Divyadhan Recycling Industries Limited (DRIL) is preparing to launch its Initial Public Offering (IPO), targeting investors with its promise of premium-quality recycled fibers for various applications. Founded by experienced executives from the textile industry, DRIL aims to establish a state-of-the-art manufacturing unit that adheres to high-quality standards often lacking in the Indian recycled market. The company has carved a niche as a leading supplier of fiber for fiber-fill and carpet yarn applications.

IPO Details and Subscription

The DRIL IPO is a Book Built Issue amounting to ₹24.16 crores, comprising entirely of a Fresh Issue of 37.76 lakh shares. The subscription period runs from September 26 to September 30, 2024, with an expected allotment date of October 1, 2024, and shares set to list on the NSE SME on October 4, 2024.

The share price band is set between ₹60 and ₹64, and the minimum lot size for retail investors is 2,000 shares. Consequently, retail investors are required to invest a minimum of ₹1,28,000, while High-Net-Worth Individuals (HNIs) must invest a minimum of ₹2,56,000 for 2 lots (4,000 shares).

NARNOLIA FINANCIAL SERVICES LIMITED serves as the book-running lead manager, SKYLINE FINANCIAL SERVICES PRIVATE LIMITED is the registrar for the issue, and Kantilal Chhaganlal Securities Private Limited is the market maker for DRIL.

Grey Market Premium and Subscription Status

As of September 30, 2024, the Grey Market Premium (GMP) for DRIL shares is reported to be ₹0, indicating a lack of demand based on the company's financial performance. It's essential to note that the GMP relies on unregulated demand and supply and should be viewed with caution.

The live subscription status shows that the DRIL IPO has been subscribed 37.97 times on its third day of the subscription period, which reflects a significant interest from investors.

Anchor Investors Report

Divyadhan Recycling Industries has successfully raised ₹6.84 crores from anchor investors at a price of ₹64 per share. The company allocated 10,70,000 equity shares to these investors, indicating confidence in the company's future potential.

How to Check Allotment Status

The allotment date for the DRIL IPO is October 1, 2024. Investors can check their allotment status by following these steps:

Go to the IPO allotment status page.

Select Divyadhan Recycling Industries Limited IPO from the dropdown.

Enter your application number, PAN, or DP Client ID.

Submit the details to check your allotment status.

Objectives of DRIL IPO

Proceeds from the DRIL IPO will be utilized for several key objectives, including:

₹1,703.71 lakhs for capital expenditure.

General corporate purposes.

Covering issue expenses.

Financial Performance

DRIL has demonstrated a relatively stable financial performance over the last three fiscal years:

Fiscal 2024: Revenue of ₹5,912.88 lakhs, EBITDA of ₹570.18 lakhs, and Profit After Tax of ₹237.80 lakhs.

Fiscal 2023: Revenue of ₹5,815.51 lakhs, EBITDA of ₹506.67 lakhs, and Profit After Tax of ₹216.18 lakhs.

Fiscal 2022: Revenue of ₹5,981.52 lakhs, EBITDA of ₹289.64 lakhs, and Profit After Tax of ₹52.91 lakhs.

Valuation Metrics

For the DRIL IPO, the pre-issue EPS stands at ₹2.41, while the post-issue EPS is expected to be ₹1.66. The pre-issue P/E ratio is 26.55x, and the post-issue P/E ratio is 38.50x. The company's ROCE for FY24 is reported at 20.76%, and the ROE is 18.42%, which suggests that the IPO is fully priced relative to its market performance.

Investment Recommendation

Given the GMP indicating 0% potential gains, alongside the fully priced metrics, we advise investors to avoid the Divyadhan Recycling Industries Limited IPO for both listing gains and long-term investment opportunities.

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