1. Introduction and Company Overview

NAPS Global India Limited, incorporated in March 2014, is a prominent Mumbai-based wholesale importer and supplier of textile products. The company has established itself as a vital link in the garment manufacturing supply chain in Maharashtra by providing a timely and reliable bulk supply of fabrics to garment vendors. Specializing in both cotton and man-made fabrics, NAPS Global India sources its products primarily from China and Hong Kong. This strategic positioning enables the company to serve a diverse clientele across India, catering to the high-volume demands of the textile and apparel sectors.

As global apparel markets continue to evolve, the reliability of supply chains has become a cornerstone of competitive advantage. In this context, NAPS Global India plays a critical role by ensuring that garment manufacturers have access to quality textiles at competitive prices. The company’s focus on maintaining strong relationships with suppliers in key textile hubs and its commitment to efficient logistics have allowed it to carve out a niche in a highly competitive market.

2. IPO Details and Structure

NAPS Global India Limited is making its public debut through an IPO structured as a Fixed Price Issue. The details of the IPO are as follows:

• Issue Amount: ₹11.88 Crores
• Type of Issue: Entirely Fresh Issue of 13.20 Lakh Shares
• Subscription Period: Opens on March 4, 2025, and closes on March 6, 2025
• Expected Allotment Date: On or about Friday, March 7, 2025
• Listing Platform: BSE SME
• Tentative Listing Date: On or about Tuesday, March 11, 2025
• Share Price: Set at ₹90 per equity share
• Market Capitalisation at IPO Price: ₹39.87 Crores
• Lot Size: 1,600 shares
• Minimum Investment: Retail investors need to invest a minimum of ₹1,44,000; High-Net-Worth Individuals (HNIs) must invest at least 2 lots (6,000 shares) totaling ₹2,88,000

The IPO is managed by Aryaman Financial Services Limited as the book running lead manager, with Cameo Corporate Services Limited serving as the registrar and Aryaman Capital Markets Limited acting as the market maker. These institutions have been chosen for their expertise and established track records in handling similar offerings in the financial markets.

IPO Objectives

The net proceeds from the IPO are targeted towards:

1. Funding Working Capital Requirements: Approximately ₹919.00 Lakhs
2. General Corporate Purposes: Approximately ₹169.00 Lakhs

These objectives indicate that the funds raised will primarily support the operational expansion of the company, particularly in enhancing its working capital to meet the growing demands of the garment manufacturing sector and supporting general corporate activities.

3. Business Model and Operational Strengths

NAPS Global India Limited’s core business revolves around importing and distributing a diverse range of textile products. The company deals in multiple categories of fabrics, which include:

• Cotton Fabrics: Essential for a variety of apparel, cotton remains one of the most widely used materials due to its comfort, breathability, and versatility.
• Man-Made Fabrics: These include synthetic fibers that are valued for their durability, wrinkle resistance, and cost-effectiveness.
• Other Specialty Fabrics: The company also imports super-soft velvet, knitted fabrics, and linen, catering to niche segments within the textile industry.

Role in the Supply Chain

By specializing in the wholesale import of textiles, NAPS Global India plays an indispensable role in Maharashtra’s garment manufacturing ecosystem. The company ensures that large volumes of textiles are available to manufacturers in a timely manner, which is critical for maintaining smooth production processes and meeting tight delivery schedules. Its ability to source fabrics efficiently from China and Hong Kong — regions known for their textile production capabilities — provides it with a competitive edge in terms of quality and cost.

4. Management Team and Leadership

The success of NAPS Global India is largely attributed to its experienced leadership, which has a proven track record in the textile and trading sectors. The key promoters include:

• Pankaj Jain (Chairman & MD): With over a decade of experience in garment and textile trading, Mr. Jain brings deep industry insights and strategic vision to the company. His expertise is critical in navigating the complexities of international sourcing and ensuring robust supply chain management.

• Ronak Mistry (Whole-time Director & CFO): Mr. Mistry’s strong background in financial management and business expansion has been instrumental in driving the company’s growth. His role involves overseeing financial planning, ensuring effective capital allocation, and supporting the company’s strategic initiatives.

The leadership’s focus on building a resilient business model and their ability to adapt to market changes have been key factors in the company’s steady growth over the years.

