Renol Poly NSE SME IPO review (May apply)

•    The company is engaged in manufacturing of colour masterbatches, pigments, and related products.
•    The company posted growth in its top lines for the reported periods.
•    Boosted profits from FY24 onwards raises eyebrows and concern over its sustainability.
•    Based on its recent financial data, the issue appears fully priced.
•    Well-informed/cash surplus investors may park moderate funds for medium term.

ABOUT COMPANY:
Renol Polychem Ltd. (RPL) is engaged in the manufacturing of colour masterbatches, colour pigment, filler granule, anti-moisture powder, carbon noodles, SuperPack & one pack, impact modifier, processing AID and titanium dioxide. It started operations/ business at Rajkot in 2008 and commenced its manufacturing operations in 2020. The Company also specializes in manufacturing of customized masterbatch and pigments to suit the specific requirements of customers/ manufacturers.

RPL is also providing solutions such as all-in-one additive containing stabilisers, impact modifier, colour pigments etc. to help the manufactures/ producers of UPVC, & CPVC pipes, Pipe fittings and manufacturing of other plastic products. The Company specializes in manufacturing of customized masterbatch and pigments to suit the specific requirements of customers/ manufacturers. The Company is also providing solutions such as all-in-one additive containing stabilisers, impact modifier, colour pigments etc. to help the manufactures/ producers of UPVC, & CPVC pipes, Pipe fittings and manufacturing of other plastic products. RPL is running its business on B2B basis and selling or distributing its products directly to business or manufacturing or commercial organizations manufacturing the end products using our products as raw materials.

The Company has started manufacturing in 2020 by purchasing machinery in July, 2020. After the purchase of machinery, it began the manufacturing of Super Pack & One Pack, Anti-Moisture Powder and Colour Pigment in August 2020. After some time, the company began manufacturing of Impact Modifier, Processing Aid, and Titanium Dioxide in September 2020. Further, achievement of manufacturing of said products, the Company commenced manufacturing of Filler Granules, Carbon Noodles and Colour Masterbatches in October 2020.

RPL is manufacturing and selling the manufactured products under its own brand i.e., ‘RENOL’, however the Company is not trading the products under its own brand, trading of products is made on “As it is basis”. As of the date of filing this offer document, it had 15 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 2454000 equity shares to mobilize Rs. 25.77 cr. at the upper cap. It has announced a price band of Rs. 100 – Rs. 105 per share of Rs. 10 each. The issue opens for subscription on July 31, 2025, and will close on August 04, 2025. The minimum number of shares to be applied is for 2400 shares and in multiples of 1200 shares, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 30.89% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 15.15 cr. for working capital, Rs. 5.60 cr. for capex on purchase of machinery, Rs. 1.00 cr. for repayment of certain borrowings, and the rest for general corporate purposes. 

The IPO is solely lead managed by Corporate Makers Capital Ltd., and Skyline Financial Services Pvt. Ltd., is the registrar to the issue. Asnani Stock Broker Pvt. Ltd. is a market maker, as well as a syndicate member. The issue is underwritten to the tune of 15% by Corporate Makers and to the tune of 85% by Asnani Stock Broker.

The company has issued entire initial equity shares at par value. It has issued further equity shares at Rs. 125 per share in February 2024, and March 2024. It has also issued bonus equity shares in the ratio of 51 for 10 in March 2024. The average cost of acquisition of shares by the promoters is Rs. 9.96, and Rs. 10.19 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 5.49 cr. will stand enhanced to Rs. 7.94 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 83.41 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 41.86 cr. / Rs. 0.73 cr. (FY23), Rs. 52.54 cr. / Rs. 3.95 cr. (for two broker periods of FY24), Rs. 62.56 cr. / Rs. 5.00 cr. (FY25). For 2 months period of FY26 ended on May 31, 2025, it earned a net profit of Rs. 1.14 cr. on a total income of Rs. 12.02 cr.

For the last three fiscals, the company has reported an average EPS of Rs. 4.41 (simple average) and an average RoNW of 48.11%. The issue is priced at a P/BV of 3.98 based on its NAV of Rs. 26.36 as of May 31, 2025, but its post-IPO NAV data is missing from offer documents.

If we attribute FY26 annualized super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 12.18. Based on FY25 earnings, the P/E stands at 16.69. Thus, the issue appears fully priced.

For the reported periods, the company has posted PAT margins of 1.75% (FY23), 5.26% (as of February 17, 2024), 23.78%, (As of March 31, 2024), 8.02% (FY25), 9.51% (2M-FY26), and RoCE margins of 33.07%, 106.11%, 38.29%, 64.18%, 11.38% respectively for the referred periods. 

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

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Multibase India, Captain Polyplast, R M Drip, as their listed peers. They are trading at a P/E of 23.2, 23.8, and 63.7 (as of July 25, 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:
This is the 4th mandate from Corporate Maker in the last two fiscals including the ongoing one.  Out of the last 3 listings, all listed at discount. It has a poor track record.