Glen Ind. BSE SME IPO review (May apply)

•    The company is engaged in the manufacturing and marketing of diverse range of food packaging and service products.
•    It marked growth in its top and bottom lines for the reported periods.
•    Boosted profits for FY24 onward raise eyebrows and concern over its sustainability as it is operating in a highly competitive and fragmented segment.
•    Based on recent set of financial performance, the issue appears fully priced. 
•    Well-informed/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Glen Industries Ltd. (GIL) is engaged in the manufacturing of diverse range of Food packaging and Service Products primarily Thin Wall Food Containers, Polylactic Acid (PLA) Straws and Paper Straws all mainly supplied to the Hotel, Restaurant, and Café/Catering (HoReCa) sector, Beverage industry and food packaging industry. Its extensive product line-up, available in various shapes and sizes, is widely favoured by sectors such as the HoReCa industry, Quick Service Restaurants (QSR), the food, beverage and dairy industry, etc. The Company was originally incorporated as “Glen Stationery Private Limited” for manufacturing all kinds of stationery and printing materials. In the year 2019 it commenced manufacturing operation of Thin Wall Food Containers with a production capacity of 195 MT/month and with constant expansion and up-gradation of technology, its capacity currently stands at 665 MT/month running at its maximum capacity. 

Company also diversified into manufacturing paper straws and PLA straws in the year 2019 with a modest capacity of 21.75 MT/month and 40.60 MT/month respectively. In the year 2022 it ventured into manufacturing of U shape straws for the beverage and dairy industry made from Paper and PLA. Present capacity of the PLA straws stands at 160 MT/month and for the paper straws capacity stands at 95 MT/month. The Company reaffirming its dedication to meeting the escalating domestic and international demand with the unveiling of an ambitious project—an advanced manufacturing facility in Dhulagarh, Howrah, West Bengal spanning nearly 90,000 square feet, this facility is poised to be a key asset, empowering the company to elevate its production capacity and fortify its competitive advantage. 

Its production facility is fully equipped with micro-processor controlled All Electric injection moulding machines imported from Japan and China. GIL’s cutting-edge facility is complemented by professional and experienced staff who play a significant role in maintaining the quality. Every stage of operation from inspection of raw materials to production line operations, from printing/labelling & packing to logistics is dominated by an uncompromising adherence to quality standards. Its product line-up is organized into two primary segments: a diverse range of Thin Wall Food Containers and a comprehensive selection of straws, including both PLA and Paper Straws. This structure allows it to focus on delivering high -quality solutions in each category, catering to the specific needs of customers. 

Customization on standardised products can be done by way of digital printing, shrink sleeving, dry offset printing, pad printing & screen printing. Its success is driven by a highly skilled workforce and a dynamic, experienced technical team, ensuring consistent, round-the-clock performance. The company maintains strict adherence to international hygiene standards and rigorous quality control measures, which, combined with its ability to meet every buyer's requirement, have enabled the company to surpass the competition and earn the trust of customers. With all operations housed under one roof, it maintains streamlined processes and a cohesive approach to delivering excellence.

It has been exporting products regularly to the Europe, USA, Australia, Middle East and Africa to name a few. GIL’s products are designed, developed and manufactured as per countries local use & preferences. Regular & repeated business from 25+ customers over the years speak volumes of its commitment towards quality & consistency. As of May 31, 2025, it had 306 employees on its payroll. It also hires contract workers as and when needed.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book-built route IPO of 6496800 equity shares of Rs. 10 each to mobilize Rs. 63.02 cr. The issue opens for subscription on July 08, 2025, and will close on July 10, 2025. The minimum number of shares to be applied is for 2400 shares and in multiples of 1200 shares, thereafter. The company has announced a price band of Rs. 92 – Rs. 97 per share. Post allotment, shares will be listed on BSE SME. The issue constitutes 27.00% of the post-IPO paid-up capital of the company. From the net proceeds of the fresh equity share issue, the company will utilize Rs. 47.73 cr. for capex on new manufacturing facility, and the rest for general corporate purposes. 

The company has reserved 153600 shares (worth Rs. 1.49 cr. at the upper cap) for its eligible employees and offering them a discount of Rs.5 per share. From the rest, it has allo0caed not more than 50% for QIBs, not less than 15% for HNIs, and not less than 35% for Retail investors.

The IPO is solely lead managed by GYR Capital Advisors Pvt. Ltd., and KFin Technologies Ltd., is the registrar to the issue. Giriraj Stock Broking Pvt. Ltd. is the market maker, and GYR Capital Advisors Pvt. Ltd. is a syndicate member, while Intellect Stock Broking Ltd. is a sub-syndicate member.

The company has issued entire initial equity shares at par value, and has issued further equity shares at a fixed price of Rs. 2024 per share in September 2020. It has also issued bonus shares in the ratio of 49 for 1 in December 2019, 1 for 1 in March 2022, and 16 for 1 in September 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 1.02, Rs. 1.67, Rs. 2.27, and Rs. 2.55 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 17.57 cr. will stand enhanced to Rs. 24.06 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 233.40 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. 119.59 cr. / Rs. 1.49 cr. (FY23), Rs. 145.22 cr. / Rs. 8.58 cr. (FY24), Rs. 171.28 cr. / Rs. 18.27 cr. (FY25). The company posted growth in its top and bottom lines for the reported periods. But the sudden boost in profits from FY24 onwards raise eyebrows and concern over its sustainability going forward. Debt-Equity ratio of 2.28 as of March 31, 20205 is at an alarming high.

For the last three fiscals, the company has reported on a simple average EPS of Rs. 6.97 and an average RoNW of 34.82%. The issue is priced at a P/BV of 2.92 based on its NAV of Rs. 33.23 as of March 31, 2025, but its post-IPO NAV data is missing from the offer document.

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 12.78. Based on FY24 earnings, the P/E stands at 27.17. The issue relatively appears fully priced. 

For the reported periods, the company has posted PAT margins of 1.25% (FY23), 5.94% (FY24), 10.70 times (FY25), and RoCE margins of 6.57%, 13.49%, 16.94%, respectively for the referred periods.

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has Rajshree Polypack as its listed peer. It is trading at a P/E of 25.6 (as of July 04, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
This is the 44th mandate from GYR Capital in the last five fiscals including the ongoing one.  From the last 10 listings, 1 listed at par and the rest with a premium ranging from 4.18% to 95.26%, on the listing date.