Megatherm Induction IPO Financial Analysis

Tanushree Jaiswal Tanushree Jaiswal 30th January 2024 - 12:05 pm
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Founded in 2010, Megatherm Induction is a leading manufacturer of induction heating and melting equipment, specializing in solutions for steel melt shops. The company provides turnkey solutions for steel plants, offering design, engineering, supply, erection, commissioning, and after-sales services, including maintenance contracts and spare parts. It is set to launch its IPO on 29 January 2024. Here's a summary of the company's business model, strengths, risks and growth prospects to assist investors in making informed decisions.

Megatherm Induction PO Overview

Megatherm Induction Ltd, a subsidiary of Megatherm Electronics Private Ltd, specializes in manufacturing induction heating and melting products, with 285 employees, operates a facility in Kharagpur with an annual production capacity of around 300 furnaces. Megatherm offers turnkey solutions for steel plants globally, catering to secondary and primary steel producers, automotive suppliers, ordnance factories, railroads, DI pipe manufacturers, and various engineering industries. The company exports its products to Latin America, Africa, the Middle East, Europe, SAARC, and Southeast Asia.

Megatherm Induction IPO Strengths

1- Megatherm Induction Ltd serves a diverse customer base in India and globally, tailoring its products and services to meet specific needs, leading to repeat business.

2- Maintains strong revenue and profitability driven by a robust order book, exceeding ₹290 crore as of July 31, 2023.

3- Strong customer relationships

4- Experience founders and management team

Megatherm Induction PO Risk

1- Operates in competitive markets and may face potential challenges from various players that could impact its business adversely.

2- Depends on a few raw material suppliers for induction heating products and transformers pose a risk. Fluctuations in supply and pricing could adversely impact business and financial results.

3- Makes a large chunk of its revenue from a small number of customers. If it loses any of these major customers, it could impact the company's business, cash flow, financial results, and overall financial health.

4- Relies on third-party transportation for its needs. Any disruptions in this aspect could negatively impact its operations, business, and financial condition.

Megatherm Induction PO Details

Megatherm Induction IPO is scheduled from 29 to 31 January 2024. It has a face value of ₹10 per share, and the IPO's price range is ₹100-108 per share.

Total IPO size (₹Cr) 53.91
Offer for sale (₹Cr) -
Fresh issue (₹Cr) 53.91
Price band (₹) 100-108
Subscription dates 29 Jan 2024 to 31 Jan2024

Financial Performance of Megatherm Induction IPO

Megatherm's Profit After Tax (PAT) stood at ₹3.09 Cr in 2021, dropped to ₹1.1 Cr in 2022, and surged to ₹14 Cr in 2023. Indicates fluctuations in profitability over the years.

Period Total Assets (₹ cr) Total Revenue (₹ cr) PAT(₹ cr)
2023 191.98 266.44 14
2022 172.63 188.47 1.1
2021 146.45 109.27 3.09

Key Ratios

Megatherm Induction's Return on Equity (RoE) percentages for the fiscal years were as follows: FY21 8.80%, FY22 3.00%, and FY23 27.65%. Return on Equity (RoE) is a key financial metric that indicates the efficiency of the company in generating returns for shareholders from their investments. A higher ROE is always better.

Particulars FY23 FY22 FY21
Sales Growth (%) 41.37% 72.48% -
PAT Margins (%) 5.25% 0.58% 2.83%
Return on Equity (%) 27.65% 3.00% 8.80%
Return on Assets (%) 7.29% 0.64% 2.11%
Asset Turnover Ratio (X) 1.39 1.09 0.75
Earnings per share (₹) 10.11 0.80 2.25

Promoters of Megatherm Induction IPO

1. Shesadri Bhusan Chanda.

2. Satadri Chanda.

3. Megatherm Electronics Private Limited.

Megatherm Induction is promoted by Seshadri Bhushan Chanda, Satadri Chanda, and Megatherm Electronics Private Ltd, collectively holding 98.92% of the company. After the listing promoter stake will dilute to 72.71%.

Megatherm Induction IPO Vs. Peers

Megatherm Induction shows a positive EPS of ₹10.11, signaling good profitability per share. On the flip side, Electrotherm India Ltd. reports a negative EPS of -₹9.28, indicating a loss per share. EPS gives investors a quick look at how well each company is doing financially on a per share basis.

Name of the company Face value (₹) EPS Basic (₹)
Megatherm Induction Limited 10 10.11
Electrotherm (India) Ltd. 10 -9.28

Final Words

This article takes a closer look into Megatherm Induction IPO, scheduled for subscription from 29 January 2024. It suggests that potential investors thoroughly review the company's details, financials, subscription status and GMP. Grey Market Premium indicates the anticipated listing performance, providing valuable insights for investors to make well informed decisions. On 29 January 2024, Megatherm Induction GMP is ₹75 up from the issue price reflecting 69.44% increase.

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