5. Financial Performance Overview

An examination of the company’s financials reveals a consistent upward trend in revenues, profitability, and operational efficiency:

Revenue Growth

For the period ended on December 31, 2024, the company reported the following revenues from operations:

• Dec 31, 2024: ₹5,283.38 Lakh
• Fiscal 2024: ₹4,788.30 Lakh
• Fiscal 2023: ₹2,600.75 Lakh
• Fiscal 2022: ₹1,348.42 Lakh

These figures illustrate a robust growth trajectory, highlighting the company’s ability to scale its operations in line with market demand.

EBITDA and Profitability

The EBITDA figures for the corresponding periods are as follows:

• Dec 31, 2024: ₹210.60 Lakh
• Fiscal 2024: ₹188.55 Lakh
• Fiscal 2023: ₹54.20 Lakh
• Fiscal 2022: ₹40.20 Lakh

Profit After Tax (PAT) has also shown consistent improvement:

• Dec 31, 2024: ₹153.43 Lakh
• Fiscal 2024: ₹145.22 Lakh
• Fiscal 2023: ₹27.17 Lakh
• Fiscal 2022: ₹18.26 Lakh

The steady growth in EBITDA and PAT reflects the company’s improving operational efficiency and its ability to convert revenues into profits even as it scales up its business.

Earnings Per Share and Valuation Metrics

A key area of focus for IPO investors is the company’s Earnings Per Share (EPS) and related valuation metrics:

• Pre-Issue EPS for FY24: ₹6.96
• Post-Issue EPS for FY24: ₹3.28

The dilution resulting from the IPO leads to a significant drop in EPS, which in turn affects the valuation:

• Pre-Issue P/E Ratio: 12.93x
• Post-Issue P/E Ratio: 27.45x
• Industry P/E Ratio: Approximately 15x

Other important metrics include:

• Return on Capital Employed (ROCE): 47.47%
• Return on Equity (ROE): 59.14%
• Return on Net Worth (RoNW): 38.15%

Additionally, the annualised EPS based on the latest financial data stands at ₹6.57, with a PE ratio of 13.69x. While these numbers indicate solid performance, the post-issue valuation (with a P/E ratio of 27.45x) appears significantly higher compared to industry benchmarks. This discrepancy suggests that the IPO is fully priced, leaving little room for attractive entry points for new investors.

6. IPO Valuation and Investment Recommendation

Despite the strong operational and financial performance of NAPS Global India Limited, the key valuation metrics post-issue suggest that the IPO is fully priced. The dilution effect—reducing EPS from ₹6.96 to ₹3.28—pushes the P/E ratio well above the industry average. When compared to the industry P/E of 15x, the post-issue P/E ratio of 27.45x signals a premium valuation.

Key Points in Valuation Analysis:

• High Post-Issue P/E Ratio: At 27.45x, it exceeds typical industry norms, implying that the shares may be overvalued at launch.
• Dilution Impact: The significant drop in EPS post-issue reduces the earnings attractiveness of the stock.
• Market Capitalisation: While the IPO sets the market cap at approximately ₹39.87 Crores, this figure does not justify the premium valuation given the current growth and profitability metrics.
• Grey Market Premium (GMP): The GMP is expected to be ₹0, indicating that there is no speculative premium building up in the grey market prior to the listing.

Based on these observations, expert analysis and market sentiment suggest that investors should exercise caution. The high valuation makes it challenging to achieve listing gains or long-term capital appreciation. Consequently, the consensus is to avoid the NAPS Global India IPO for both short-term trading and long-term investment purposes.

7. Subscription Dynamics and Market Sentiment

Initial subscription trends provide a snapshot of market appetite for the IPO. As of 05:30 PM on March 4, 2025, the live subscription status indicates that the IPO is subscribed 0.21 times on its first day. This modest subscription level reflects cautious investor sentiment, likely driven by the high valuation and the fully priced nature of the offering.

The subdued subscription response is a critical indicator. It suggests that, despite the company’s strong fundamentals and growth prospects in the textile supply chain, the premium pricing may deter potential investors who are seeking more value-oriented opportunities.

8. Use of Proceeds and Strategic Objectives

The proceeds from the NAPS Global India IPO are earmarked for:

1. Working Capital Requirements: ₹919.00 Lakhs to support day-to-day operational needs and ensure smooth liquidity management.
2. General Corporate Purposes: ₹169.00 Lakhs to fund various strategic initiatives and corporate expenses.

