Emerald Resilient Tyres, established in 2002, is a prominent player in the industrial tyres sector, known for its global footprint and reliable product offerings. The company has a history of supplying tyres and wheels for various industries, and its commitment to quality and innovation has helped it become a preferred partner worldwide. The upcoming IPO of Emerald Tyre Manufacturers aims to raise ₹49.26 crores through a combination of a Fresh Issue and Offer for Sale.

IPO Overview

Emerald Tyre Manufacturers' IPO will consist of a Fresh Issue of 49.86 lakh shares worth ₹47.36 crores and an Offer for Sale of 1.99 lakh shares worth ₹1.89 crores. The subscription period is set to open on December 5, 2024, and will close on December 9, 2024. The price band for the IPO has been set between ₹90 and ₹95 per equity share, and the market capitalization at the upper end of the price band will be ₹185.02 crores. The lot size is 1,200 shares, requiring a minimum investment of ₹1,14,000 for retail investors and ₹2,28,000 for High-Net-Worth Individuals (HNIs).

The tentative listing date is December 12, 2024, with the shares being listed on the BSE SME platform. GYR Capital Advisors Private Limited is the Book-Running Lead Manager for the IPO, and Link Intime India Private Limited is the registrar. Giriraj Stock Broking Private Limited will serve as the market maker for the issue.

Grey Market Premium and Subscription

The IPO’s Grey Market Premium (GMP) has been observed to be ₹42, reflecting a 44.38% premium based on the financial performance of the company. The GMP is a speculative figure based on demand and supply dynamics in the unorganized market and should not be relied upon for making investment decisions. As of December 4, 2024, the expected listing price of ₹137 indicates a significant potential listing gain.

Financials and Company Performance

Emerald Tyre Manufacturers has shown robust growth in recent years, with consolidated revenues from operations reaching ₹6,492.75 lakhs for the period ended July 31, 2024. The company’s EBITDA for FY24 stood at ₹1,081.42 lakhs, reflecting a healthy profit margin. For the same period, the company’s consolidated profit after tax (PAT) was ₹413.64 lakhs, showing strong profitability.

The company's P/E ratios are 11.00x pre-issue and 15.24x post-issue, indicating that the IPO is fairly priced. Its Return on Capital Employed (ROCE) for FY24 stands at 17.62%, and the Return on Equity (RoE) is 19.18%, both of which are positive indicators of the company’s operational efficiency and profitability.

Use of IPO Proceeds

The funds raised from the Fresh Issue will be utilized for capital expenditure, including expansion plans and upgrading existing facilities. The company also intends to use a portion of the proceeds for general corporate purposes and covering offer expenses.

Key Considerations for Investors

While the IPO offers an attractive Grey Market Premium and potential for listing gains, investors should be aware that the tyre industry, though growing, faces intense competition and market fluctuations. The IPO’s pricing and the company’s performance metrics suggest a balanced investment proposition. Therefore, the Emerald Tyre Manufacturers IPO is recommended for risky investors who are looking for potential short-term gains or long-term growth in the industrial tyre market.

Given the company's expanding global presence and strong financial metrics, the IPO could offer significant opportunities, provided investors are prepared to manage the associated risks.