Cool Caps Industries Ltd. (CCIL) is mainly engaged in the business of manufacturing a wide range of Plastic Bottle Caps and closures which includes plastic soda bottle caps, plastic soft drink bottle caps, plastic mineral water bottle caps and plastic juice bottle caps from units situated in Howrah, West Bengal and Kotdwar, Uttarakhand. Apart from plain closures, it also manufactures embossed, debossed and printed closures as per client specifications. The Company is also in the business of manufacturing face masks and the products include Mask On Plus N95 FFP2 Mask, Mask on N95 FFP2 Mask and N95 FFP2 Mask from a unit situated in Howrah, West Bengal. Over the past couple of years, the company has outgrown itself into a distinguished large-scale organization specializing in pet bottle caps of various shapes, sizes and colours along with cap handle having plentiful applications CCIL manufactures caps and closures in Continuous Compression Molding Machine imported from Sacmi Inc, Italy with Cool + Technology using 100% virgin food grade quality material. Production takes place in an enclosed dust-proof environment with quality testing at regular intervals. The products are packed in corrugated boxes with proper bursting strength inside plastic liners. Overall colour migration test, heavy metal testing and analysis is done to ensure a quality product. In addition to the supply of pet bottle caps, it also trades in Shrink film as an additional service to its existing customers. This product has a demand within the existing customer base and therefore, to provide a one-stop solution to their needs, the company has started selling this product. Shrink films are manufactured by its associate concern, M/s Airborne Technologies Private Limited. Shrink film is a shrink wrap made of LDPE (Low-Density Polyethylene) material used for secondary and tertiary packaging due to its advantages and specific properties. Potential applications for collation shrink film mainly include bundle-packaging of beverages such as water, soft drinks, energy drinks, etc. and is a cost-effective substitute of formerly used corrugated boxes. The market for shrink film demand is growing and a lot of bottling/beverages companies are shifting from corrugated boxes on account of their own benefits. Furthermore, CCIL is also involved in trading plastic granules besides using them as a raw material for its own consumption. Plastic granules are made up of particles that are formed as a result of the progressive enlargement of primary particles that change their original identity. These granules can be utilized in the production of a vast range of plastic products, such as chairs, mugs, bottles, tanks, to name a few and are known for their fine finishing and easy malleability. The company provides a wide range of granules such as Polypropylene Granule, High-Density Polyethylene (HDPE) Granules, Low-Density Polyethylene (LDPE), Linear Low-Density Polyethylene (LLDPE) Granules and many more. The plastic granules are procured domestically and also imported from foreign countries. As of January 31, 2022, CCIL had 47 employees on its payroll. As per financial performance, CCIL has posted total income/net profits of Rs 19.20 Cr / Rs 1.37 Cr (FY19), Rs 25.75 Cr / Rs 3.21 Cr (FY20), Rs 31.29 Cr / Rs 2.86 Cr (FY21) and Rs 19.10 Cr / Rs 1.34 Cr (H1 FY22). So company has shown good growth. Company has posted an average EPS of Rs 4.08 and average RoNW of 21% for last three fiscals. Issue is priced at a P/B of 1.83 as per NAV of Rs 20.76 post issue. As per FY21 earnings on fully diluted equity post issue, asking price is at P/E of around 15.33 and as per annualised FY22 earnings P/E is 16.34 . As per RHP there are no listed peers. On BRLM's front, Aryaman Financial Services Limited associated with this SME IPO and handled 4 IPOs in last 3 years. From last 4 IPOs, one opened below issue price and remaining above issue price or at par. As of now from last 4 IPOs, one are trading below and remaining are trading above issue price or at par. ( As on 22.03.22 ) As per financials, CCIL has shown good results, RoNW is 16.13% and P/E is respectively 15.33 and 16.34 as per FY21 and annualised FY22 earnings, which looks fully priced. This sector has very high competition and fragmented. Performance of BRLM is average post listing. So we are giving NEUTRAL rating to this IPO.
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