SK Minerals IPO Recommendation/Concise Review
Incorporated in February 2022, SK Minerals & Additives Ltd. is engaged in the manufacturing, processing, and supply of industrial minerals and specialty chemicals. The company follows a flexible business model that combines domestic trading and in-house production.
However, two key aspects demand careful scrutiny.
1) Financial Performance:
For the last three fiscals, the company has reported total income/net profit of Rs.132.59 cr./Rs.1.90 cr. (FY23), Rs.108.94 cr./Rs.3.10 cr. (FY24) and Rs.212.15 cr./Rs.10.94 cr. (FY25). For the first five months of FY26 (till August 31, 2025), it earned a net profit of Rs.5.03 cr. on total income of Rs.85.38 cr.
It is notable that the sharp surge in FY25 turnover — from Rs.108.94 cr. to Rs.212.15 cr. — was driven mainly by trading income as the purchase of stock-in-trade jumped from Rs.58.83 cr. to Rs.153.75 cr. This raises concern that the rise in sales may not stem from growth in manufacturing operations but from increased trading activity — possibly inflating figures to justify a higher IPO valuation.
2) Debt & Liquidity:
The company’s borrowings stood at Rs.22.55 cr. as of March 31, 2025, with a debt-equity ratio of 0.74, which appears reasonable. However, investors should be cautious of the liquidity risks typical of SME IPOs.
Merchant Banker’s Track Record:
This is the 15th mandate managed by Khambatta Securities over the last four fiscals. Out of the 12 past listings, 3 opened at a discount, while the rest delivered listing gains ranging between 3.33% and 181.46%.
Chanakya View:
Considering the sudden financial jump, heavy trading component, and moderate merchant banker record, this IPO does not appear worth the risk at the current valuation. Conservative investors may avoid the issue.
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