L.K. Mehta Polymers Ltd is a well-established company in the Indian plastic rope and twine industry, boasting a legacy that spans three generations. The company has consistently focused on excellence, adapting to the evolving demands of the market. With a deep-rooted experience in the sector, L.K. Mehta Polymers has built a reputation for quality, driven by its long history of delivering reliable products and services to the market.

As part of its growth journey, L.K. Mehta Polymers is raising capital through an Initial Public Offering (IPO). The IPO is a fixed price issue amounting to ₹ 7.38 Crores, with the issuance of 10.40 lakh equity shares. The subscription period for the IPO is from February 13, 2025, to February 17, 2025, with the shares expected to be listed on the BSE SME on February 20, 2025.

The IPO price for L.K. Mehta Polymers has been set at ₹ 71 per equity share, with the market capitalisation at the issue price amounting to ₹ 27.26 Crores. Retail investors are required to subscribe to a minimum of 1,600 shares, resulting in a minimum investment of ₹ 1,13,600. High-Net-Worth Individuals (HNIs) need to subscribe to 2 lots (3,200 shares), totalling ₹ 2,27,200. However, the Grey Market Premium (GMP) for this IPO is ₹ 0, indicating no expected listing gains.

The IPO is being managed by SWASTIKA INVESTMART LIMITED, with Bigshare Services Private Limited serving as the registrar. Swastika Investmart Limited is also acting as the market maker for the IPO. The GMP value of ₹ 0 suggests a lack of demand in the unorganised grey market, and as such, investors should be cautious when considering this IPO.

As of February 14, 2025, the L.K. Mehta Polymers IPO was subscribed 8.40 times on its second day of subscription. This high demand indicates that investors are showing interest in the company, though it does not necessarily imply significant listing gains due to the zero GMP. The allotment status will be determined on February 18, 2025, and interested investors can check their allotment status on the registrar’s website by following the step-by-step guide.

L.K. Mehta Polymers intends to utilise the proceeds from the IPO for working capital requirements and general corporate purposes. Specifically, ₹ 534 Lakhs will be used to meet the incremental working capital needs, while ₹ 134.40 Lakhs will be allocated for corporate purposes.

The financial performance of L.K. Mehta Polymers over recent years shows consistent growth. For the fiscal year ending December 31, 2024, the company reported revenues of ₹ 1,198.15 Lakh, compared to ₹ 1,887.40 Lakh in 2023 and ₹ 1,713.80 Lakh in 2022. The EBITDA for 2024 stood at ₹ 115.34 Lakh, reflecting an upward trend from previous years. The Profit after Tax (PAT) was ₹ 41.77 Lakh, indicating a positive profit growth compared to earlier periods.

The company's Key Performance Indicators (KPIs) include a pre-issue EPS of ₹ 3.42 and a post-issue EPS of ₹ 2.23 for FY24. The pre-issue P/E ratio is 20.76x, and the post-issue P/E ratio is 31.87x, which is above the industry average. The Return on Capital Employed (ROCE) for FY24 stands at 16.00%, and the Return on Equity (ROE) is 28.35%. These figures suggest that L.K. Mehta Polymers is a mature company in its sector, but with a fully priced IPO.

Despite the company’s solid financial performance, the zero GMP raises concerns about immediate listing gains. As a result, potential investors are advised to exercise caution before applying for the L.K. Mehta Polymers IPO. The market conditions and the lack of a Grey Market Premium may not bode well for those expecting quick returns.

The company is led by Mr. Kamlesh Mehta, who has over 29 years of experience in the polymer industry, and Ms. Rina Mehta, who brings 2 years of experience to the table. Together, they form a solid leadership team that has steered L.K. Mehta Polymers through its growth phases.

In conclusion, while L.K. Mehta Polymers has demonstrated steady growth over the years, the IPO’s pricing and zero GMP indicate a potentially low-risk opportunity with limited upside for listing gains. Investors should carefully consider the company’s performance, financials, and their investment goals before making a decision.

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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