The allocation of funds underscores the company’s intention to strengthen its operational base and support future growth in a sector that is critical to the garment manufacturing ecosystem. However, the reliance on working capital and general corporate purposes suggests that the funds are being used for routine business needs rather than transformative investments, which might limit the potential for rapid growth in shareholder value.

9. Risk Factors and Industry Considerations

While NAPS Global India operates in a robust sector with a vital role in the textile and garment supply chain, several risk factors merit consideration:

Market Competition

The wholesale textile import sector is highly competitive, with numerous players vying for market share. Intense competition can pressure margins and impact profitability.

Supply Chain Disruptions

Given that the company sources textiles primarily from China and Hong Kong, any disruptions in global supply chains, such as geopolitical tensions or trade restrictions, can adversely affect its operations.

Dependence on the Garment Industry

The company’s business model is closely tied to the health of the garment manufacturing sector in Maharashtra and across India. Economic downturns or shifts in consumer demand in the apparel market could impact demand for textiles.

Currency Fluctuations

As an importer, NAPS Global India is exposed to fluctuations in foreign exchange rates, which can affect the cost of procurement and, ultimately, profitability.

Valuation Risk

The fully priced nature of the IPO, reflected in the elevated post-issue P/E ratio, poses a significant risk for investors. Should market conditions change or if growth does not meet expectations, the stock could experience a correction, leading to losses.

10. Conclusion and Final Recommendation

NAPS Global India Limited is a well-established player in the textile import and wholesale distribution market. With a strong operational footprint, a strategic location in Mumbai, and a key role in supporting Maharashtra’s garment manufacturing supply chain, the company demonstrates solid fundamentals. The management team, led by experienced promoters Pankaj Jain and Ronak Mistry, has steered the company through steady revenue growth and improved profitability over the past few fiscal years.

However, despite these operational strengths and a consistent growth trajectory, the valuation metrics post-IPO suggest that the offering is fully priced. The dilution effect significantly impacts EPS, pushing the post-issue P/E ratio to 27.45x—substantially higher than the industry average of 15x. Combined with the initial low subscription level (0.21 times on the first day) and a Grey Market Premium of ₹0, these factors indicate a lack of strong investor enthusiasm.

Final Thoughts:

• For Short-Term Traders: The fully priced nature of the IPO, along with limited upside potential, means that short-term listing gains are unlikely. The absence of a speculative premium in the grey market further underscores this point.

• For Long-Term Investors: While the company has a solid business model and steady financial performance, the current valuation does not offer an attractive entry point. The high post-issue P/E ratio and associated dilution risk mean that long-term capital appreciation is uncertain, and investors may face limited returns relative to the risks involved.

Given these considerations, the consensus recommendation is to avoid investing in the NAPS Global India IPO for both short-term trading gains and long-term investment purposes. Investors are advised to look for alternative opportunities within the textile or related sectors where the valuation multiples are more attractive and offer a better risk-reward balance.

11. Strategic Takeaways for Investors

• Operational Strength: NAPS Global India plays a crucial role in the textile supply chain, ensuring timely bulk supplies for garment manufacturers—a key advantage in a thriving industry.
• Financial Growth: The company has shown consistent growth in revenues and profitability, reflecting strong market demand and effective management.
• Valuation Concerns: Despite solid fundamentals, the dilution of EPS and the resulting high post-issue P/E ratio suggest that the IPO is fully priced, leaving little margin for upside.
• Market Sentiment: The initial low subscription level indicates cautious investor sentiment, reinforcing the notion that the offering may not attract significant buying interest upon listing.

12. Final Recommendation

For investors evaluating opportunities in the textile and garment sectors, it is essential to prioritize offerings that provide a clear margin of safety and attractive valuation multiples. Although NAPS Global India has commendable operational credentials and a solid business model, the fully priced nature of its IPO makes it less compelling compared to other potential investments in the market.

Investors are advised to avoid the NAPS Global India Limited IPO as the current valuation does not justify the potential risks. Those interested in the textile import space should continue monitoring the market for opportunities where the entry price is more aligned with the company’s growth prospects and industry benchmarks.

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