Silkflex Polymers (India) Limited

As per financial performance, Silkflex Polymers (India) Limited has posted total income / net profits of Rs 20.96 Cr / Rs 0.45 Cr (FY21), Rs 28.04 Cr / Rs 0.69 Cr (FY22), Rs 34.42 Cr / Rs 0.79 Cr (FY23) and Rs 33.81 Cr / Rs 2.56 Cr (upto Q3 FY24). So as per previous financials data, company has shown good growth, but sudden increase in net profit, just before IPO generates doubts. Company has posted an average EPS of Rs 0.88 and average RoNW of 9.38% for last three fiscals. Issue is priced at a P/BV of 2.22 as per NAV of 23.38 as on Post issue. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 88.11, 76.79 and 17.64 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Shreni Shares Limited is associated with this SME IPO and handled 24 SME IPOs in last 3 year. From last 10 SME IPOs, all are opened above issue price on the day of listing. As of now from last 10 SME IPOs, one is trading below issue price and remaining is trading above issue price. ( As on 02.05.24 ) As per financials, Silkflex Polymers (India) Limited RoNW is 9.62% and P/E is respectively 88.11, 76.79 and 17.64 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced and sudden rise in net-profit is very surprising. Company is engaged in the trading of the textile printing inks and water-based wood coating polymers products of a Malaysian based brand - 'Silkflex' produced by Silkflex Polymers SDN BHD, which is highly competitive and fragmented segment. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Mr. Tushar Lalit Kumar Sanghavi
• 2 Ms. Urmi Raj Mehta
• 3 M/s. Tushar Lalitkumar Sanghavi HUF
• 4 M/s. Lalitbhai H Sanghvi HUF