Ideal Technoplast Industries Limited is gearing up for its Initial Public Offering (IPO) starting August 21, 2024. As a prominent manufacturer and supplier of rigid plastic packaging, Ideal Technoplast has been serving various sectors since 2012, offering products like industrial containers, adhesives, and oils in a range of sizes from 1KG to 20Ltr. The company's offerings are essential for the storage, handling, and transportation of valuable products, catering to a diverse clientele.

IPO Details and Subscription Information

The Ideal Technoplast IPO will involve a fresh issue of 13.25 lakh shares, amounting to ₹16.03 crores. The fixed price for the shares is set at ₹121 each. The minimum lot size for retail investors is 1,000 shares, translating to a minimum investment of ₹121,000. High-Net-Worth Individuals (HNIs) are required to invest in at least 2 lots, amounting to ₹242,000. The IPO subscription period runs from August 21, 2024, to August 23, 2024. Share allotment is expected to be finalized by August 26, 2024, with the listing on the NSE SME anticipated by August 28, 2024.

Grey Market Premium and Market Sentiment

As of today, the Grey Market Premium (GMP) for Ideal Technoplast’s IPO is estimated between ₹10 and ₹15. This implies a potential listing gain of approximately 10-15%. However, it is important to note that GMP is indicative and may not reflect the final trading price once the shares are listed. The GMP is influenced by market demand and supply before the official listing and should be used with caution for making investment decisions.

Financial Performance and Valuation

Financially, Ideal Technoplast has shown stable performance over recent years. Revenue increased from ₹569.47 lakhs in FY21 to ₹1,199.79 lakhs in FY23, reflecting growth. EBITDA rose from ₹31.41 lakhs in FY22 to ₹398.04 lakhs in 11MFY24. PAT also improved from ₹9.82 lakhs in FY22 to ₹135.40 lakhs in 11MFY24. These figures highlight the company's consistent performance and financial stability.

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The IPO is priced with a pre-issue EPS of ₹9.65 and a post-issue EPS of ₹2.70. The pre-issue P/E ratio stands at 12.53x, while the post-issue P/E ratio is 44.81x, which is higher than the industry average of 34x. The company’s ROCE for 11MFY24 is 32.95%, and the ROE is 43.95%, suggesting strong returns on capital and equity.

Objectives of the IPO

The proceeds from the IPO will be utilized for the following purposes:

Capital Expenditure: ₹1,362.76 lakhs will be used for expanding the company's facilities and operations.

General Corporate Purpose: ₹80.49 lakhs will be allocated for general corporate needs and related expenses.

Investment Recommendation

Given the current financial metrics and high P/E ratio, the Ideal Technoplast IPO appears to be fully priced. The potential listing gains indicated by the GMP are modest, suggesting that investors might consider avoiding the IPO for short-term gains. However, those interested in long-term investments should carefully evaluate the company’s financial health and market position. For more comprehensive details, refer to the company’s Red Herring Prospectus (RHP) and consult with certified financial advisors before making investment decisions.

Conclusion

The Ideal Technoplast Industries IPO presents a mixed opportunity with steady financial performance but high valuation. Investors should weigh the potential risks and rewards and consider their investment strategy before participating in this IPO.

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