Gajanand International Limited, a key player in the cotton industry, made an impressive debut on the NSE SME platform on September 16, 2024, listing at ₹42.05 per share, a 17% premium to its IPO price of ₹36 per share. This strong listing highlights investors’ confidence, despite the fact that the IPO was only subscribed 14.28 times, reflecting moderate interest compared to other SME IPOs.

About Gajanand International Limited

Founded in 2009, Gajanand International is headquartered in Jasdan, Gujarat, and specializes in producing contamination-free, sustainable cotton through its automated, cutting-edge factory. The company has built a reputation for delivering high-quality cotton products at affordable prices. With a focus on customer satisfaction, the company emphasizes that its customers are at the core of its operations.

Gajanand International is known for its state-of-the-art manufacturing infrastructure, which ensures a sustainable and contamination-free cotton production process. The company aims to continue offering competitive pricing in a highly competitive market, maintaining its position as a leader in its field.

IPO Details

The Gajanand International IPO was a fixed price issue of ₹20.64 crore, comprising a fresh issue of 57.36 lakh shares. The subscription period for the IPO ran from September 9, 2024, to September 11, 2024, with shares priced at ₹36 per share. Investors were required to bid in lots of 3,000 shares, resulting in a minimum investment of ₹108,000 for retail investors. High-net-worth individuals (HNIs) needed to invest a minimum of ₹216,000 for 6,000 shares.

The IPO was managed by Fast Track Finsec Private Limited, with Skyline Financial Services Private Limited as the registrar and Nikunj Stock Broker Limited serving as the market maker.

Gajanand International IPO Grey Market Premium (GMP)

Prior to its listing, Gajanand International’s Grey Market Premium (GMP) ranged between ₹3 to ₹4, indicating possible listing gains of around 10-12%. Though GMP is often seen as an indicator of how a stock might perform on listing day, it should not be solely relied upon for investment decisions. The actual listing at ₹42.05 (a 17% premium) outperformed GMP estimates, underscoring the market’s positive outlook for the company.

Gajanand International IPO Live Subscription Status

As of the final day of the IPO subscription on September 11, 2024, Gajanand International’s IPO was subscribed 14.28 times. While this is a strong showing, the retail frenzy surrounding recent SME IPOs resulted in modest demand relative to some of its peers. Investors who participated in the IPO can check their allotment status on the registrar's website by:

Navigating to the IPO allotment status page.

Selecting Gajanand International Limited IPO from the dropdown list.

Entering their application number, PAN, or DP Client ID.

Submitting the required information to view allotment status.

Financial Performance of Gajanand International Limited

Gajanand International has demonstrated solid financial performance over recent years. The company’s revenue increased from ₹6,176.21 lakhs in FY22 to ₹7,342.40 lakhs in FY23, and surged further to ₹10,874.81 lakhs in FY24. Likewise, EBITDA grew from ₹123.82 lakhs in FY22 to ₹274.01 lakhs in FY23, reaching ₹404.07 lakhs in FY24.

Profit After Tax (PAT) also followed a positive trajectory, climbing from a modest ₹2.85 lakhs in FY22 to ₹141.06 lakhs in FY23, and reaching ₹223.73 lakhs in FY24. These financials underscore the company's ability to deliver consistent growth in a competitive market.

IPO Valuation and Metrics

Gajanand International issued shares at a pre-issue EPS of ₹1.71 and a post-issue EPS of ₹1.18. The pre-issue P/E ratio stands at 21.05x, while the post-issue P/E ratio is 30.50x, compared to the industry average of 62.45x. The company’s Return on Capital Employed (ROCE) for FY24 is 29.72%, and Return on Equity (ROE) is 19.30%. These numbers suggest that the IPO is priced fairly, providing potential for long-term returns, though some investors may find the valuation high in the short term.

Objectives of the IPO

The funds raised from the IPO will be used for the following purposes:

₹1,498.72 lakh will be allocated towards the company’s working capital requirements.

₹401.24 lakh will be used for general corporate purposes.

The remaining proceeds will be utilized to cover issue-related expenses.

Gajanand International IPO Review and Recommendation

Gajanand International Limited has built a strong reputation over the years in the cotton manufacturing industry, particularly through its sustainable and contamination-free cotton products. The company's focus on innovation, quality, and customer satisfaction has enabled it to maintain its competitive edge in the market.

While the company’s financials have shown steady growth, the IPO’s pricing has led to mixed reviews from market analysts. Despite a 17% premium listing, the stock may face volatility in the short term due to the high post-issue P/E ratio.

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