About the business
The company is engaged in the manufacturing of 3D printing machines and consumables that are used for 3D printing. The company plans to offer the entire range of products required in the domain of 3D printing. It derives majority of its business from the B2B and the e-commerce channels, with a small portion of revenue contributed by the B2C segment. The products have applications in various fields such as manufacturing, education, interior, architecture and others. 82% of the revenue is derived from the sale of its machines. The pricing for the printing machines ranges from INR 12000 all the way up to INR 300000
Competitive landscape
The company considers itself as an early mover in the 3D printing market with virtually no unlisted peers/ competition from large players. However, as per the management, China is the manufacturing hub for these machines. This indicates that there would be little entry barrier in the market, wherein other players may also opt to import the machines/consumables from China and sell it in the Indian markets.
Financials
The company has reported revenue of INR 39 crores in FY23-24 vs INR 23 in the previous year. According to the promoter, a large part of the topline growth is attributable to the branding/marketing it received from its appearance on the Shark Tank India Season 2, which increased awareness for its products.
The company has healthy EBITDA margins of around 17% and has seen year-on-year growth trend. The total capacity utilisation is ~40% of the 144 MT. As per the management, they maintain significant inventory to cater to orders immediately. As of March’24, the company had debt of around INR 3 crores.
Growth strategy
Key growth avenues are:
- Geographical expansion
- Increasing addressable market through advertising/marketing
- Growing the product portfolio
- Increasing manufacturing capacity
Valuation
The price band is in the range of INR150 with an EPS of around INR 10 and a PE of close to 15x.
Analysis
The target addressable market for the company’s products is yet not clear. Since the company relies on China for importing its machinery, there is a likelihood of high competition from the Chinese players even though the domestic market is yet to be developed. The company has 60% unutilised capacity and a significant inventory , which indicates that the demand for the products is yet to be established. The shares offered in IPO are from the promoters who intend to reduce their stake from the current 89% holding. The valuation of 15x seems to be on a higher side for such a company. Hence, it would be best to wait and observe the growth and performance of this company for a couple of years before investing.