Euro Pratik IPO review (Not Rated)

•    The company is engaged in an asset light business of decorative wall panel and laminates.
•    It has increased its dealer network that has resulted in higher top and bottom lines for FY25.
•    Based on its recent financial data, the IPO appears fully priced.
•    It is operating in a highly competitive and fragmented segment.
•    Well-informed investors may park moderate funds for long term.

ABOUT COMPANY:
Euro Pratik Sales Ltd. (EPSL) operates in the decorative wall panel and decorative laminates industry as a seller and marketer of Decorative Wall Panels and Decorative Laminates. According to the Technopak Report, it is one of India’s leading Decorative Wall Panel brands and have established itself as one of the largest organized Wall Panel brands with a market share of 15.87% by revenue in the organized Decorative Wall Panels industry and total revenue from the Decorative Wall Panels sold during Fiscal 2023. 

It develops differentiated design templates for Decorative Wall Panels and Decorative Laminates which are tailored to meet contemporary architectural and interior design trends, resulting in identification as product innovators for products like Louvres, Chisel and Auris at India Coverings Expo from 2019 to 2022 (Source: Technopak Report). EPSL study, identify and understand industry trends, the potential product requirements of consumers and focus on delivering a compelling product portfolio that resonates with diverse market segments. The company has created its “Euro Pratik” and “Gloirio” brands. Its merchandising approach focuses on meeting the requirements of consumers while being cognizant of product design, placement and marketing capabilities. Over the last seven years, it has introduced a diversified product portfolio which has enabled the company to create a distinct market in the Decorative Wall Panels and Decorative Laminates industries catering to various segments, including residential, and commercial applications. 

As at March 31, 2025, EPSL offered consumers a wide range of products in India, with over 30 product categories and over 3,000 designs (Source: Technopak Report). It operates as a fast-fashion brand in the Decorative Wall Panels and Decorative Laminates industries in India with over 113 product catalogues (involving a combination of products and designs) launched in the last four years. The company offers a quality and eco-friendly alternative to traditional wall decoration products such as wallpaper, wood and paint. Its range of products competes with wallpaper products and premium wall paints in the Indian market by offering a durable and cost-effective product range (Source: Technopak Report.). Its products are anti-bacterial, antifungal, free from certain heavy metals such as lead and mercury, and are made from recycled and eco-friendly materials, offering greater environment consciousness than the substitutes in the Indian market such as wood and paint products (Source: Technopak Report).

EPSL manages the distribution of products through an established, extensive distribution network across 116 cities in India, as at March 31, 2025, which is distributed predominantly across Metros, Mini metros, Tier-I, Tier-II and Tier-III cities, enabling it to reach a broad spectrum of consumers and markets. As at March 31, 2025, the company managed a distribution network of 180 distributors across 25 states and five union territories in India, who connect it with several Retail Touchpoints (Source: Technopak Report). To create demand for products, it undertook strategic product placement and comprehensive marketing efforts by initially tapping into Metro cities, where it established its brand equity and created an extensive distribution network which it leveraged to engage with new distributors in other locations. Further, its distribution system enables reliable delivery of products to distributors and consumers across India and other countries. 

EPSL’s warehouses spread across approximately 194,877.50 square feet in Bhiwandi, Maharashtra, aid the stability of operations. Its warehouses are located near the Nhava Sheva port in Mumbai, which helps it with delivery of products to distributors. To further strengthen its brands, the company has engaged Hrithik Roshan, an established actor, as the brand ambassador for the products under the “Euro Pratik” brand. In similar vein, its Subsidiary Gloirio has engaged Kareena Kapoor Khan an established actress, as the brand ambassador for the products offered under the “Gloirio” brand. It operates on an asset-light business model by outsourcing manufacturing processes to contract manufacturing partners and have long-term arrangements with select global manufacturers which assists it in offering unique products. Once its manufacturing partners receive design templates, they produce the finished products in compliance with EOSL’s specifications and quality standards. 

