Sah Polymers Limited is primarily engaged in manufacturing and selling of Polypropylene (PP) / High Density Polyethylene (HDPE) FIBC Bags, Woven Sacks, HDPE/PP woven fabrics, based products of different weight, sizes and colours as per customers specifications. They offer customised bulk packaging solutions to business-to-business ('B2B') manufacturers catering to different industries such as Agro Pesticides Industry, Basic Drug Industry, Cement Industry, Chemical Industry, Fertilizer Industry, Food Products Industry, Textile Industry Ceramic Industry and Steel Industry. Besides, the Company is a Del Credere Associate cum Consignment Stockist (DCA / CS) of Indian Oil Corporation Limited and also operates as Dealer Operated Polymer Warehouse (DOPW) of Indian Oil Corporation Limited for their polymer division. They enter into arrangements as third-party manufacturers to manufacture tape and fabric based on customers' requirements. Company has two business divisions (i) domestic sales; and (ii) exports. They have presence in 5 states and 1 union territory for the domestic market based on sales made for the three months ended June 30, 2022 and FY 2022, respectively. Internationally they export the products to 14 countries such as Algeria, Togo, Ghana, Poland, Portugal, France, Italy, Dominican Republic, USA, Australia, UAE, Palestine, UK and Ireland. For the three months ended June 30. 2022 and for Fiscals 2022, 2021 and 2020, the revenue from exports was Rs. 1558.22 lakhs, Rs. 4439.39 lakhs, Rs. 2752.39 lakhs, and Rs. 2491.88 lakhs cotributed 57.61%, 55.14%, 49.98% and 50.75% respectively of their revenue from operations. Presently, company has one manufacturing facility with installed production capacity of 3960 m.t. p.a. located at Udaipur, Rajasthan. In line with the strategic expansion plans, they intend to use part of the Net Proceeds to establish a new facility with an additional installed capacity of 3960 m.t p.a. to manufacture different variants of FIBC products. Sah Polymers is promoted by SAT Industries Limited which is listed on BSE Ltd and NSE Ltd. A description of key products of the company are as follow :1. FIBC (Flexible intermediate bulk container)2. Container Bag3. Garden bags/wastage bags4. Woven sacks5. PP Fabric6. Ground covers7. Spiral tubing8. Box bags9. PP Woven fabric Roll. As of October 31, 2022, company had 94 employees. As per financial performance, Sah Polymers Limited has posted total income/net profits of Rs 49.91 Cr / Rs 0.30 Cr (FY20), Rs 55.34 Cr / Rs 1.27 Cr (FY21), Rs 81.23 Cr / Rs 4.38 Cr (FY22) and Rs 27.59 Cr / Rs 1.25 Cr (Q1FY23). So as per last three years data, company has shown growth. They have posted an average EPS of Rs.1.71 and average RoNW of 10.58% for last three fiscals. Issue is priced at a P/BV of 3.65 as per NAV of 17.79 as on 30.06.22. If we attribute latest earnings of FY23 on fully diluted equity post issue, then asking price is at a P/E of around 33.50, which looks fairly priced, but if we take FY22 earnings than P/E is around 38.32, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Pantomath Capital Advisors Private Limited is associate with this IPO, and have handled around 7 IPOs in last three fiscals and all are SME. From last 10 SME IPOs, one opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, Four are trading below issue price and remaining above issue price or at par. ( As on 22.12.22 ) As per financials, Sah Polymers Limited has shown good growth, RoNW is 16.42% and P/E is respectively 38.32 and 33.50 as per FY22 and annualized FY23 earnings, which looks aggressively priced when compared with peers. Also the issue size is very small, so company will go in T2T group. Company is in business of bulk packaging solutions for B2B manufacturers. This sector is expected to give good growth, but it's highly competitive segment with no entry barriers. Performance of BRLM is average. So, we give AVOID rating for this IPO.
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