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Indobell Insulation IPO subscribed 5.06 times on Day 3. Check GMP and other details
Team Finance Saathi
08/Jan/2025
What's covered under the Article:
- Indobell Insulation IPO opens with a fixed price of ₹46 per share, offering 22.05 Lakh shares.
- The IPO's Grey Market Premium (GMP) is reported as ₹0, indicating no listing gain potential.
- The IPO proceeds will be utilized for capital expenditure, working capital, and general corporate purposes.
Indobell Insulation Limited is a manufacturer and contractor specializing in insulation products, such as Nodulated/Granulated Wool (mineral and ceramic fibre nodules) and prefabricated thermal insulation jackets. These products are integral to insulating applications in homes, commercial buildings, and industrial plants. The company provides a comprehensive range of insulation materials that are used across various designs of insulation systems.
The Indobell Insulation IPO is a Fixed Price Issue valued at ₹10.14 Crores, with the IPO price set at ₹46 per equity share. This IPO consists entirely of a fresh issue of 22.05 lakh shares. The subscription period opens on January 06, 2025, and will close on January 08, 2025. The shares will be listed on the BSE SME (Small and Medium Enterprises) platform, with the tentative listing date expected to be January 13, 2025.
The Market Capitalization of Indobell Insulation at the IPO price of ₹46 per share will be approximately ₹28.97 Crores. The lot size for the IPO is 3,000 shares, meaning retail investors must invest a minimum of ₹1,38,000, while High-Net-Worth Individuals (HNIs) need to invest in 2 lots (6,000 shares), amounting to ₹2,76,000.
Subscription and Grey Market Premium (GMP):
As of January 07, 2025, the live subscription status indicates that the IPO has been subscribed 5.06 times on its second day. This shows moderate demand, but it is not overwhelming.
The Grey Market Premium (GMP) of the Indobell Insulation IPO is ₹0, suggesting that there are no expected listing gains based on current market conditions. This flat GMP indicates that the market has low interest in the IPO, and it may be priced optimally, with little potential for immediate gains after listing.
IPO Objectives and Utilization of Funds:
The company plans to utilize the net proceeds from the IPO for the following purposes:
- ₹41.00 lakh to fund capital expenditure for the purchase of additional plant and machinery.
- ₹775.80 lakh to meet working capital requirements, ensuring that the company can continue its operations smoothly.
- ₹70.00 lakh for general corporate purposes, providing flexibility for future growth and operational needs.
Financial Performance and Valuation:
The company has shown a steady growth trajectory in its financial performance:
- Revenues from operations for the period ending September 30, 2024 stood at ₹556.30 lakh, a slight decrease from previous years (₹1,798.57 lakh in FY2023 and ₹2,105.22 lakh in FY2022).
- EBITDA for the period was ₹86.39 lakh, reflecting a decline from earlier years, indicating some pressure on profit margins.
- Profit After Tax (PAT) for the period ended September 30, 2024, was ₹42.39 lakh, continuing the growth trend from previous fiscal years.
Key financial metrics:
- Pre-issue EPS of ₹2.52 and post-issue EPS of ₹1.64 for FY24.
- Pre-issue P/E ratio of 18.25x, and post-issue P/E ratio of 28.06x.
- ROCE (Return on Capital Employed) for FY24 is 28.15%, indicating efficient capital use.
- ROE (Return on Equity) for FY24 is 18.21%, reflecting steady returns on equity.
These metrics suggest that the IPO is fully priced, offering investors limited upside potential.
Investment Recommendation:
While Indobell Insulation Limited shows steady financial growth, the flat GMP and moderate subscription figures suggest that the IPO may not offer significant listing gains. Investors should approach this IPO with caution, as the potential for immediate returns appears low.
Given the fully priced valuation and 0.00% GMP, we recommend that investors avoid the Indobell Insulation IPO if seeking short-term gains. However, it may be considered for long-term investors who believe in the growth potential of the insulation and construction industry.
The Upcoming IPOs in this week and coming weeks are Sat Kartar Shopping,Barflex Polyfilms.