respect to uh silver storm I still think the IPO price should be protected ideally I'll see on last day how the valuation how the interest etc is and then bases that take a call uh with that we'll move forward and talk about the second company the second company we'll be covering is what quite a few people wanted to listen to uh Loya cop setting up Loya Cop incorporated in 2023 company's a global manufacturer of machining and equipment for technical textiles especially for producing polyropylene bags and high density
17:51 polyropylene woven fabric and sacks 2023 older company textile but 2023 we'll try and understand and then second thing which makes polyropene bags and then they will obviously be supplying to quite a few people. From what I understand, they are a leader in this machinery. Uh uh we'll understand if this is a cap goods play or not. Terms of the IPO, it's a 1,100 cr IPO. All of which is a fresh issue. Garas IPO >> full offer for sale. Full offer for sale. >> All of which is a OFS offer for sale at a market cap of 4500 crores. FI26
18:39 financials about to 1,700 crores top line 193 crores bottom line. So it's coming at like 22 times FI26 LM is motil. Uh so with that over to talk about LOA is my voice audible. Yes. >> So Lya Corp Limited is an 1981 established company based out of Kur. So uh without you know before starting into the you know direct business model this company was started as a joint venture between Starlinger Corporation based out of Austria which is one of the world's top three uh technical textile machine manufacturer. Uh it was started then they had a de
19:25 merger in 2014 and there was a non-core business which was again demerged into 2024 which on which I would be coming later. It's a leading global manufacturer of technical textile machinery with a market share of 15.4% uh in the global woven graffia machinery. So global market share is 15.4% and they have a market share of around 40.7% in India chalice percent. Uh the company's supplies and exports to over 100 countries. Uh you know their product portfolio includes extrusion lines, circular looms, lamination, coating lines, printing machinery, conversion machinery, multifilament, yarn machinery, monofilament extrusion machinery, recycling machines and uh
20:12 they also supply the related spare parts uh you know uh if there is some requirement of uh you know in some older machines they have an annual capacity of 200 240 tape lines, 13,800 circular looms and 1 lakh 8,000 tip window winders. Their machines are used to serve various applications like packaging uh know so like there are two segments you know uh for which their machines are used. One is the packaging application, one is the non-packaging application. Packaging in the packaging application they serve to the segments like cement obviously there machinery is used to serve those segments like cement fertilizers grain
21:00 polymers fibc etc and they also you know the machines are also helped in some non-packaging applications like you know tarpolin joe textiles uh there is something like as roof roof filament segment so these the company has got six facilities out of which four uh facilities are in India and two are overseas out of which one is in US and one is in the Italy. Uh the company holds 71 patents in India, 56 patents in the abroad, eight design restrictions and around 54 trademarks. [snorts] The current order book stands at around 1,358 crores. The company is raising 1101 crores fully an offer for sale. Huh? So
21:46 the company had already raised 300 cr as a secondary placement uh we uh a couple of days after the RSP was filed which had investors like Motilos Park Midas family office and I guess white also coming on the financials FI24 they did a revenue of 1,166 crores and a bid of 106 crores at a pat of 30 crores in FI25 uh the revenue grew to 1,377 crores. IDA went to like 2 and 2 2.2x 229 crores and the pad grew to like 4x 218 crores. FYI26 the company did a revenue of 1,717 crores 339 crores bida and 193.45 crores PA. So
22:34 now a very uh you know legit question here comes in margin% within 2 years. So the answer here is the company has historically operated uh in in those 18 to 20% sort of a margin band before co but postco that lot of disruptions hence their margins had came down the utilization numbers had went pretty down uh that has led to those cut and that is now ramping up again and the management believes it can go back to those 19 20% and can can even inch up higher as the utilization goes up at the exports export support markets uh you know uh do much better. So uh like now
23:23 there are two three things here you know. Uh first is how should we uh measure the growth of this company you know. So I feel the growth of Lya Corp is directly equivalent to two things. First is the growth in the overall technical textile market which in India is projected at around 10%. uh for like next 5 7 years uh till FI32 which is like 6 years uh and also more into the capex uh and expansion for the technical textile players obviously you know so it is actually a direct proxy of the capex and also the technical textile industry so it is a pure play cap good sort of a play to make those very large machines even we had visited knack package in
24:09 that time we had seen loya's machines and uh whenever Ever a technical textile companies does some expansion the machinery is surely procured from loya and this is you know the trend globally and there is actually a pickup in last one 12 months 18 months toward the technical textile segment as a whole. So just check their order book is around a 1358 cr uh 1358 cr order book which is ex just execution time like 9 months and the Q1 is already done. This is a order book after Q1. So this whole likely should be uh done in this current financial year itself. There is a Q1 which is already went which I feel should be around at 500 cr and there there would be some spare parts which would be another you know 5 10%. So if I
24:57 just add those numbers and there again started some couple of new machines uh which should again contribute around 5% of the top line. So the the number which I could see is around 2,00 to 2,100 cr lower bandage number and management believes that you know the margin should d up to those 20% but still if we consider 19 18 and a half% the beta goes to like 400 crores from 339 crores and the pad goes from 193 to around a 250 260 cr uh there is barely any cost knowa They have an interest cost of around books. So it is barely 10 12 crores of an interest cost that is also working
