Sintercom IPO Review, Should you Invest?

Sintercom India Limited (SIL) is coming up with its NSE Emerge SME initial public offer (IPO), which will open for subscription between February 5th to February 7th, 2018. The anchor allocation will be on a day before the issue open i.e. February 2nd. The Sintercom IPO is coming with a price band of INR 63 to INR 65 per equity share, having the face value of Rs. 10 each.

The investors can bid for the minimum  lot of 2,000 equity shares and then the investors can invest in multiples of 2,000 equity shares. In addition, Sintercom will be alloting 18,40,000 equity shares at Rs. 65 per share totalled Rs. 11.96 crore (approximately) to three anchor investors, namely Resonance Opportunities Fund, Raisonneur Capital Ltd and India Max Investment Fund Ltd.

Moreover, the Sintercom IPO consists of both Fresh Issue of 30,16,000 equity shares and an offer for sale upto 10,31,213 equity shares by Victora Stock-Invest Private Limited and upto 24,98,787 Equity Shares by Maurill Industries. Further, the IPO has reserved upto 50,000 equity shares for subscription by the eligible employee and has upto 3,34,000 equity shares is reserved for subscription by the market maker. Additionally, the Book Running Lead Manager is Pantomath Capital Advisors Private Limited to the IPO and the registrar to the offer is Link Intime India Pvt Ltd.

Sintercom India Limited (SIL) Profile

Sintercom’s products are used in the commercial and passenger vehicles. The company manufactures sintered metal automotive components of engines, body chassis, transmissions systems and exhaust applications using sintering manufacturing processes.

Currently, Sintercom caters to domestic Original Equipment Manufacturers and have renowned clients like Maruti Suzuki Limited, Bajaj Auto Limited, Mahindra & Mahindra Limited and Fiat India Automobiles Private Limited. In addition, the company has an in-house dedicated Research & Development team.

Sintercom IPO Proceeds Usage

The funds raised from the Fresh Issue of the IPO will be used to finance the expansion of production capacity at existing unit. The company will make the part repayment of secured and unsecured loan taken by them. Further, the proceeds will be used for the funding of the the working capital requirements of the company, as well as, will be used for general corporate purposes.

Should you invest?

As per offer documents, the company has no listed peers to compare with. However, GKN (unlisted) and Sundaram Fastners (listed) are the company’s competitors. Further, they are in lower strength sinter products segment, whereas Sintercom India Limited is concentrating on higher strength sinter products which have better future prospects.

Additionally, SIL will be instrumental in smooth transition to Euro –VI version of vehicles by 2020 and its sintered products will help OEMs in bringing out more fuel efficient models. Therefore, the rising demand of sintered products in automobile and other sectors will this company to grow further. The investors can go for the subscription of the Sintercom IPO with a view of long term.