1. At a Glance
Classic Electrodes wants you to pay nearly₹2.62 lakh minimumto join their IPO buffet of welding rods and MIG wires. It’s a ₹41.5 crore issue, 100% fresh capital – so no promoters running away with cash, just asking you to fund their next machine purchase and loan repayments. Promoters drop from97.7% to 71.7%, but don’t worry – they’ll still control the switch on your financial current.
2. Introduction
Imagine being born in 1997, not as a boyband, but as a welding consumables company in Kolkata. For nearly three decades, Classic Electrodes has supplied India with the unglamorous but absolutely necessary stuff – electrodes, MIG wires, and R&D-backed consumables that keep bridges standing, factories running, and your neighbor’s auto-rickshaw still welded together.
This IPO lands in SME land, where lot sizes are so big they look like HNI entry tickets. Minimum 3,200 shares = ₹2.78 lakh. So unless you can casually cough up a BMW down payment for the joy of holding “welding stock,” this one is already elitist.
But the anchor investors seem convinced – they’ve pumped in ₹11.7 crore on Day -1. With that, Classic is promising capex, debt repayment, and working capital stability. Translation: “We need new toys, fewer EMIs, and more cash buffer.”
3. Business Model (WTF Do They Even Do?)
Classic Electrodes’ gig is simple: theymake welding consumables– electrodes for mild steel, stainless steel, cast iron, deep penetration jobs, plus MIG wires. Customers? Industrial plants, engineering firms, infrastructure projects.
They havetwo operational units– Dhulagarh (WB) and Jhajjar (Haryana). Bahadurgarh (Unit III) shut shop in FY24 – proving even welding can’t fix a bad plant.
Products aren’t FMCG glamorous; no potato chips here. But they’re sticky: once industries trust your quality, they rarely switch, unless you botch supply. They ride on certifications, dealer networks, and R&D tinkering that makes their rods stronger, longer-lasting, and less prone to spark tantrums.
So the model is: manufacture → distribute through dealers → steady repeat orders →
maintain margins → beg bankers and IPO investors for capital when needed.
4. Financials Overview
Here’s how their earnings arc looks:
| Metric | Feb 2025 (₹ Cr) | FY24 (₹ Cr) | YoY % |
|---|---|---|---|
| Revenue | 187.9 | 194.4 | -3.4% |
| EBITDA | 19.2 | 23.0 | -16.5% |
| PAT | 9.6 | 12.3 | -22.3% |
| EPS (₹) | 9.3 | 12.0 | -22.5% |
Annualised post-issue EPS =₹5.81→ Post IPO P/E =15x.Auditor’s joke: “Profits dipped in FY25, but hey, as long as sparks are flying, optimism burns bright.”
5. Valuation (Fair Value Range Only)
Three styles, like three welding rods:
- P/E MethodPost-issue EPS = ₹5.81.Peer range = 12–18x.FV range = ₹70 – ₹105.
- EV/EBITDAEV ≈ MCap (₹156 Cr) + Debt (₹54 Cr) – negligible cash = ₹210 Cr.EV/EBITDA ≈ 10.9x vs industry 8–12x.FV range = ₹80 – ₹100.
- DCF (Discounted Welding Cash)Revenue CAGR assumption 12%, PAT margin 6%, discount rate 12%.FV = ₹75 – ₹95.
Overall FV Range: ₹70 – ₹105.This FV range is for educational purposes only and is not investment advice.
6. What’s Cooking – News, Triggers, Drama
- Anchor Round:₹11.7 crore raised; half the shares locked till Sep 27, 2025.
- Capex Expansion:₹10 crore for new plant & machinery → sparks will fly.
- Debt Repayment:₹10