25:44 capital thing and so they don't need any sort of a capix just blend their utilization few of their lines are even at 40% 30% utilization just their extrusion line is at 80 90%. Now one thing very important here is to know their export operations has actually done very terrible in FI26. You know their US entity has bleeded. They have seen net losses and the capacity utilization in their US plant is barely 67%. So the management expects the uh they had actually mentioned this in an interview. So it is nothing you know it is actually in a public domain they expect their US operations to go up the utilization levels to install those losses getting converted into PAT. Uh so
26:31 uh we should expect those margins inching up the capacity utilizations going up and the export operations improving significantly. uh in historically the company has operated at those 60% export 40% India sort of a revenue split which actually has went reverse in FI26 but I feel that should again go back to those 50/50 levels so slightly uh higher to those export markets so uh like uh anchor book was very good you know decently impressive uh the the preipo names parkas motil all these are good names overall I feel uh there is a scope scope which is left uh just coming on its valuations uh 4,500 4490 precisely market cap on this it is
27:16 coming at 23p FY26 and 13.5x CVM bida and fi 27 it is coming at like 17p and 11 12 times bida which is quite cheap for a cap good company but there's a second thing you should consider is the growth of this company is going to be uh in the future uh in that 13 to 15% % range which is going to be 10 to 12% India and rest would be the exo export market share which they are going to gain. So that should so like you should assume key fi 28 so the growth would be like very uh like muted 13 14 15% maximum 16% uh 27 they should do I assume around a 20% growth but then there coming forward the growth should be more or less in that 15% odd range uh
28:02 so I feel if you just look at all the players except Raju engineers which is a different segment all lw machine lakmi machine works which is again based out of KPUR itself. MTA machinery which is into a very mid to low-end packaging machinery. Uh Joti obviously is a different player altogether into CNC machines not comparable still if you want to consider Windsor is not comparable at all because that is into a different segment. So I feel uh you can easily consider this company getting a 20 25p and around a 15 15ish you know u bit multiple. So I easily see actually it should be much more than that 15 to 20 times e bit multiples but this time P is very reasonable and balance sheet is
28:50 good cash generating business payment cycles are quite good global market share the largest player globally coming on their de merger thing they have done two de mergers first is they had a noncore you know first is like they had done a de merger of their defense and aerospace business which is Loia aerospace and they have even raised 100 or 150 crores very recently at some 1500 cr valuation from singularity if I'm not wrong decent defense aerospace business so this company had already filed an IPO in 2022 that time that entity also had aerospace but that eventually went off and then there was one another demer done in 2023 24 of
29:36 some other uh you know machinery you know lines which was a noncore. Uh so they have made and done a proarma or say carved out financials of that pure play packaging textile technical textile manufacturing business which is coming to you know coming to uh the public market. Hence the retail is 10% because there was a proarma and a carved out financial so I feel uh it is a good bet for short to medium term. uh there is definitely some scope out there but on listing gains I'm not very sure key will there be some super short-term momentum in this company because like for any institution I'm thinking as in that point of view
30:23 there's no hurry in buying it because there's nothing very exciting coming up in the very short term like I personally expect Q1 numbers to be on a good good note but still I don't find a reason why they should list at some very great premium just because it is cheap because there is no short-term trigger in the company. It's a it should be consistent uh company with that 15 20 25% sort of a keer uh stock price keer for like 2 years and it should grow at that 15% mark uh how as their pad growth and revenue growth comes in. So it is a good bet. There is a definitely some short-term valuation arbitrage out there. There is a 20% super shortterm upside
31:10 there but not sure. So I feel is a good bet can be evaluated at a decent short to like medium-term but uh listing in point of view I'm not sure on this is what my final review would be. uh you know everything is quite good, management is good, the business is good, uh the market leadership is quite good, uh products are good, uh ever growing market uh there is no shortage of demand in such segment 95% 92 93% revenues of Lya comes from repeat customers obviously the orders are going to be lumpy because her company but let's say that is sort of a sort of a recurring I would say recurring but sort of a
31:57 predictability of the business. So that that's that's all on low. Yeah. Decent business. Got it. And of bootstrap sameot family like you are right. I feel there is some family relocation restructuring which is happening because they're diluting total around400 upon 45 30% 30% they diluting slightly around that 30% mark but if you just check the DRP they had filed for 40% equity of the company
32:45 which was very surprising there one of their promoter was fully exiting so I feel there's something on the uh family which is happening but I feel whatever I know is that particular you know family is not in directly involved into the day-to-day uh you know day-to-day operation so uh that is actually IP is happening for the same reason uh they want to do that restructuring >> got it and in terms of like uh who all of these are good PS according to you right like yeah so So this is a one one of a kind company is not comparable at all.
