L.K. Mehta Polymers Ltd, a prominent player in India’s plastic rope and twine industry, is launching an Initial Public Offering (IPO) worth ₹ 7.38 Crores. This Fixed Price Issue comprises a fresh issue of 10.40 lakh shares, with a price band of ₹ 71 per equity share. The IPO subscription period opens on February 13, 2025, and will close on February 17, 2025. The shares will be listed on the BSE SME with the tentative listing date set for February 20, 2025.

The lot size for this IPO is 1,600 shares, and retail investors need to make a minimum investment of ₹ 1,13,600. For High-Net-Worth Individuals (HNIs), the minimum investment requirement is ₹ 2,27,200, equivalent to 2 lots (3,200 shares). The market capitalization of L.K. Mehta Polymers at the issue price will be ₹ 27.26 Crores.

Company Overview and Promoters

L.K. Mehta Polymers has a strong legacy spanning over three generations in the polymer industry, led by Mr. Kamlesh Mehta, who has 29 years of experience, and Ms. Rina Mehta, who brings 2 years of expertise to the table. The company’s commitment to excellence and continuous adaptation has been central to its success.

Financial Performance:

For the year ending December 31, 2024, the revenue from operations was ₹ 1,198.15 Lakhs, showing a steady growth trend. EBITDA stood at ₹ 115.34 Lakhs, and Profit After Tax (PAT) reached ₹ 41.77 Lakhs, reflecting continued positive growth. The Company’s Earnings Per Share (EPS) before the issue is ₹ 3.42, with a post-issue EPS of ₹ 2.23 for FY24. The P/E ratio before the issue is 20.76x, increasing to 31.87x after the issue.

Subscription and GMP Trends:

As of February 14, 2025, the L.K. Mehta Polymers IPO is subscribed 6.86 times on the second day of the subscription period. However, the Grey Market Premium (GMP) stands at ₹ 0, suggesting no immediate listing gains. This signals that the market's demand for the stock might not result in quick profits upon listing.

Objectives of the IPO:

The funds raised through the IPO will be utilized for:

1. ₹ 534 Lakhs for meeting working capital requirements.
2. ₹ 134.4 Lakhs for general corporate purposes.

Expert Review:

The L.K. Mehta Polymers IPO offers a stable investment opportunity, but it comes with limited short-term profit potential. With a low GMP, the IPO seems fully priced. Therefore, investors looking for listing gains might want to approach this issue with caution. However, for those interested in the long-term stability of the plastic rope and twine industry, this could be a worthwhile investment.

For investors interested in IPO applications, it’s crucial to assess both the financials and market dynamics before making a final decision. Given the lack of Grey Market Premium and the fully priced nature of the issue, we recommend avoiding the IPO if you are targeting listing gains.

The Upcoming IPOs in this week and coming weeks are Royalarc Electrodes Limited, Tejas Cargo India Limited, Quality Power Electrical Equipments.

The Current active IPO are  L.K. Mehta, Shanmuga Hospital, PS Raj Steels, Voler Car, Maxvolt Energy, Hexaware Technologies.

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