Started in 1991, Shakun Polymers Limited, is Baroda - Gujarat based one of the leading players in the field of compounding for the wire and cable market as per CRISIL Report. Company manufactures speciality compounds which find different applications across a wide spectrum of the wire and cable industry such as power cables (both LT & HT), building wires, telecommunication & fibre optic cables, instrumentation cables and photovoltaic cables (i.e. solar cables). SPL is one of the first movers in India for manufacturing of HFFR compounds, which offer a higher level of fire safety in wire and cable. They are also one of the leading exporters for HFFR compounds from India as per CRISIL Report. Currently, company's product portfolio comprises of over 80 product grades, which are manufactured and sold to reputed domestic and international wire and cable manufacturing customers in over 25 countries. They broadly categorise their speciality compounds for wires and cables as follows:(1) Thermoplastic and Cross Linkable HFFR Compounds for various applications;(2) Thermoplastic and Cross Linkable Semi Conducting Compounds for power cables;(3) Specialised PVC Compounds for various applications; Some of the major domestic customers of SPL includes companies such as Polycab Wires Private Limited, KEI Industries Limited, KEC International Limited, RR Kabel Limited, Apar Industries Limited, Vindhya Telelinks Limited, Birla Cables Limited, Paramount Communications Limited, Thermo Cables Limited and Tirupati Plastomatics Private Limited. Company also has presence in the international market in various countries in Asia, Middle East, Africa and South America. Some of the major international customers include companies such as Dubai Cable Company (Private) Limited, Alfanar Cables, Tekab Company Limited, Nuhas Oman LLC, Moghan Wire & Cable Co. and Abhar Wire & Cable Co. SPL currently has 3 Units with an aggregate installed capacity of over 25,000 MTPA. Company started its first manufacturing facility i.e. Halol Unit I in 1991 to manufacture speciality compounds (jacketing compound for jelly filled telecommunication cables), which was expanded to manufacture Semi Conducting Compounds for power cables in 1998. They setup the second manufacturing facility i.e. Daman Unit, in 1993 to manufacture speciality compounds (jacketing compound for jelly filled telecommunication cables) which was expanded to manufacture Specialised PVC Compounds for the wire and cable industry in 2002. Thereafter they setup their third manufacturing facility Halol Unit II in 2008 to manufacture HFFR Compounds. Company is planing to setup one more manufacturing facility Halol Unit III with capacity of approx. 15,000 MTPA and will be operation by September 2019. As of 31st March, company has production capacity of Semi Conducting compounds, HFFR compounds and specialised PVC compounds in all 3 units 9000 MTPA, 12,000 MTPA and 6000 MTPA with current capacity utilisation 64.29%, 108.15% and 66.02% respectively. As of March 31, 2018, Company has 200 permanent employees and three apprentices. Company's three year CAGR for revenue from operations from FY 2015 to FY2017 is 19.16%, its CAGR for EBIDTA from FY 2015 to FY 2017 is 19.63% and its CAGR for PAT from FY2015 to FY 2017 is 32.84%. The raw materials used in Halol plants are broadly divided into polymers, fillers and additives. Company approximately imports 80% to 90% of the raw material consumed at these manufacturing facilities. The polymers are produced by various petrochemical plants based out of Europe/USA and Asia. The major raw materials used in Daman plant are PVC resin, Plasticizers, fillers and additives. Majority of these raw materials are imported from Taiwan, Spain and China. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
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