OBSC Perfection Limited stands out as a precision metal component manufacturer, offering a diversified range of high-quality engineered products across various industries. The company primarily caters to leading OEMs (Original Equipment Manufacturers) that supply components and parts to major automotive manufacturers in India. This article provides a detailed overview of the OBSC Perfection IPO, which is scheduled to open for subscription from October 22 to October 24, 2024. The IPO aims to raise ₹66.02 Crores through a fresh issue of 66.02 lakh shares.

The share price band for the OBSC Perfection IPO is set between ₹95 to ₹100 per equity share, with a minimum investment requirement of ₹1,20,000 for retail investors, necessitating a lot size of 1,200 shares. For High-Net-Worth Individuals (HNIs), the minimum investment is ₹2,40,000 for 2,400 shares. UNISTONE CAPITAL PRIVATE LIMITED serves as the book-running lead manager, while BIGSHARE SERVICES PRIVATE LIMITED acts as the registrar for the issue. Additionally, R. K. Stock Holding Private Limited will function as the market maker for this IPO.

As of October 24, 2024, the Grey Market Premium (GMP) for the OBSC Perfection IPO is anticipated to be ₹0, reflecting limited investor enthusiasm. It is essential to note that the GMP is influenced by demand and supply dynamics in an unregulated market and should be treated as an educational reference rather than a definitive indicator of listing gains.

Subscription Status and Anchor Investors

On its final subscription day, the OBSC Perfection IPO reported a subscription rate of 15.46 times, indicating moderate interest from investors. The company raised ₹18.79 Crores from anchor investors at a price of ₹110 per share, allocating 18,79,200 equity shares to them. This allocation is crucial for establishing institutional support prior to listing.

Allotment and Use of Proceeds

The allotment for the OBSC Perfection IPO is expected to be finalized on October 25, 2024, with shares likely to be listed on the NSE SME around October 29, 2024. The proceeds from the fresh issue will be allocated to various projects, including:

1. Funding capital expenditure for machinery at their existing manufacturing facility (“Unit III”) in Tamil Nadu: ₹1,542.00 Lakhs.
2. Funding capital expenditure for machinery at their existing manufacturing facility (“Unit IV”) in Maharashtra: ₹1,517.00 Lakhs.
3. Working capital requirements of the company: ₹1,666.00 Lakhs.
4. General corporate purposes.

Financial Performance

Reviewing the company's financial performance provides valuable insights into its operational effectiveness. For the five-month period ending August 31, 2024, OBSC reported revenues from operations of ₹5,700.15 Lakhs and an EBITDA of ₹1,031.99 Lakhs. The profit after tax during the same period reached ₹603.05 Lakhs. For the fiscal years 2024, 2023, and 2022, the revenue figures were ₹11,611.41 Lakhs, ₹9,691.03 Lakhs, and ₹5,672.42 Lakhs, respectively.

In terms of valuation, the company offers a pre-issue EPS of ₹6.84 and a post-issue EPS of ₹4.99. The pre-issue P/E ratio stands at 14.61x, while the post-issue P/E ratio is 20.04x, compared to an industry average of 40.45x. Furthermore, the company’s Return on Capital Employed (ROCE) for FY24 is 31.49%, and its Return on Equity (RoE) is 40.61%, suggesting a reasonable valuation relative to industry standards.

Investment Recommendation

Considering the financial performance and current market conditions, we recommend investors to exercise caution regarding the OBSC Perfection Limited IPO. The lack of Grey Market Premium and moderate subscription rates suggest that the stock may not offer substantial listing gains or long-term investment benefits. Therefore, investors looking for short-term opportunities might want to avoid this IPO for now.

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This article aims to provide comprehensive insights into the OBSC Perfection IPO, empowering investors to make informed decisions based on current market trends and company performance.