Siyaram Recycling Industries Stock Analysis: Buy, sell or hold

 Introduction to Siyaram Recycling Industries Ltd

Incorporated in 2007, Siyaram Recycling Industries Ltd has emerged as a key player in the brass recycling industry. Specializing in the separation of brass scrap and the manufacturing of brass ingots, billets, rods, and components for sanitary installations, the company operates from three strategic plants in Jamnagar district.

The Three Pillars of Production of Siyaram recycling

Unit I: Brass Billets and Ingots Production

Spans 4970 square meters.

Primary site for manufacturing brass billets, ingots, and rods.

Unit II: Sanitary Parts Manufacturing 

Covers 3629 square meters.

Dedicated to the production of brass sanitary parts.

Unit III: Scrap Separation Facility

Encompasses 3346 square meters.

Focused on the separation of scrap, utilizing an area of 366 square meters.

Market Presence and Revenue Distribution of Siyaram recycling 

In 2023, recorded revenue from operations reached 492.87 million.

Domestic market dominance, with 67.06% of revenue generated locally and 32.94% internationally.

Products distributed across 18 states and Union Territories in India.

Geographical Revenue Breakdown  of Siyaram recycling

Gujarat: 56.40%

Madhya Pradesh: 5.25%

Punjab: 2.03%

Rajasthan: 1.41%

Global Outreach (H2)

Exporting products to China, Germany, Belgium, and Oman.

Gujarat remains a revenue stronghold, contributing significantly to the company's financial success.

Financial Performance Overview of Siyaram recycling

Historical Performance of Siyaram recycling

FY21: Rs. 139.73 cr. total income / Rs. 1.42 cr. net profit.

FY22: Rs. 426.44 cr. total income / Rs. 3.22 cr. net profit.

FY23: Rs. 497.86 cr. total income / Rs. 7.65 cr. net profit.

H1 FY24 Snapshot (H2)

Net profit: Rs. 3.97 cr.

Total income: Rs. 215.11 cr.

Valuation Metrics and IPO Pricing of Siyaram recycling

P/BV of 1.26 based on NAV of Rs. 36.50 (as of September 30, 2023).

P/BV of 1.18 based on post-IPO NAV of Rs. 39.02 per share at the upper cap.

Annualized FY24 earnings indicate a P/E of 10.90, suggesting a fully priced issue.

Profitability and Margins of Siyaram recycling

PAT margins: 1.03% (FY21), 0.76% (FY22), 1.55% (FY23), 1.85% (H1-FY24).

RoCE margins: 5.39% (FY21), 10.38% (FY22), 13.42% (FY23), 7.46% (H1-FY24).

Siyaram Recycling vs. Listed Peers in Indian stock Market

As per the offer document, Sprayking Agro and Poojawestern Metaliks are listed as peers, trading at P/E ratios of 72.90 and 22.23 (as of December 08, 2023). However, direct comparability is cautioned.

Investor Guidance: Siyaram recycling stock hold or sell?

Siyaram Recycling's engagement in brass products and components. Financial performance history marked by erratic profits, particularly from FY23 onwards. Informed investors may consider a medium-term investment strategy.

In the realm of brass recycling, Siyaram Recycling Industries Ltd stands as a promising player. Its diversified production units, robust revenue distribution, and global outreach showcase its potential for growth. However, potential investors are advised to tread cautiously, considering the historical financial fluctuations and the fully priced nature of the IPO.

FAQs on Siyaram Recycling IPO

Q. Is Siyaram Recycling a new entrant in the market?

Answer: No, the company was incorporated in 2007.

Q: Where are Siyaram Recycling's manufacturing units located?

 Answer: The three units are situated in Jamnagar district.

Q:What is the primary focus of Unit III?

Answer: Unit III is primarily used for the separation of scrap.

Q: Which regions contribute the most to Siyaram Recycling's revenue?

Answer: Gujarat leads with 56.40%, followed by Madhya Pradesh, Punjab, and Rajasthan.

Q: How does Siyaram Recycling's financial performance compare to its peers?

Answer:  The article highlights the company's financial performance against listed peers Sprayking Agro and Poojawestern Metaliks.