Hindprakash Industries Limited

Started in 2008, Ahmedabad based Hindprakash Industries Limited is engaged in manufacturing and trading of Dyes, Auxiliaries, Intermediates and Chemicals. With the wide range of products, company caters to various industries viz. Dyestuff and Dye intermediates, Textiles, Construction Chemicals, Speciality Chemicals etc. Company is located at Vatva, in the heart of Gujarat Industrial Development Corporation (GIDC), an Industrial Estate for manufacturing, blending and formulation of dyes, auxiliaries & intermediaries. The Estate has common effluent treatment plant of which most of the units in the estate are members apart from having their own environmental treatment facilities. Hindprakash has a manufacturing unit and a separate laboratory for operational efficiency. For business operations, the company has all the related types of machinery. All the process starting from raw material procurement to inspection to synthesizing to drying to blending to packaging to delivery are carried out in-house by the company. HindPrakash Industries Ltd has two warehouses to store the raw material and finished goods. HindPrakash uses a 3rd party transportation facility. For the last three fiscals, Hindprakash Industries Limited has posted turnover/net profits of Rs. 86.12 cr. / Rs. 2.14 cr. (FY17), Rs. 87.48 cr. / Rs. 2.32 cr. (FY18) and Rs. 97.99 cr./ Rs. 2.83 cr. (FY19). For H1 of FY20, it has clocked in the net profit of Rs. 1.78 cr. on a turnover of Rs. 50.64 cr. Super increase in bottom line in H1 of FY20 raises concern. For last 3 fiscals, Hindprakash Industries Limited has posted an average EPS of Rs. 3.38 and average RoNW of 14.38% respectively. The issue is priced at a P/BV of 1.27 on the basis of its NAV of Rs. 31.42 post issue. If we annualise H1 FY20 earnings and attribute it to post issue paid-up equity capital then asking price is at a P/E of around 11.7. As per FY19 earnings, P/E is around 14.7. Comparison between peers is shown in above table. On BRLM's front for Hem Securities Limited, this is the 26th IPO in the last three fiscals (including the ongoing). Out of last ten listing, four opened at discount or par and the rest with premiums ranging from 0.03% to 20% on the day of listings. As of now from last 10 IPOs, 5 are trading below issue price and remaining above or near issue price. ( As on 10.01.2020 ) Company has shown normal growth in financials, RoNW is 14.38% and issue looks fully priced as per FY19 earnings. Super earnings of H1 FY20 makes issue fairly priced and also raises concern. Also this industry has very tough competition from listed or local players. Performance of BRLM is poor. Considering all these, we give 'NEUTRAL' rating to this SME IPO.

• 1 Mr. Sanjay Prakash Mangal
• 2 Mr. Om Prakash Mangal
• 3 Mr. Santosh Narayan Nambiar