LK Mehta Polymers, a leading name in India’s plastic rope and twine industry, made its stock market debut on February 21, 2025, with a flat listing at ₹71.10 per share on the BSE SME platform. The stock opened just 0.14% above its issue price of ₹71, failing to meet investor expectations despite its 42.49x oversubscription during the IPO phase.

The lackluster listing has raised concerns among retail and institutional investors, many of whom had anticipated better returns. The IPO’s Grey Market Premium (GMP) stood at ₹0, signaling weak demand and no pre-listing enthusiasm for the stock.

LK Mehta Polymers IPO Details and Subscription Status

The LK Mehta Polymers IPO, a fixed price issue of ₹7.38 crores, was entirely a fresh issue, consisting of 10.40 lakh equity shares at ₹71 per share. The IPO opened on February 13, 2025, and closed on February 17, 2025, with allotment finalized on February 18, 2025.

Despite a remarkable subscription rate of 42.49 times, the listing failed to provide any significant gains. The IPO was managed by Swastika Investmart Limited, with Bigshare Services Private Limited serving as the registrar.

Flat Listing Despite Strong Subscription

The massive demand during the IPO phase, particularly from retail investors and HNIs, did not translate into listing day gains. The breakdown of subscription across categories was as follows:

• Retail Investors: Oversubscribed 35.71 times
• Non-Institutional Investors (HNIs): Oversubscribed 56.38 times
• Qualified Institutional Buyers (QIBs): Oversubscribed 22.15 times

Despite this, the stock showed no substantial movement post-listing, highlighting a potential misalignment between demand during the IPO phase and actual market sentiment post-listing.

Market Capitalization and Investment Breakdown

At its issue price of ₹71 per share, LK Mehta Polymers had a market capitalization of ₹27.26 crores. Investors were required to subscribe in lots of 1,600 shares, meaning the minimum investment stood at ₹1,13,600 for retail investors and ₹2,27,200 for HNIs, who were required to purchase at least two lots.

Financial Performance and Company Overview

LK Mehta Polymers Ltd has a legacy spanning three generations in the polymer industry, specializing in plastic ropes and twines. Led by Kamlesh Mehta (with over 29 years of experience) and Rina Mehta, the company has demonstrated consistent financial growth over the past few years.

Revenue and Profit Trends (in ₹ Lakhs):

The company’s Return on Capital Employed (ROCE) stood at 16%, while its Return on Equity (ROE) was 28.35%, indicating solid financial fundamentals. However, the post-issue EPS dropped to ₹2.23, leading to a high post-issue P/E ratio of 31.87x, suggesting that the IPO was fully priced with limited upside potential.

Utilization of IPO Proceeds

The company plans to utilize the IPO proceeds as follows:

1. ₹5.34 crores for working capital requirements
2. ₹1.34 crores for general corporate purposes

Grey Market Premium (GMP) and Market Sentiment

Unlike many IPOs that witness strong Grey Market Premium (GMP) ahead of listing, LK Mehta Polymers saw a flat GMP of ₹0. This suggested no major pre-listing demand and signaled a neutral or cautious approach by investors.

Investor Takeaway: Should You Hold or Exit?

Given the flat listing and lack of listing gains, investors are now evaluating their next move.

• Short-term investors who were looking for listing gains may consider exiting their positions if the stock remains stagnant.
• Long-term investors might find value in LK Mehta Polymers’ steady growth in the polymer sector, but the high P/E ratio could pose a valuation risk.
• The absence of GMP movement suggests that demand might not pick up in the near term, making it a wait-and-watch situation for investors.

Conclusion

The LK Mehta Polymers IPO delivered disappointing listing day results, with just a 0.14% increase from its issue price. Despite strong subscription numbers, the lack of Grey Market Premium (GMP) and high valuation metrics suggest that investors remain cautious about its future performance.

As the company continues to expand in the plastic rope and twine sector, long-term investors might look at fundamentals, while short-term traders might reconsider their exit strategies. The coming weeks will be crucial in determining whether LK Mehta Polymers can build momentum in the SME segment or if it remains range-bound in early trading sessions.

The Upcoming IPOs in this week and coming weeks are Nukleus Office, Shreenath Paper.

The Current active IPO are Beezaasan Explotech, Swasth Foodtech, HP Telecom India.

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