Pyramid Technoplast IPO Review
Pyramid Technoplast IPO: A Review of the Industrial Packaging Company
 |
| blockchain053.blogspot |
Pyramid Technoplast Limited, an industrial packaging company that manufactures polymer-based molded products, is going public with its initial public offering (IPO) on August 18, 2023. The IPO will close on August 22, 2023, and the shares will be listed on BSE and NSE on August 30, 2023. In this blog post, we will review the company’s business, financials, valuation, risks, and prospects, and help you decide whether you should subscribe to the IPO or not.
What does Pyramid Technoplast do?
Pyramid Technoplast was incorporated in 1997 and started its commercial production in 1998. The company produces polymer-based molded products such as drums, carboys, jerry cans, intermediate bulk containers (IBC), and accessories. These products are mainly used by chemical, agrochemical, specialty chemical, and pharmaceutical companies for their packaging requirements. The company also manufactures mild steel (MS) drums for packaging and transport of chemicals.
The company has six manufacturing units located in Gujarat and Dadra and Nagar Haveli, with a total installed capacity of 20,612 metric tonnes per annum (MTPA) for polymer drums, 12,820 MTPA for IBC, and 6,200 MTPA for MS drums. The company is also constructing its seventh unit in Gujarat, which is expected to be operational by the second quarter of FY 2024.
The company has a diversified customer base of over 400 clients across various industries and segments. Some of the prominent customers include UPL Limited, Bayer CropScience Limited, BASF India Limited, Syngenta India Limited, Rallis India Limited, Coromandel International Limited, Atul Limited, Aarti Industries Limited, SRF Limited, and Lupin Limited.
The company has obtained UN certification outlined by United Nations Recommendation for IBC and MS Drums to meet safety levels. The manufacturing units are ISO 9001:2015/ ISO 14001:2015/ISO 45001:2018 certified by quality, environment, health, and safety management systems. The company’s MS drums also meet the quality standards as per IS 1783:2014 (Part 1 and 2) laid down by Bureau of Indian Standards.
How has Pyramid Technoplast performed financially?
Pyramid Technoplast has shown consistent growth in its revenue and profitability over the past three years. The company’s revenue increased from Rs 314 crore in FY 2021 to Rs 480 crore in FY 2023, registering a compound annual growth rate (CAGR) of 23.7%. The company’s earnings before interest and tax (EBIT) grew from Rs 25 crore in FY 2021 to Rs 45 crore in FY 2023, with a CAGR of 32.9%. The company’s profit after tax (PAT) rose from Rs 17 crore in FY 2021 to Rs 32 crore in FY 2023, with a CAGR of 36.7%.
The company’s return on equity (ROE) and return on capital employed (ROCE) were also impressive at 33.1% and 21.3%, respectively, for the three-year average period ending FY 2023. The company’s EBIT margin improved from 8.1% in FY 2021 to 9.4% in FY 2023. The company’s debt-to-equity ratio was reduced from 1.1 in FY 2021 to 0.5 in FY 2023.
What are the details of Pyramid Technoplast IPO?
The IPO of Pyramid Technoplast is a mix of fresh issue and offer for sale (OFS). The fresh issue comprises of issuing new shares worth Rs 91.30 crore, while the OFS consists of selling existing shares worth Rs 61.75 crore by the promoter Credence Financial Consultancy LLP. The total issue size is Rs 153.05 crore at the upper price band.
The price band of the IPO is Rs 151 to Rs 166 per share, with a face value of Rs 10 per share. The lot size is 90 shares and the minimum order quantity is one lot. The IPO will be open for subscription from August 18 to August 22, and the allotment will be finalized on August 25. The refunds will be initiated on August 28 and the shares will be credited to the demat accounts of the allottees on August 29. The listing date is expected to be August 30.
The IPO is reserved as follows: not more than 30% for qualified institutional buyers (QIBs), not less than 20% for non-institutional investors (NIIs), and not less than 50% for retail investors.
The company has raised Rs 27.55 crore from four anchor investors by allocating 16,59,600 equity shares at Rs 166 per share. The anchor investors include Carnelian Structural Shift Fund, the Alchemie Ventures Fund, the Pluris Fund, and the Resonance Opportunities Fund.
How is Pyramid Technoplast valued?
