Premium Plast Ltd. has been a prominent player in the plastic components manufacturing sector since its inception in May 1995 in Mumbai. The company has grown from producing just two components to over 600 components across two strategic locations, specializing in a diverse range of products catering to various industries, including automotive, industrial, electrical, and specialized packaging.

The Premium Plast IPO is a book-built issue aiming to raise ₹26.19 Crores through a fresh issue of 53.46 Lakh Shares. The subscription period is from October 21, 2024, to October 23, 2024, with the allotment expected to be finalized on October 24, 2024. The shares are anticipated to be listed on the NSE SME with a tentative date of October 28, 2024.

The share price band for the Premium Plast IPO is set at ₹46 to ₹49 per equity share, with a minimum lot size of 3,000 shares. This translates to a minimum investment of ₹1,47,000 for retail investors, while High-Net-Worth Individuals (HNIs) must invest at least ₹2,94,000 for two lots (6,000 shares).

KHANDWALA SECURITIES LIMITED is the book-running lead manager for the IPO, with BIGSHARE SERVICES PRIVATE LIMITED serving as the registrar. Asnani Stock Broker Private Limited will act as the market maker.

Financial Overview:

As of October 23, 2024, the Grey Market Premium (GMP) for Premium Plast is expected to be ₹11, suggesting moderate demand for shares based on the company’s financial performance. However, it’s crucial to note that the Grey Market Premium can be volatile and should not be relied upon for price discovery.

On the final day of subscription, the Premium Plast IPO showed an impressive live subscription status of 36.96 times, reflecting strong investor interest.

Objectives of the IPO:

The funds raised from the fresh issue will be allocated to several key areas:

1. Expansion of the existing manufacturing facility in Pithampur, Madhya Pradesh, and purchasing new machinery, amounting to ₹1,655.44 Lakhs.
2. Funding capital expenditures for setting up a rooftop on-grid solar power plant at their existing manufacturing facility, totaling ₹104.4 Lakhs.
3. Prepayment or repayment of certain outstanding borrowings, amounting to ₹223.12 Lakhs.
4. General corporate purposes and offer-related expenses.

Company Performance:

For the three-month period ending June 30, 2024, Premium Plast reported revenues of ₹1,212.81 Lakhs. For the fiscal years 2024, 2023, and 2022, revenues stood at ₹4,670.59 Lakhs, ₹4,404.83 Lakhs, and ₹3,104.78 Lakhs, respectively. The EBITDA for the same period was ₹194.51 Lakhs, with a profit after tax of ₹141.16 Lakhs.

The company is offering shares at a pre-issue EPS of ₹10.03 and a post-issue EPS of ₹2.50. The pre-issue P/E ratio is 4.88x, and the post-issue P/E ratio is 19.6x, compared to an industry average P/E of 40.45x. The ROCE for FY24 is 28.01%, and the RoE stands at 28.90%, indicating that the IPO is priced reasonably.

Given the Grey Market Premium showing potential listing gains of 21%, this IPO may be attractive to risky investors seeking short-term gains. However, long-term investors may want to consider avoiding this IPO due to the volatility in the plastic components market.

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This article offers essential insights into the Premium Plast IPO, helping investors make informed decisions regarding their investments.