L.K. Mehta Polymers Limited has a legacy that spans over three generations in the Indian plastic rope and twine industry. The company has consistently adapted to market changes and maintained a commitment to excellence. With a fresh issue of ₹7.38 Crores, this IPO offers 10.40 lakh shares at ₹71 per equity share. The IPO is open for subscription from February 13 to February 17, 2025, with the allotment expected on February 18, 2025, and a tentative listing date of February 20, 2025.

Key Details of the IPO

The IPO involves a fixed price issue of ₹7.38 Crores, with a market capitalization of ₹27.26 Crores at the issue price. The lot size for retail investors is 1,600 shares, translating to a minimum investment of ₹1,13,600. For High-Net-Worth Individuals (HNIs), the minimum investment is ₹2,27,200 (2 lots, 3,200 shares). The lead manager for the IPO is Swastika Investmart Limited, while Bigshare Services Private Limited serves as the registrar.

Financial Overview of L.K. Mehta Polymers Limited

As of December 31, 2024, the company's revenues from operations were ₹1,198.15 Lakhs, indicating steady growth from ₹1,193.67 Lakhs in FY2022. The company's EBITDA for FY24 was ₹115.34 Lakhs, and its Profit After Tax (PAT) for FY24 stood at ₹41.77 Lakhs, an improvement over the previous year. The Pre-issue EPS stands at ₹3.42, while the Post-issue EPS is ₹2.23 for FY24. This suggests that the company has a positive financial outlook, though the IPO is considered fully priced based on its valuation metrics.

Market Valuation and Financial Ratios

The IPO price band of ₹71 per share gives the company a pre-issue P/E ratio of 20.76x and a post-issue P/E ratio of 31.87x. Other key metrics include a ROCE of 16.00% and a ROE of 28.35% for FY24, reflecting efficient utilization of capital. However, the annualized EPS based on the latest financial data is ₹1.98, resulting in a PE ratio of 35.73x, which is relatively high for a company in this sector.

Grey Market Premium (GMP) Insights

The Grey Market Premium (GMP) for L.K. Mehta Polymers Limited IPO is currently at ₹0, indicating no potential listing gains based on market sentiment. GMP often reflects speculative trading in the unorganized market, and since it is ₹0, this suggests no immediate listing premium.

IPO Subscription Status and Allotment Process

As of February 17, 2025, the IPO has been subscribed 17.38 times, indicating significant investor interest. The allotment date is scheduled for February 18, 2025. To check the allotment status, investors can visit the registrar’s website and enter their application number or PAN details.

Objectives of the IPO

The funds raised through the IPO will be used for the following purposes:

1. ₹534 Lakhs to meet incremental working capital requirements.
2. ₹134.40 Lakhs for general corporate purposes.

Investor Insights and Recommendation

Based on the financial performance and the current valuation, the L.K. Mehta Polymers Limited IPO appears fully priced. The GMP of ₹0 suggests limited prospects for listing gains. Considering these factors, the recommendation for potential investors is to avoid this IPO for immediate listing gains.

Conclusion

L.K. Mehta Polymers Limited has a strong presence in the Indian polymer industry, but the IPO seems overpriced given the financial metrics and market conditions. Investors should carefully consider the company's future growth potential and the lack of listing gains before making investment decisions.

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, L.K. Mehta, Shanmuga Hospital.

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