CMR Green Technologies Favours Debt Over Equity for OFS IPO

CMR Green Technologies to Debut in Public Markets Amid Volatile Market Conditions

Aluminium recycling company CMR Green Technologies is set to enter the public markets with a pure offer-for-sale (OFS) issue, a move that comes at a time when many companies are choosing to wait on the sidelines due to volatile market conditions. This mainboard IPO is also the first to make its way to the market in over a month.

Despite the market uncertainties, the firm's CMD, Mohan Agarwal, remains optimistic about the company's prospects. The firm has reportedly received positive feedback from institutional investors during its roadshows, which has given the company the confidence to launch the issue.

CMR Green Technologies is one of India's largest aluminium recycling companies, with a market share of roughly 45% in its segment. The firm's operations are four times larger than its nearest domestic competitor. However, compared to its listed peers, the firm has lower EBITDA and profit margins. The management has argued that aluminium recycling is a volume-driven business with relatively thin margins, but that return on capital employed and operational efficiency are more relevant metrics for the sector.

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The company primarily supplies recycled aluminium products to automobile manufacturers and tier-1 auto ancillaries, while also expanding into beverage can recycling, solar, and EV-linked applications. CMR Green Technologies has a debt-equity ratio of 0.76 and has chosen not to include a fresh issue portion in the Rs 630 crore IPO, opting instead to use debt to fund its significant capacity expansion plans.

The IPO will remain open for public subscription until June 5, while the one-day anchor book will be launched on June 2.