33:32 So that is not comparable. You can compare it like standalone. Got it. And in terms of revenue like growth growth like right because I was reading somewhere that like 24 they actually the business had done around 100 crores they used to do something like that but and like the business if anything has degrown over 3 years of some 7 8 10%. >> No no no it has not degrown. So financials
34:18 out proarm financials which is pure play only this business 1166 to 1377 to1 1717 that is pure player corp and there is some other entity which used to be in 2024 that is now out of the out of the company so pure play business grow it's not like growth >> obviously if you just check 1166 to 137 77 is 20% and then another 30%. And now again growing at 20% in FI27. So it is growing. It is growing well. >> Got it. That is good. And there's one more thing. Yeah. Now you know there isn't lot of India in Europe FTA happening and I feel technical texture is one of those segment which should
35:04 actually see lot of you know growth coming in. So I feel segment obviously it is not a technical textile but similar segment getting listed doing well this guy coming as a cap good play so I feel like it it is a good company to keep like don't expect crazy returns but a decent returns can return can be generated in this company as well and cap boots have historically performed good. Yeah, because I was excited about the company. I quite like the IPO as well. I'm not sure why it is so muted, >> but everything just seems good only except that the growth kind of tapers off in a year also, right? Like it's cheap also. It's not like it
35:50 is expensive. >> Yeah, I feel obvious even that is a generous return. Got it. and preipo that that was good anchor also was good anchor also ankle is pretty good >> right correct very good >> I will be applying like I don't see a reason why not to apply other than just I'm not sure I don't see a Overall it's a good compet beyond a limit. >> Correct. Correct. So retail%
36:38 40% right. So just 600 will be the free float for some period of time. But yeah like the view should be to keep it that's it. Got it. I would be it seems like a good company to me from whatever I have heard and right now like there were a few reviews who said that the business has degrown and yeah one one thing is again like their margins have went up quite drastically when their gross margin hasn't went up in the same uh proportion like their gross margin
37:23 >> earlier their utilizations were in the 20 25% mark only in FI 24 which actually went to 45 50%. It would be 20% plus easily and supply chain raw material pressure even after all these things they at these margins and the US operations are bleeding heavily margin next two years so obviously but more similar. Got it. Got it. No, makes sense. I would be applying. I think I have made my night mind with that we'll quickly move forward and talk about the third company. We are running late. Uh setting up the third company. It's called Externate Technologies Incorporated in 2002. This Bopal based company is a
38:10 integrated IT solutions provider offering into services such as digital transformation managed services proprietary platforms and then Ka data center. Let's see um in terms of the IPO it's 167 cr IPO all of which is a fresh issue market cap 664 crores FI26 financials 366 crores top line 41 crores bot line bottom line so it's coming at like 16 times FI26 LM share India share India has been pretty active of late so with that over to Sachin to talk about extern Correct. >> Uh am I audible? >> Yes. >> All right. So uh coming to this
38:57 extranate so uh first I will break down what these guys actually do main board may this another this IT company. So uh let's say you uh there is a what you say uh government department or any other uh big uh institution like big colleges or schools and they need their entire IT uh softwares and IT hardwares etc and for that they need the hardware part as well and then after that they also need that maintenance part to flow in year on year. So these guys and guys like all of these generally picks up players like externet from there they source all of their hardware servers and data centers etc. given the new AI thing coming in and from there extra extranet is getting
39:43 most of their revenues from these government clients only. So data hardware we provide and then they are already also providing the that maintenance services year on year. So that is the two uh revenue streams that are coming in. So uh what these guys are saying that around more than 55 to 60% is our uh revenue from these government clients only. So because of that the dependence on these government clients is already built in and there is al also a reputation that externate is a a good and reliable player into this IT stack segment and they can provide all of the things that is required for these institutions. Now uh coming to what these guys are saying that we would likely scale up further and what do you say crossell or new segments as well
