Newmalayalam Steel Limited, founded in 2017, is a prominent manufacturer of galvanized pipes, tubes, and sheets, catering to various industries, including construction, automobiles, solar panels, and home decor. The company’s products are widely used for roofing solutions across Kerala, particularly to reduce heat and prevent leakage. Its product portfolio includes GP pipes, GI pipes, coils, sheets, slits, and additional items like scrap and rejected pipes.
Company Overview
- Managing Director: Mr. Vazhappily Davis Varghese
- Parent Organization: Newmalayalam Steel Ltd
- Incorporation Year: 2017
Also Read: Newmalayalam Steel IPO Details: Key Information You Need to Know
Strengths of Newmalayalam Steel
- Expansion of Production Capacity: In 2019, Newmalayalam Steel expanded its production capabilities by installing an additional electric resistance welding (ERW) tube mill with a capacity of 4,000 MT.
- Strong Brand Presence: The company claims to have a robust brand presence, particularly across Kerala, where its products address the region’s harsh and unpredictable weather conditions.
- Quality Control: With an in-house laboratory at its manufacturing unit, Newmalayalam Steel ensures the quality of raw materials, semi-finished products, and finished goods.
- Cost-Efficient Production: The company manufactures multiple products under one roof, optimizing overhead costs and resources.
Also Read: Mamata Machinery IPO Review: Comprehensive Insights for Investors
Risks to Consider
- Revenue Dependence on Dealers: A significant portion of the company’s revenue comes from its dealer network. A decline in dealer sales could affect the company’s financial stability.
- Dependence on Jaihind Steel: Newmalayalam Steel relies heavily on Jaihind Steel Private Limited for revenue and raw materials. Any disruption in this relationship could impact operations.
- Geographical Risk: The company’s manufacturing operations are primarily based in Kerala, making it vulnerable to any disruptions in the region.
- Competition: Newmalayalam Steel faces competition from other companies within the group, including Vyttila Steel Pvt Ltd and Jaihind Tubes Pvt Ltd.
- Operational Hazards: Steel manufacturing involves hazardous processes, which could lead to personal injury, property damage, and potential liabilities.
- Financial Position: As of September 30, 2024, the company had significant borrowings, and any inability to service these loans could impact its financial health.
Financial Performance
Newmalayalam Steel’s revenue decreased by 15.78% and profit after tax (PAT) dropped by 28.91% between FY24 and FY23. Here’s a quick look at the company’s financials:
| Period Ended | Assets (₹ Lakhs) | Revenue (₹ Lakhs) | Profit After Tax (₹ Lakhs) | Net Worth (₹ Lakhs) | Total Borrowing (₹ Lakhs) |
|---|---|---|---|---|---|
| 30 Sep 2024 | 11,032.77 | 15,533.82 | 519.30 | 4,566.44 | 3,917.94 |
| 31 Mar 2024 | 11,208.19 | 30,314.80 | 426.86 | 4,047.14 | 5,911.15 |
| 31 Mar 2023 | 8,734.83 | 35,995.71 | 600.49 | 3,620.28 | 2,815.22 |
| 31 Mar 2022 | 9,001.66 | 32,360.91 | 673.06 | 3,019.79 | 4,920.06 |
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Use of IPO Proceeds
The company intends to use the net proceeds from the IPO for the following purposes:
- IT/Technological Upgradation of its existing manufacturing facility
- Expansion of the existing solar facility for power generation
- Civil construction of a new factory shed cum storage facility at the existing premises in Kerala
- Advertising, marketing, and brand building activities
- Funding incremental working capital requirements
- General corporate purposes
Dilip Davda’s IPO Review: Should You Apply?
Based on the review by Dilip Davda, the Newmalayalam Steel IPO appears fully priced, considering its earnings from H1-FY24. While the company operates in a highly competitive and fragmented market, the improvement in the bottom line for H1-FY24 is surprising. Investors with a long-term perspective may consider allocating moderate funds for this IPO, given the company’s potential and brand recognition in the region.
Newmalayalam Steel IPO Registrar
- Registrar: Kfin Technologies Limited
- Phone: 04067162222, 04079611000
- Email: Visit Registrar Website
Conclusion
Newmalayalam Steel offers a unique opportunity in the galvanizing industry, with a strong presence in Kerala and a diversified customer base. However, potential investors should consider the risks associated with its dependency on dealers, competition, and geographical concentration. With a fully priced issue and mixed financial performance, the Newmalayalam Steel IPO could be suitable for long-term, informed investors looking to invest in a growing company with room for improvement in operational efficiency and market reach.
Disclaimer: This blog is for informational purposes only and does not constitute financial advice. Please consult a financial advisor before making any investment decisions.
FAQs
What is Newmalayalam Steel IPO?
The Newmalayalam Steel IPO is the public offering of shares by Newmalayalam Steel Limited, a manufacturer of galvanized pipes, tubes, and sheets. The company intends to use the funds raised from this IPO for various business purposes, including technological upgradation and expansion of facilities.
What are the main products of Newmalayalam Steel?
Newmalayalam Steel manufactures products like GP pipes, GI pipes, coils, sheets, slits, and additional items such as scrap and rejected pipes, catering to sectors like construction, automobiles, and solar panel frames.
What are the risks associated with investing in Newmalayalam Steel IPO?
Risks include dependency on dealers for revenue, competition within the industry, geographical concentration in Kerala, and potential operational hazards due to the nature of steel manufacturing.
How can I apply for the Newmalayalam Steel IPO?
Investors can apply for the IPO through their Demat and Trading accounts via the ASBA (Application Supported by Blocked Amount) process, available through banks and financial institutions offering IPO services.
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