During the Fiscal 2025, it worked with 36 contract manufacturers across countries including India, South Korea and China. It has increased scale of operations during the reported periods, on account of growth in sales in Fiscal 2023 and an increase in profitability in Fiscal 2024 and consolidation of similar businesses in Fiscal 2025 which was driven primarily by its Recent Acquisitions. As at March 31, 2025, it sold products to 180 distributors across 25 states and five union territories in India (Source: Technopak Report). In Fiscal 2024, it also began exporting products to over six countries across Asia and Europe and are actively sourcing and delivering products in Singapore, UAE, Australia, Bangladesh, Burkina Faso and Nepal. In order to continue to increase the scale of its business, the company will keep exploring organic or inorganic expansion into new markets with favorable demographics, market size and growth potential. 

The company increased contract manufacturers tally to 36 for FY25 against 12 for FY24, and 17 for FY23. The fall in contract manufacturers for FY24 resulted in lower top line, but due to introduction of new high margin products it marked increased bottom line and that trend continues. As of March 31, 2025, it had total 195 employees (including 102 contract workers).

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route secondary IPO of equity shares issue worth Rs. 451.31 cr. (approx. 18271862 shares at the upper cap). The company has announced a price band of Rs. 235– Rs. 247 per equity shares of Re. 1 each. The issue opens for subscription on September 16, 2025, and will close on September 18, 2025. The minimum application to be made is for 60 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 17.88% of the post-IPO paid-up equity capital. NO funds are going to company as this is a pure Offer for Sale (OFS), which is made for listing gains and providing exit to some of its stakeholders in part/full.

The company has reserved equity shares worth Rs. 1.40 cr. (approx. 56680 equity shares at the upper cap) for its eligible employees and offering them a discount of Rs. 13.00 per share. From the rest, it has allocated not more than 50% for QIBs, not less than 15% for HNIs, and not less than 35% for Retail investors.

The joint Book Running Lead Managers (BRLMs) to this issue are Axis Capital Ltd., and DAM Capital Advisors Ltd., while MUFG Intime India Pvt. Ltd., is the registrar to the issue. Sharekhan Ltd. is a syndicate member.

Having issued initial equity shares at par, the company issued further equity shares at a fixed price of Rs. 49 per share (based on Re. 1 FV), in March 2019. It has also issued bonus shares in the ratio of 4 for 1 in January 2024, and 7 for 2 in September 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 0.06, Rs. 0.37, and Rs. 0.38 per share. 

Post-IPO, its current paid-up equity capital of Rs. 10.22 cr. will remain same as this is a pure secondary issue. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 2524.34 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit, of Rs. 268.55 cr. / Rs. 59.57 cr. (FY23), Rs. 230.11 cr. / Rs. 62.91 cr. (FY24), and Rs. 291.52 cr. / Rs. 76.44 cr. (FY25). 

For the last three fiscals, the company has posted an average EPS of Rs. 6.80 and an average RoNW of 37.40%. The issue is priced at a P/BV of 10.77 based on its NAV of Rs. 22.94 as of March 31, 2025, as well as on post-IPO equity base (as this is a pure secondary issue).

If we attribute FY25 earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 33.02. Based on FY24 earnings, the P/E stands at 40.10. Thus, the issue is fully priced. 

While the company has not reported PAT margins it posted RoCE margins of 61.42%, (FY23), 55.17%, (FY24), 44.58% (FY25), for the reported periods.

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It has already adopted a dividend policy in November 2024, on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Greenlam Ind., Asian Paints, Berger Paints, and Indigo Paints as its listed peers. They are currently trading at a P/E of 189.0, 63.4, 53.8, and 37.9 (as of September xx, 2025). However, they are not truly comparable on an apple-to-apple basis. These compares appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
The two BRLMs associated with the offer have handled 58 pubic issues in the past three fiscals, out of which 12 issues closed below the offer price on the listing date.