40:29 like if you just take the revenue streams into pure hardware so that is around 33 to 34%. Uh managed services and put the these AMC that they provide that is around 41%. And they have also made some proprietary uh products and platform etc like they are providing this certifying authority certificates uh digital signatures and they have also got that PKI certificate thing running in via that brand extra trust extra trust so that those revenues are around 10 to 11% of the revenues which they are saying that we would likely scale up this proprietary platform of ours going ahead they have already onboarded around 8 lakh people uh into this extra uh trust thing. So that is the prime focus going ahead and
41:16 if they are able to scale up that so that will be the likely differentiator for these players. uh they are saying that uh we would not generally focus more on the government like it's already around 50% of revenues and we are likely to bring that down to more 40 35 to 40% because the working hours cycle is pretty stressed there around 150 to 180 days it takes for the government's uh payment to flow in and because of that we see that most of the IPO seats are going into working capital use only uh so now coming straight to their financials from uh 232 uh CR in around in FI20 24 they have grown steadily around 30 32% C to 365 in FI26 margins have uh grown up in FI25 and FI26 primarily because earlier they used
42:01 to what do you say supply hardware from one vendor to another and then sell it to these PSU clients and what do you say they did a sort of trading in these components later on they have switched it to providing all of these into in-house and then also taking the AMC of these hardware components in a in their revenue streams as well. So because of that we see that the margins have uh expanded to a good extent from FI24 and these are the sustainable ones these guys are saying that% most likely and around 10 to 11% of pat year on year. Now uh apart from 100 CR in IPO uh from IPO proceeds for using the working capital they are paying around 20 CR into from the debt. So they
42:48 are repaying the debt and around 8 to 9 CR they are procuring more hardwares and more systems into their business. So that would likely help them to generate more business for their existing clients as well and for the new clients that they are trying to pitch in. So they are saying that around 357 is their uh is our existing order book and they generally tend to keep or they generally tend to supply around 55 to 60% of their order book in around 12 to 15 months. So this 350 I think would likely be executed in the current year because forward projections where they're saying that you would maintain the historical CG. So 30 32 CR to around 450 470 they are likely doing in FI27. Now the biggest uh what plus
43:34 point if you can say if they are able to scale up is that uh uh certifying authority uh proprietary thing that they have brought in extra trust so that they are registered with the SEBI also they have got registered and they have also registered with the department of telecommunications so that is not easily replaced because you have to get lot of certifications you have you have got to pitch in lot of clients you got to uh interact with the government etc. So for that they have already built up all of the existing ecosystem and they have looking to scale this further as well. On the export side as well they are uh pitching in more clients like they have got some orders from Emirates airline for self- service machines. So that is the testament that they are able to scale domestic operations in uh around India as well out of India as well and
44:20 pitching into more clients from export markets. Now apart from this 10% of their extra test or that propriety platform or uh DSC platform the other 80 to 90% is pure what do you say general uh traditional IT hardware thing like they supply hardware stuff then they get the AMC contracts for that and they have good clients with the government tenders so generally built up the year on year so there is not much more in that segment apart from that 10% thing so that is a likely differentiator if that can for this extra uh extra net guys going ahead. Now uh uh one thing that I saw in the financials was that they are prone to be uh cash flow positive in the current year. So
