L.K. Mehta Polymers IPO: Overview

L.K. Mehta Polymers Ltd, with a legacy of three generations in the Indian plastic rope and twine industry, has built a strong reputation based on excellence and innovation. The company’s products cater to the growing demand for plastic ropes and twines, which have various applications in agriculture, construction, and manufacturing.

The IPO is a fixed price issue of ₹7.38 crores, consisting of a fresh issue of 10.40 lakh shares. The subscription period runs from February 13, 2025, to February 17, 2025, with the allotment expected on February 18, 2025, and listing on the BSE SME on or about February 20, 2025.

Key IPO Details:

• Price Per Share: ₹71
• Market Capitalisation: ₹27.26 crores (at the IPO price).
• Lot Size: 1,600 shares (₹1,13,600 for retail investors).
• HNIs Minimum Investment: ₹2,27,200 for 3,200 shares.

SWASTIKA INVESTMART LIMITED is the book running lead manager, and Bigshare Services Private Limited is the registrar. Swastika Investmart Limited is the market maker for the IPO.

Financial Review:

• Revenue from Operations (FY 2024): ₹1,198.15 lakh, with slight growth from ₹1,193.67 lakh in FY 2022.
• EBITDA (FY 2024): ₹115.34 lakh, down from ₹172.55 lakh in FY 2023.
• Profit After Tax (PAT): ₹41.77 lakh in FY 2024, recovering from a loss of ₹0.76 lakh in FY 2023.

Key Performance Metrics:

• Pre-issue EPS: ₹3.42
• Post-issue EPS: ₹2.23
• Pre-issue P/E Ratio: 20.76x
• Post-issue P/E Ratio: 31.87x
• ROCE (FY24): 16.00%
• ROE (FY24): 28.35%
• RoNW (FY24): 28.35%

Given the P/E ratio and market capitalization, the IPO is priced at the higher end of the spectrum when compared to similar industry players.

IPO Objectives:

The proceeds from the IPO will be used for:

1. Incremental working capital requirement (₹534.00 lakh).
2. General corporate purposes (₹134.40 lakh).

Grey Market Premium (GMP) and Subscription Updates:

• GMP: ₹0, indicating no expected listing gains.
• As of February 17, 2025, the IPO was subscribed 42.49 times on its final day of subscription.

IPO Allotment Process:

To check the allotment status, visit the registrar’s website starting February 18, 2025, and enter your application number, PAN, or DP Client ID.

Anchor Investors:

There are no anchor investors in this IPO.

Investor Guidance:

With a 0.00% GMP and high P/E ratios, the L.K. Mehta Polymers IPO appears to be fully priced and may not provide immediate listing gains. Given the steady growth in the company’s financials but the high valuation, we recommend avoiding the IPO for listing gains. Investors may consider it cautiously based on long-term growth potential rather than short-term profits.

Conclusion: L.K. Mehta Polymers IPO offers moderate growth potential, but with a high P/E ratio, it may not be the best opportunity for listing gains. Risk-averse investors may consider avoiding this IPO, while those with a long-term investment horizon might explore it further.

The Upcoming IPOs in this week and coming weeks are Swasth Foodtech, Beezaasan Explotech, HP Telecom India.

The Current active IPO are Royalarc Electrodes, Tejas Cargo India, Quality Power Electrical Equipments.

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