Review By on September 26, 2020
The Lead Manager Gretex Corporate Services Pvt. Ltd. first made the announcement in media for the public issue of 506000 shares at Rs.160 per share with a market lot of 1000 shares. As the market lot was wrong, it modified the issue size to 508800 shares to match market lots mathematics and also reduced the price from Rs. 160 to Rs. 159 to match the final amount based on revised equity shares numbers. Thus lead manager garbled on many counts.
G M Polyplast Ltd. (GMPL) is in the business of manufacturing of H.I.P.S, A.B.S & P.E.T sheets, along with sheets it also manufactures the raw material used to manufacture the sheets called as granules. The company is known in the industry for manufacturing and supplying of high-grade Sheets and Granules in India. It has been keeping pace with modernization in all spheres of development, manufacturing, and marketing, emphasis on product quality & client satisfaction. A professional approach and constant interaction ensure client requirement is met with a high standard within the agreed guideline of time and cost. Its impressive growth has been largely due to confidence in its own capability and impressive infrastructure it has created over the years.
GMPL has been steadily diversifying as well as adding new products to its portfolio, besides adding additional infrastructure for increasing its manufacturing capability for its existing products. Its product range includes Acrylonitrile Butadiene Styrene (ABS) Plastic Sheets, High Impact Polystyrene (HIPS) Sheets, PET (Polyethylene Terephthalate) Sheets / Rolls, Amorphous Polyethylene Terephthalate (A-PET) Sheet, Recycled Polyethylene Terephthalate (R-PET) Sheet, HDPE (High-Density Polyethylene) Sheets / Rolls, PP (Polypropylene) Sheets / Rolls, Electrostatic discharge materials (ESD materials).
To meet its plans for working capital (Rs.3.70 cr.) and general corpus fund (Rs. 1.18 cr.) needs, GMPL is coming out with a maiden combo IPO of 508800 equity shares of Rs.10 each at a fixed price of Rs. 159 per share to mobilize Rs. 8.09 cr. The issue consists of fresh equity issue of 322800 equity shares (Rs. 5.13 cr.) and offer for sale of 186000 equity shares (Rs. 2.96cr.). The issue opens for subscription on September 30, 2020, and will close on October 06, 2020. Minimum application is to be made for 800 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME platform.
The issue constitutes 26.46% of the post issue paid-up capital of the company. The company will be spending Rs. 0.25 cr. (for Rs. 5.13 cr. fresh issue) and Rs. 0.40 cr. for the entire IPO process. The issue is solely lead managed by Gretex Corporate Services Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Gretex Share Broking Pvt. Ltd. is acting as a Market Maker for this company. Having raised entire equity so far at par, GMPL issued bonus shares in the ratio of 15 shares for 1 share held in June 2020.
The average cost of acquisition of shares by the promoters is Rs. 0.63 per share. Post issue, GMPL's current paid-up equity capital of Rs. 1.60 cr. will stand enhanced to Rs. 1.92 cr. With this IPO, the company is looking for a market cap of Rs. 30.72 cr.
On the financial performance front, for the last three fiscals, GMPL has posted turnover/net profits of Rs. 55.51 cr. / Rs. 0.92 cr. (FY18), Rs. 68.35 cr. / Rs. 1.38 cr. (FY19) and Rs. 63.43 cr. / Rs. 2.32 cr. (FY20). While the company has suffered a setback in top line for FY20, it has maintained growth in bottom lines for all these three fiscals.
For the last three fiscals, GMPL has posted an average EPS of Rs. 11.31 and an average RoNW of 26.28%. The issue is priced at a P/BV of 3.22 on the basis of its NAV of Rs. 49.64 as on March 31, 2020, and at a P/BV of 2.35 on the basis of post-issue NAV of Rs. 68.03.
If we attribute FY20 earnings on fully diluted post issue equity, then asking price is at a P/E of around 13.25, making it a reasonably priced offer.
As per offer documents, GMPL has shown Axel Poly, Supreme Ind. and Astral Poly as its listed peers. They are currently trading at a P/Es of around 00, 37.6 and 89.71. (As on September 25, 2020). However, they are strictly not comparable on an apple to apple basis.
On merchant banker's performance front, this is the 11th mandate from its stable in the last three fiscals. Out of last 10 listings, 1 opened at discount, 1 at par and the rest at premiums ranging from 1.32% to 7.64% on the day of listing.
Review By on September 26, 2020
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of GM Polyplast Ltd. offers an early investment opportunity in GM Polyplast Ltd.. A stock market investor can buy GM Polyplast IPO shares by applying in IPO before GM Polyplast Ltd. shares get listed at the stock exchanges. An investor could invest in GM Polyplast IPO for short term listing gain or a long term.
Read the GM Polyplast IPO recommendations by the leading analyst and leading stock brokers.
GM Polyplast IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the GM Polyplast IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is GM Polyplast IPO?"
Our recommendation for GM Polyplast IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the GM Polyplast IPO.
The GM Polyplast IPO allotment status will be available on or around October 9, 2020. The allotted shares will be credited in demat account by October 13, 2020. Visit GM Polyplast IPO allotment status to check.