45:08 uh they could have gone for other modes of funding as well apart from IPO butt see the IPO is here. Uh and further they are saying that because we have now got more working capital leads and more working more working capital funds we have already got in so we would likely be pitching in for more clients and more orders and they have already built up a 900 CR order pipeline as well and further around 4500 CR is into active evaluation to help strengthen uh strengthen the current business of uh externate uh in one in one of the risks that I saw is that There is one uh small contingent liabilities that are present around 40 to 45 C which these guys are saying they are needed for our general guarantees of the business like bankies
45:55 we have uh given it to our close uh people that are working with us. So we do not see materializing it in any of the near term. uh and apart from that uh the revenue concentration they are saying that we would generally diversify more going ahead like around top 10 clients are around contributing around 80% like when we are able to scale up those export clients and we are able to scale into more geographies apart from Maharashtra then we would likely uh reduce that to around 60 to 70% for the top 10 clients. Now uh coming to the valuation part um on IPO uh price for FI26 it's around what do you say 16 times which is which is reasonable for the traditional IT because 90% to YCR and whatever they're
46:42 projecting it would be around 10 to 11 times which is fairly uh what do you say decent in the mainboard category plus IPO that is it is likely a small mainboard IPO which is if you can say This is a disguised theme large theme and that is coming into mainboard because we have the lead manager of thememes share India is handling as well and when we if we see that anchor boo as well uh not much interest in the anchor book like you see the general names that appear in SM anchor books that are present in this anchor book as well apart from that Taurus mutual fund not a quite lot to be happy about considering the anchor book etc as well and there is a general trend I saw in the GMP of this issue as well like it
47:28 was earlier very high and now it has started to come down uh to what do you say 7 to 8% or maybe even lower than that uh in ter if we compare these guys or IPO recently I think CSM technologies IP so that also trades around 14 50 times trailing and it is still below the IPO price forward maybe it is around 10 to 11 times so that becomes a good benchmark for issues like this uh going ahead like where this issue will likely trade uh in the given course of time and plus we have bunch of other peers as well that are present in theme only. I would likely compare this externate to theme because typally compare this to theme like go to cloud was one that came in recently plus
48:14 United data tech was one theme that came in. So all of these guys generally trade in that 14 to 15 times uh of price earnings multiple. So that is in terms of the valuation these guys have shown big players in the RSP like co force in loon and some very large play dynons etc to that I do not think are general or would you say good peers to this externate so uh for the final thing I think that uh it's a okayish IPO uh GMP going down is never a a good trend to be honest but keeping that aside I I would still prefer what do you say Indomim uh over this and maybe if I I have ample money left after applying Indo MIM and Silvertorm. I would think of applying this but not sure as of now. That's all.
49:05 >> Yeah, extra trust looks extra weak to me. [laughter] It I it company sorry thanks. No thanks. Uh doesn't seem good. Should probably be avoided. uh that is with respect to uh extra trust. With that we'll move forward and talk about one last company. This is a company which I am super excited about and I always like I have tracked this company for quite some time now. So uh it's Indom just setting up in corporate in 1996. Company is a global leader in manufacturing precision engineering components using MIM uh metal injection molding technology. company offers end to-end solutions including mold design, tooling, finishing and assembly. uh Bangalore
49:51 ranch in N based in terms of the IPO it's a 3,800 cr IPO out of which 500 cr fresh 33 100 cr of they were earlier supposed to come much bigger 7,000 cr IPO but then they cut the valuation into half which is sad uh because we would have gotten a bigger portion otherwise in terms of market cap market cap is 24,000 crores 23980 that is the MCAP at which IPS came in terms of FI26 financials they We've done a revenue of 4,300 PAT of 533. So six times sales and 45 times PAT looks expensive at first glance. We'll try and understand what should be the valuation in terms of the LM. The LM is ISDFC access ICICI code and SBI caps.
