Premium Plast Limited, a prominent name in the manufacturing of plastic components and parts for industries such as Automotive, Industrial, Electrical, and Specialized Packaging, is set to launch its IPO on October 21, 2024. The company’s journey, which began in May 1995 in Mumbai, has seen significant growth, evolving from producing just two components to manufacturing over 600 components at two strategic locations. Now, the company is tapping into the public market with a Fresh Issue of 53.46 Lakh Shares, amounting to ₹26.19 Crores.

Key IPO Details:

The Premium Plast IPO is entirely a Book Built Issue, consisting of fresh shares aimed at expanding the company’s existing operations. Investors can subscribe to the issue from October 21, 2024, to October 23, 2024, with the shares likely to be listed on the NSE SME platform on October 28, 2024. The price band has been set between ₹46 to ₹49 per equity share, and the minimum lot size is 3,000 shares.

For retail investors, the minimum investment is ₹1,47,000, while High-Net-Worth Individuals (HNIs) are required to purchase at least 2 lots (6,000 shares), amounting to an investment of ₹2,94,000.

Grey Market Premium (GMP) and Subscription Insights:

As of now, there’s no significant trading of the Premium Plast shares in the Grey Market Premium (GMP), which indicates 0% potential listing gains. However, it's important to note that the GMP market is unofficial and often speculative. Investors should focus on the company's financial performance and IPO fundamentals rather than relying on grey market trends.

Premium Plast IPO Objectives:

The proceeds from the Premium Plast IPO will be used to further the company’s operational capabilities. Specifically, the company plans to:

  ▪ Utilize ₹1,655.44 Lakhs for the expansion of its existing manufacturing facility in Pithampur, Madhya Pradesh, and the purchase of new machinery.

  ▪ Allocate ₹104.4 Lakhs for setting up a rooftop on-grid solar power plant at the Pithampur facility to reduce energy costs.

  ▪ Set aside ₹223.12 Lakhs for prepayment or repayment of certain outstanding borrowings.

  ▪ The remainder will be used for general corporate purposes and offer-related expenses.

Financial Performance:

The company's financial metrics show steady growth:

  ▪ Revenue from operations for the fiscal years 2024, 2023, and 2022 were ₹4,670.59 lakhs, ₹4,404.83 lakhs, and ₹3,104.78 lakhs respectively.

  ▪ The EBITDA for these years was ₹645.33 lakhs (FY24), ₹220.77 lakhs (FY23), and ₹97.23 lakhs (FY22).

  ▪ The Profit after Tax (PAT) for the same periods was ₹477.55 lakhs (FY24), ₹159.32 lakhs (FY23), and ₹77.70 lakhs (FY22).

The company's pre-issue EPS (Earnings Per Share) stands at ₹10.03, with a P/E ratio of 4.88x pre-issue and 19.6x post-issue, while the industry P/E ratio is 40.45x, positioning this IPO attractively in terms of valuation. Return on Capital Employed (ROCE) for FY24 was 28.01%, and Return on Equity (RoE) was 28.90%, indicating strong profitability.

IPO Allotment and Listing:

The allotment date is set for October 24, 2024, and investors can check their IPO allotment status online on the BIGSHARE SERVICES PRIVATE LIMITED website. By entering your application number, PAN, or DP Client ID, you will be able to determine whether you’ve secured an allotment.

Investment Recommendation:

While Premium Plast's financial performance and profitability ratios suggest a solid foundation, we recommend caution for investors seeking listing gains due to the 0% Grey Market Premium. Long-term investors may find the company’s plans to expand its manufacturing capacity and reduce energy costs promising, but it's essential to assess personal risk appetite and consult with financial advisors before making investment decisions.

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