At the upper price band of Rs 166 per share, Pyramid Technoplast is valued at a price-to-earnings (P/E) ratio of 19.2 and a price-to-book (P/B) ratio of 3.1, based on the FY 2023 earnings and net worth. These ratios are lower than the median P/E and average P/B of its peers, which are 23.9 and 4.1, respectively.
The peers of Pyramid Technoplast include Time Technoplast Limited, TPL Plastech Limited, and Mold-Tek Packaging Limited. These companies have a three-year average ROE of 14.7%, 10.8%, and 18.5%, respectively, and a three-year average ROCE of 15.4%, 12.2%, and 20.7%, respectively. These figures indicate that Pyramid Technoplast has superior profitability and efficiency compared to its peers.
What are the risks and challenges for Pyramid Technoplast?
Pyramid Technoplast faces some risks and challenges that may affect its business and performance in the future. Some of these are:
The company operates in a highly competitive industry and faces competition from new entrants as well as existing players. The company may lose its market share or face pricing pressure if it fails to maintain its product quality, customer service, innovation, and cost efficiency.
The company depends on the growth and demand of the end-user industries such as chemical, agrochemical, specialty chemical, and pharmaceutical sectors. Any slowdown or disruption in these sectors due to economic, regulatory, environmental, or other factors may adversely impact the company’s sales and profitability.
The company is subject to fluctuations in the prices and availability of raw materials such as polymers, steel, and other components. The company may not be able to pass on the increased costs to its customers or may face lower margins if it does so.
The company is subject to various laws and regulations related to environmental protection, quality standards, safety measures, labor laws, taxation, etc. Any non-compliance or change in these laws and regulations may result in penalties, liabilities, or loss of reputation for the company.
The company has high trade receivables as a percentage of total assets, which averaged 39% over FY 2021-23. This indicates that the company has a long credit period for its customers or faces delays in collecting payments from them. This may affect the company’s liquidity and working capital management.
What are the prospects for Pyramid Technoplast?
Pyramid Technoplast has some positive factors that may support its growth and prospects in the future. Some of these are:
The company has a strong presence in the industrial packaging segment with a diversified product portfolio, customer base, and geographic reach. The company has a market share of around 10% in the polymer drum segment and around 15% in the IBC segment.
The company has established long-term relationships with its customers and has received repeat business from more than 376 customers in each of the last three years. The company also has strategic alliances with global players such as Mauser Group N.V., Greif Inc., Schutz GmbH & Co., KGaA, etc.
The company has a robust and expanding manufacturing base with six operational units and one under construction unit. The company also has a fleet of 51 trucks that enables on-time delivery of its products to its customers.
The company has demonstrated consistent growth in its revenue and profitability over the past three years with impressive margins and returns ratios. The company has also reduced its debt-to-equity ratio from 1.1 in FY 2021 to 0.5 in FY 2023.
The company has a favorable valuation compared to its peers based on the P/E and P/B ratios. The company also offers a decent grey market premium (GMP) of Rs 28 per share as of today, indicating a positive sentiment among investors.
Conclusion
Pyramid Technoplast IPO is an attractive opportunity for investors who are looking for a well-established industrial packaging company with consistent growth, superior profitability, efficient operations, diversified product portfolio, loyal customer base, strategic location, favorable valuation, and positive GMP.
However, investors should also be aware of the risks and challenges that the company faces such as competition from new entrants, fluctuations in raw material prices, dependence on end-user industries’ growth and demand, regulatory compliance issues, and high trade receivables.
Therefore, investors should do their own research and analysis before subscribing to the IPO.
FAQ
Q: When is Pyramid Technoplast IPO opening and closing?
A: Pyramid Technoplast IPO is opening on August 18, 2023 and closing on August 22, 2023.
Q: What is Pyramid Technoplast IPO price band?
A:The price band of Pyramid Technoplast IPO is Rs 151 to Rs 166 per share, with a face value of Rs 10 per share. The lot size is 90 shares and the minimum order quantity is one lot. The total issue size is Rs 153.05 crore at the upper price band. You can apply for the IPO through your online broker or bank account, or through the ASBA (Application Supported by Blocked Amount) facility. You can also check the subscription status and allotment status of the IPO on the BSE website or the registrar’s website. Do you have any other questions about the IPO? 😊
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult with a professional financial advisor before making any investment decisions.
No comments