Emerald Tyre Manufacturers, established in 2002, is gaining recognition as one of the emerging global players in the industrial tyres segment. Known for its high-quality products and customer-centric approach, Emerald has built a reputation as a reliable supplier of Total Industrial Tyre-Wheel Solutions. The company has a robust track record of long-standing market presence, a growing global footprint, and a range of solutions to meet diverse customer needs.

The company has launched its ₹49.26 Crore IPO, offering 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 IPO is priced between ₹90 and ₹95 per share, and the lot size is 1,200 shares, requiring a minimum investment of ₹1,14,000 for retail investors. High-Net-Worth Individuals (HNIs) must apply for at least 2 lots (2,400 shares), totaling ₹2,28,000. The shares are expected to list on the NSE SME on December 12, 2024, with allotment finalized on December 10, 2024.

One of the standout features of this IPO is its strong Grey Market Premium (GMP) of ₹61, reflecting 64.07% potential listing gains. This increase in GMP from ₹29 on December 2, 2024, to ₹61 on December 6, 2024, highlights the growing investor confidence in the company’s performance. Although GMP is not a reliable indicator of final listing prices, it serves as a sign of high demand in the unorganized market.

The financial performance of Emerald Tyre Manufacturers has been strong, with ₹6,492.75 Lakhs in revenue for the period ending July 31, 2024, and a consolidated profit after tax of ₹413.64 Lakhs for the same period. Over the last few years, the company has experienced consistent revenue growth and improved EBITDA margins, which should provide confidence to potential investors.

The company’s pre-issue EPS is ₹8.64, with a post-issue EPS of ₹6.23, and the P/E ratio stands at 11.00x pre-issue and 15.24x post-issue. These figures suggest that the IPO is priced at a reasonable valuation, making it an attractive proposition for long-term investors and those looking for potential listing gains.

Emerald Tyre’s objectives for the IPO proceeds include ₹4,085.28 Lakhs for capital expenditure, general corporate purposes, and offer expenses. This capital will support the company's ongoing expansion plans and enhance its production capabilities. The company has raised ₹13.90 Crores from Anchor Investors, adding credibility to the offering.

Key metrics like the ROCE of 17.62% and RoE of 19.18% for FY24 indicate that the company is well-managed and efficient in generating returns. These numbers suggest that Emerald Tyre Manufacturers is positioned for steady growth in the future.

Recommendation: Given the 64% Grey Market Premium, strong financials, and reasonable valuation, we recommend that risky investors apply for the Emerald Tyre Manufacturers IPO for potential listing gains or long-term investment.

The Upcoming IPOs in this week and coming weeks are Dhanlaxmi Corp, Jungle Camps, Toss The Coin, Sai Life Sciences, Mobikwik, Vishal Mega Mart, Supreme Facility, Purple United, Rosmerta Digital, Inventurus Knowledge and Avanse Financial.

The Current active IPO is Emerald Tyre Manufacturers.

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