Solve Plastic Products Limited is an ISO 9001:2015 and Bureau of Indian Standards IS 4985:2021, 3419:1988, 9537:Part 3:1983 certified company engaged in manufacturing of comprehensive range of uPVC (Unplasticized Polyvinyl Chloride) Pipes and Rigid PVC Electrical Conduits. The company has 3 (three) well-equipped manufacturing facility at Kerala and 1 (one) well-equipped manufacturing facility at Tamil Nadu. The manufacturing facilities are fully automated. Considering the growing demand of Rigid PVC Electrical Conduits in the regional markets, the company is proposing to enhance the plant capacity of Electrical Conduits from 2760 MT (27,60,000 Kgs) Per Annum to 4860 MT (48,60,000 Kgs) Per Annum situated at the existing facility situated at Karkuddy, Therkkumedu, Kesavapuram, Shencottah, Tirunelveli, Tamil Nadu. Also seeing the demand of HDPE Pipes, the company is proposing to augment its product portfolio by implementing manufacturing facility of HDPE Pipes of 2160 MT (21,60,000 Kgs) per Annum at the existing manufacturing facility situated at Unit – 2, Edamon, Kollam, Kerala. The overall Project cost for the proposed expansion project has been estimated at Rs 552.64 lakhs. The Company markets its products under the brand name of 'BALCOPIPES', through its network of Authorized Dealers/Distributors. As on the date of this Prospectus, the Company has 260 Authorized Dealers/Distributors present across 3 (three) states i.e. Kerala, Karnataka and Tamil Nadu. The company sell its products majorly in Kerala State. The products manufactured are approved by various agencies such as the Bureau of Indian Standards (BIS) and also from organisations i.e. Central Public Works Department (CPWD) of Chennai & Kochi, Military Engineer Services (MES), Integral Coach Factory, Public Works Department (PWD) of Kerala and Tamil Nadu and Tamil Nadu Housing Board. They are registered vendor with government organizations such as Chennai Port Authority and Southern Railway. As per financial performance, Solve Plastic Products Limited has posted total income / net profits of Rs 55.77 Cr / Rs (0.41) Cr (FY22), Rs 62.25 Cr / Rs 1.20 Cr (FY23) and Rs 47.15 Cr / Rs 1.42 Cr (FY24). So as per previous financials data, company has shown zig-zag results and sudden rise in net-profit just before IPO raises doubts. Also issue related expenses are high. Company has posted an average EPS of Rs 3.43 and average RoNW of 27.67% for last three fiscals. Issue is priced at a P/BV of 2.45 as per NAV of 37.17 as on Post issue. If we attribute latest earnings of FY22, FY23 and FY24 on fully diluted equity post issue, then asking price is at a P/E of around (97.64), 33.05 and 27.90 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Finshore Management Services Limited is associated with this SME IPO and handled 25 IPOs in last 3 years. From last 10 IPOs, two opened below issue price or at par on the day of listing. As of now from last 10 IPOs, all are trading above issue price. ( As on 10.08.24 ) As per financials, Solve Plastic Products Limited has shown zig-zag results, RoNW is 32.47% and P/E is respectively (97.64), 33.05 and 27.90 as per FY22, FY23 and FY24 earnings. So, issue looks aggressively priced, also sudden rise in net-profit and higher issue expenses raises doubts. Company is engaged in the manufacturing of comprehensive range of uPVC Pipes and Rigid PVC Electrical Conduits, which is highly fragmented and competitive business 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.
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