• Graphite production already in place
  • Further projects to be brought on stream
  • Upstream assets add value
  • Already generating cash

What Tirupati does

This is a company that’s been around for some time. It’s already mining, producing, processing and delivering high-end graphite to established customers, and is profitable at an operational level, although not yet at a group level.

Demand for graphite is likely to pick up in the coming years as the number of electric vehicle batteries that are manufactured continues to rise. It’s also used in flame-retardant materials, for composites and thermal management, markets which Tirupati is already addressing.

What’s the plan?

Once Tirupati is listed, the plan is to step operations up a gear at all levels and move rapidly to overall profitability.

The plan is to deploy significant sums on expanding production at the company’s key mines in Madagascar, the Vatomina and the Sahamamy projects, and preparing them for further expansion.

Sahamamy is already up and running and delivering margins of greater than 50%, and the Vatomina project will be brought on stream in two quarters post listing.

Further sums will also be deployed on expanding output at Tirupati’s downstream operations in India, where production of speciality grade graphite will rise to 4,800 tonnes per year.

In addition to that, the company also plans to boost its graphene production capabilities, also in India.

What does the chief executive say?

“We’re currently profitable at the project level,” says chief executive Shishir Poddar. “Post-IPO we’ll be profitable at the corporate level too. We will build a company that will be a global leader in graphite and graphene.”

From the broker

According to research undertaken by broker Optiva, Tirupati looks set to generate initial sales of US$20mln and earnings of US$10mln, which in turn is likely to grow following the new investment – and the reinvestment of future cash flows – to around US$150mln in sales and US$80mln in earnings.

Accordingly, Optiva reckons the net present value of Tirupati at around £300mln, or £169mln fully risked, with an expected market capitalisation on listing of between £49mln and £56mln.

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