CMR Green Tech IPO: Aluminium Recycling has Benefits

• IPO is open from 3-5^th June, at ₹ 182-192/share
• Mkt. Cap. of ₹ 4,206 cr. The IPO is a 100% OFS of 3.29 crore shares
• Sector: Recycling of Non-Ferrous Metals
• Opinion: Average Offering. Buy on Dips

• Why CMR: Aluminium demand is rising across automobiles, housing and office construction, cans, consumer products, etc. The recycled Al. industry cuts energy demand compared to primary Al. mfg. The circular economy is very beneficial in terms of power consumed, reuse, pollution, etc. Rising EV adoption, increasing demand for lightweight materials, and stricter environmental regulations are expected to drive long-term demand for recycled Al. As India’s largest recycled Al. alloy producer and leading non-ferrous metal recycler, CMR enjoys strong scale advantages, and long-standing relationships with leading automotive OEMs. These strengths position the company well. It has experienced promoters of several decades.
• Why now in IPO: CMR has recently expanded capacities and moved into mfg. of ingots & billets. With capacity utilization under 70%, there is much room to grow. The exit by an early investor in the OFS offers investors in the IPO an opportunity to participate in India’s growing recycling and sustainability theme through the market leader. CMR’s recent capacity expansions, technology upgrades, and focus on higher-value Al. products support its future growth prospects.
• Risks: 1) Low operating margins, negative free cash flow and rising debt, these are due to capex, high working capital and forex issues 2) High dependence on the automotive sector, which contributes around 84% of revenue 3) Exposure to fluctuations in Al. scrap prices and raw material availability, dependence on imported scrap, global supply chain and net forex depletive. 5) The Gulf war to raise fuel, logistics and forex costs.
• Opinion: Rated average. BUY on dips
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Disclaimers and Disclosures

• Punit Jain discloses that he has no shareholding in CMR, or any group company. In addition, JainMatrix Investments Bangalore (JMI) and its promoters/ employees also have no direct or financial interest in the companies mentioned in the report, and no known material conflict of interest as on date of publication of this report.
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