Emerald Tyre Manufacturers, established in 2002, has become a recognized global player in the industrial tyre segment. Known for its time-tested products and customer-centric approach, the company has earned a solid reputation as a reliable supplier and solution provider. The company is now looking to raise ₹49.26 crores through its Initial Public Offering (IPO), which includes a fresh issue of ₹47.36 crores and an offer for sale worth ₹1.89 crores. The IPO subscription period runs from December 5 to December 9, 2024, with a tentative listing date set for December 12, 2024, on the NSE SME.

Emerald Tyre Manufacturers IPO Details

The price band for the Emerald Tyre Manufacturers IPO has been set at ₹90 to ₹95 per equity share, with a market capitalization of ₹185.02 crores at the upper price band. Retail investors are required to invest a minimum of ₹1,14,000 for 1,200 shares, while high-net-worth individuals (HNIs) need to apply for at least two lots, equating to ₹2,28,000. The IPO has attracted significant attention, with 58.92 times subscription on December 6, 2024, indicating strong investor demand.

The IPO is being managed by GYR Capital Advisors Private Limited as the book-running lead manager, with Link Intime India Private Limited serving as the registrar. Giriraj Stock Broking Private Limited is the market maker for this issue.

Emerald Tyre Manufacturers IPO Subscription Status and Grey Market Premium

As of December 6, 2024, the IPO is showing remarkable demand, with 58.92 times subscription. The Grey Market Premium (GMP) for the IPO has been reported at ₹42, indicating an expected 44.38% listing gain based on the current market performance and investor sentiment. It’s important to remember that the GMP is an unofficial market indicator and should be treated with caution. The real listing price will only be determined once the shares are listed on the NSE SME.

Emerald Tyre Manufacturers IPO Financials

Emerald Tyre Manufacturers has shown consistent financial growth. For the period ending July 31, 2024, the company reported revenues from operations of ₹6,492.75 lakhs, with a profit after tax (PAT) of ₹413.64 lakhs. The company’s EBITDA for FY 2024 stood at ₹1,081.42 lakhs, reflecting its strong operational performance. For FY 2024, the ROCE was 17.62%, and ROE was 19.18%, indicating robust returns on capital employed and equity.

The pre-issue EPS for the IPO is ₹8.64, while the post-issue EPS is ₹6.23, with a pre-issue P/E ratio of 11.00x and a post-issue P/E ratio of 15.24x. These figures suggest the IPO is fairly priced, making it an attractive investment opportunity for potential investors.

Objectives of the IPO

The funds raised through the Fresh Issue will be allocated towards the following purposes:

1. Capital Expenditure – An allocation of ₹4,085.28 lakhs to expand the company’s manufacturing and operational capacity.
2. General Corporate Purposes – Funds will be directed towards general business requirements and growth.
3. Offer Expenses – Part of the funds will be used to meet the costs associated with the IPO process.

Anchor Investors and Allotment Process

Emerald Tyre Manufacturers has successfully raised ₹13.90 crores from anchor investors. A total of 14,64,000 equity shares were allocated to these investors at ₹95 per share. Anchor investors are typically institutional investors that help set the tone for the IPO’s market reception. The IPO allotment will be finalized on December 10, 2024, and investors can check the status by visiting the Registrar’s website.

Investment Recommendation

The IPO presents a promising opportunity, especially given the Grey Market Premium (GMP), which suggests substantial listing gains for early investors. The company’s strong financials, robust P/E ratio, and the experienced leadership of the promoter, Mr. Chandhrasekharan Venkatachalam Thirupathi, make this IPO a potential growth investment. We recommend the Emerald Tyre Manufacturers IPO for risky investors looking for listing gains or those interested in long-term investments, considering the company’s future growth potential in the industrial tyre segment.