Beezaasan Explotech, a renowned name in the Indian explosives industry, is set to launch its Initial Public Offering (IPO) on February 21, 2025, with a price band of ₹165 to ₹175 per equity share. The fresh issue of 34.24 Lakh shares amounts to ₹59.93 Crores, aiming to support the company’s expansion and operational growth. With over 60 years of industry experience, Beezaasan Explotech specializes in the development and manufacturing of explosive products and services, and it intends to leverage this expertise in its public offering.

IPO Details and Financial Overview

Beezaasan Explotech has a market capitalization of ₹227.15 Crores at the upper price band of ₹175 per share. The lot size of the IPO is set at 800 shares, meaning retail investors must invest a minimum of ₹1,40,000. High-net-worth individuals (HNIs) are required to invest in a minimum of 2 lots, totaling ₹2,80,000. The IPO will remain open for subscription until February 25, 2025, and the allotment status is expected to be finalized by February 27, 2025. The shares are scheduled for listing on the BSE SME on or about March 3, 2025.

Objectives of the IPO

The primary objectives for the IPO proceeds include funding capital expenditure for the expansion of manufacturing units in Gujarat. This includes the construction of new facilities for Emulsion Explosive-3 Plant, Bulk Explosive Plant, and a Detonating Fuse Plant, which will bolster the company’s production capacity. Additionally, funds will be allocated for the purchase of commercial vehicles and the repayment of borrowings to strengthen the company’s financial position. The remaining funds will be used for general corporate purposes.

Beezaasan Explotech Financials

Beezaasan Explotech has shown steady growth in its revenues and profits over the past few years. For the fiscal year 2024, the company reported revenues from operations of ₹18,789.64 Lakh, showing a healthy increase from ₹14,190.54 Lakh in 2022. The EBITDA for FY2024 stands at ₹1,416.03 Lakh, demonstrating the company’s operational efficiency. The Profit After Tax (PAT) for FY2024 was ₹832.86 Lakh, marking an increase from the previous years. This consistent growth in both revenue and profit indicates a robust financial position.

Performance Metrics and Valuation

In terms of valuation, Beezaasan Explotech’s pre-issue P/E ratio is 28.97x, while the post-issue P/E ratio is 46.68x, which is lower than the industry P/E ratio of 90x. This suggests that the IPO is priced fairly relative to its peers. However, the Grey Market Premium (GMP) of the IPO is reported to be ₹0, signaling that the market expectations for short-term gains from the IPO listing are quite low. The annualized EPS stands at ₹16.7, and with a PE ratio of 10.47x, the company appears to be fairly valued.

Market Sentiment and Subscription

The GMP of ₹0 indicates that there is no significant trading activity in the Grey Market, suggesting low demand for shares in the unlisted market. As such, the IPO might not experience notable listing gains upon its debut. The subscription status will be closely watched, but there is little optimism for significant price movement due to the lack of Grey Market activity.

IPO Review and Conclusion

While Beezaasan Explotech boasts decades of experience and a solid growth trajectory, the IPO does not appear to offer strong listing gains based on the Grey Market Premium. The company’s focus on expanding its manufacturing capabilities and meeting growing industry demand offers long-term growth potential, but for investors looking for short-term returns, this IPO might not be the best option.

Given the company’s strong industry presence, stable financials, and robust growth, it could offer long-term value for investors with a high-risk tolerance. However, for those seeking immediate listing gains, the Beezaasan Explotech IPO is likely to underperform due to the lack of GMP and limited market excitement. Based on these factors, we recommend avoiding this IPO for short-term speculation, but it may still be of interest to those with a long-term investment horizon.

The Upcoming IPOs in this week and coming weeks are Swasth Foodtech, Beezaasan Explotech, HP Telecom India.

The Current active IPO are Royalarc Electrodes, Tejas Cargo India, Quality Power Electrical Equipments.

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