50:38 So with that over to talk about Indom is clear. >> Yeah. So, Indom is a Bangalore based uh world's largest uh manufacturing manufacturer of precision engineering components using the metal injection molding MIM technology. Uh it holds around 7% 6.8% precisely market share in the global MIM market. It is also the largest in terms of uh capacity as well capacity revenue. The company manufactures products using the technologies like metal injection molding, MIM, ceramic injection molding, investment casting, precision machining and metal 3D printing. Though technologies, one is binder jet and
51:25 second is laser powder bend fusion. [snorts] Its product portfolio spans across five categories. So there are five groups of the products. I'll be explaining each one. First they operate is defense products which includes firearm components such as triggers, hammers, sights, magazine catch basically which is expandable capacity. parts, guns, expendable parts. The second pro product group they have got is aerospace products. Uh in that they manufacture manifolds, precision
52:11 housings, adapters, T's, servo motor housings, uh nosles, locking rings and clevices and they also make brackets. Uh these are fairly complex products which go into very high-end aerospace applications. The third group they have is medical products. Uh they make components for a range of surgical devices which are used across endoscopy, laparoscopy, dental, robotics and orthopedics such uh like jaws, cartridge base, base adapters, sound tubes, blades. The fourth group is automotive in which they make components for vehicle safety, fuel systems, power trains, interior applications, ve turbochargers which another critical component. The fourth uh the fifth
52:58 segment they uh they they operate is the consumer. They make housings for ovens. They make pipe clamps, 3C parts for mobile phones, latches and cams for connectors. Indomm's consolidated equipment uh across plants includes 200 MIM machines, 45 big size batch furnaces, five continuous furnaces and out of those five, three are among the world's largest uh you know continuous furnaces. uh they have also fored recently into metal 3D printing technology and it is one of the first players to deploy the desktop uh metal production system and also the world's first metal 3D printing system for mass production. Uh the company also has got a successful
53:46 track record of acquiring multiple companies out of which they acquired tracks industries in 20 FI21 which is into investment casting solutions for industrial and aerospace applications. They did an acquisition in UK which was into MIM products and 3D printing uh predominantly in the European markets. They acquired the company called as Fenix Dentures which was into medical device designing and development procedures. So they also recently did a JV with Offlex Company Limited which is a South Korea based company uh which intends to operate in the specialized production and sale of foldable hinge modules in India and as well as other locations. Uh so uh the company is raising around a 3,800 cr out of which 500 cr is a fresh issue and precisely
54:33 3312 cr is an offer for sale. the out of 500 crores 400 crores is going towards the deary payment and rest to go into the GCP the company's fully bootstrapped 95% they have given it to IIT Madras uh as as a gift so it is not basically a fun it is just uh you know a form of gift so it is a fully bootstrap company uh there is a parent entity corporate promoter are called as green middles which is based out of Maicius which is owned by the father of uh you know Krishna Chivakula so there is a there are two promoters one is the main Krishna Chivakula and the second is Krishna Chivula Junior who is also called known as KJ who is the person
55:21 you're looking in the interview so his father's corporate entities is based out of Maicius so uh this is on the fundamentals part Baki coming on its financials FI24 they did a revenue of 2870 crores a bend of 743 crores crazy margins pat of like 284 crores around a 10% pat margin FI25 they did 3330 crores of a so this is an operating revenue this doesn't include the other income uh and a bid of 933 crores and a pat of 424 crores FY26 they grew by another 20% plus to 4193 crores 1,71 crores of an iida 533 crores pat so I feel they had acquired a company in FY
56:06 26 year 25 if I'm not wrong which is yet to get consolidated. So like I have made my own estimates uh and like you you you need to also understand that the global MIM market is expanding at like 12 13% and you can assume key being an Indian player and being the largest player it should grow at like 15 16 odd% you shouldn't expect it beyond that and just that acquisition should add some more numbers so it should do like 4850 cr sort of a top line 1350 so cr sort of a bit than 700 cr sort of a pat one might ask here like why have you considered the beta margin growing for from like 20 uh 24% uh to maybe uh sorry uh 8 m I'll just check the exact number yeah so from like
56:52 25% to like 27 and a half to 28% the answer is very simple uh FY26 uh they saw a very high growth into the consumer applications is actually a low margin business and the company expects their high margin segment like defense and au to contribute much more in the growth than the other product groups in FI27 as well as FI28 should which should take those margins to back to the 20 FI 23 24 levels which were like 27 28%. So I have considered 27% margins here and there should be some sort of a 20 30 crores interest cost saving and then the utilization wrapping up. So uh the utilization currently stands at like 45%. As this grow higher
57:39 you know the efficiencies and you know expansion of margins is going to come in. So like uh looking at the fin uh you know valuations uh like it is coming at uh I would say uh around around 2122 times uh EV a bit and like 45 times PAT which should be which should the number should come down on F28 basis to maybe uh you know around 15 times 15 times C beta and around 25 times patch. So I feel it is a one-of-a-kind company not in India as well as globally. Insanely great capabilities. You just go and you know go in that you know re region you know in the Bangalore and and they are
58:26 just going to say so this is that role model company you know in Bangalore for all these aerospace and defense components companies. Uh so industrial corporation is what I meant. uh one-of-a-kind company extremely high quality promoter extremely high quality management uh you just look at the manufacturing procedures they have so that MIM sort of an technology is is driven from those metal powders which are imported and very costly so uh so like the wastage is much more than the uh output you know net output so it is not an easy procedure that anyone can come and you know establish and make it first First of all, it is a extremely
59:12 extremely high entry barrier business baky. Uh you know the cost efficiencies and those tech know technology and all that. Uh you know how those metal powders should be integrated what should be the composition and then that you go into that investment casting and ceramic molding thing is not easy at all. Uh so it is a oneoff one of company. So I feel it is a blind blind buy and I feel hottest IPO till now of this year. So like love at first type of company must must apply and good portfolio company. I see this doubling within a like maybe a 15 months it should double from the issue price is what I believe. >> Got
1:00:00 I know whom you referred to when you said that [laughter] this company when they say that this is the company we want to be. uh but uh one of a kind company very good capabilities their margins should ideally increase this year because they said that they'll do more uh defense and arrow and less consumer consumer is where where a lot of problem is from my understanding maybe consumer drags everything down right and uh but my point is how do you compare it who would be right there because uh Azad would not be a great peer right Azad is a lot more complex lot more complex this is slightly
1:00:47 easier right not easier like slightly more less complex to Azad right in terms of >> different I tell you I actually slightly differ here these are very different business segments as well so just look what Azad is doing Azad is working on two three very large product groups in which it has got its mastery turbines blades which is like in India no other company can do but beyond there are specific product portfolio it has got its dominance and basically this company is into some other products dominance and the volume is quite large you know end of the day we know Rolls-Royce procurement limit there is no limit because I feel end of the day these slightly less uh mission critical
1:01:33 segments are also going to come into the MIM techch as the other companies uh you know want to work more on the uh quality and the performance of the product. So eventually the time in the segment is also set to expand whereas Azad is uh riding on that supply chain shift which is happening uh you know from like Europe, US to India and even from China to India. So these are very different comparisons. So I don't feel uh they should be you know kept in a single basket. Got it. And then uh you said 21 times
1:02:22 How much does it check it? But again, Omnitech is into all that oil and gas sort of a portfolio% oil and gas. So comparable trade set I'm opening with 307 40 times this guy is at 24 21 times right and this is a better business than trading at 25 and this guy is coming at maybe
1:03:09 there is enough space much enough space. I would definitely like this is the company to look up. You never know. One question and point to address they have quite a lot of acquisition that is likely to convert into financials. So, Goodwill there is always a drag down right goodwill impairment and then that drags the margins. So if that is repeating that is likely to turn to to be good like
1:03:55 exceptal items and goodwill imply these are adjusted numbers if I'm not wrong that is added advantage but sheet to be very honest. Importing it will continue. It is not really other income as such. So,
1:04:46 margins which is expected to go down back to that 2 3% mark and% core operating revenue which should add that 1 2% margins as well% 6.5 it is higher than normal% normal 6.5 which should again come back to at normal levels >> and their customers consumer segment should reduce. >> That should be the percentage of the revenue from consumer has actually went up in F26 or defense will go big. So consumer is around 15 to 20% whereas
1:05:34 aerospace is 30 to 33% sort of anida business. So as this goes up the margin profile goes up. Got it. Yeah, I would be applying in terms of there are quite a few questions with respect to subscription expected subscription. People are saying 12 times, but I think [laughter] 15 plus we'll try my luck. Retain should be lower. Retain should be like I think 7
1:06:20 8x at best. Retain 35 which is good. Oops. GMP. I like money. >> Good business. Very very good business. Significant discount. >> I think it will work. But yeah, I hope GMP remains muted. Even interesting company which should be the talk of the town next week I assume next week I know financial like when I'm going to speak everyone is going to see the mind is going to be
1:07:05 blown it is with respect to today's episode we almost toward the close and did you see kita subscribe just this last question. I hope let's see with that ending today's episode. We'll hopefully see you in mid of the week. If we don't I will be applying to [laughter] and [clears throat] I'll be applying to Puja precision like without a doubt
1:07:51 but yeah um let's see >> two things uh one is we are going to do a series of interviews coming in silver is posted we would we would love if everyone goes and watches it we're going to post one more today then there should be another two or three coming next week uh and we are likely to do one more mainboard also and second is it it won't be easy for us to do the next page because at least I am not an um travel I guess there is one more person who can do the same to but we would like you know we would uh try our level best to you know do the space for next week also >> perfect just again want to highlight that we are not registered none of what we say is a qualified opinion please due
1:08:37 diligence Thank you so much everyone. Have a good night and bye. >> Thank you everyone. >> Thank you.
