Sah Polymers Limited IPO Details
Sah Polymer Limited was incorporated in 1992 in Udaipur, Rajasthan. This company is led by Asad Daud, and professionally supported by Hakim Sadiq Ali Tidiwala as well as Murtaza Ali Moti is principally involved in the manufacturing and distribution of polypropylene (PP)or high density Polyethylene (HDPE) FIBC Bags Woven Sacks, HDPE/PP Woven Fabrics and other products that are of various dimensions, weights and colors as per customer specifications.
It has two divisions of business: (i) national sales in addition to, (ii) exports. Sah Polymers is present in five states as well as a union territory, with a manufacturing plant in Rajasthan. Sah Polymers exports its products to 14 countries, including Algeria, Togo, Ghana, Poland, Portugal, France, Italy, Dominican Republic, USA, Australia, UAE, Palestine, UK and Ireland. In the three months that ended on June 30th, 2022, and for Fiscal 2022, revenues from exports made up 57.61 percent and 55.14 percent, respectively of the total revenue from operations.
As per RHP, brief description of their product portfolio and application is as under:
Objective of the Issue
It is proposed that the Fresh Issue’s net proceeds be used as follows:
- ₹ 8.18 Crs will be used for setting up of a new manufacturing facility to manufacture new variant of Flexible Intermediate Bulk Containers (FIBC).
- ₹ 19.66 Crs will be used for repayment of certain secured and unsecured borrowings in full availed by the Company.
- ₹ 14.95 Crs will be used for funding the working capital requirements of the Company & for General Corporate purposes.
| Sah Polymers Limited IPO | Details |
|---|---|
| Price Band | ₹61 to ₹65 per share |
| Face Value | ₹ 10 per share |
| Issue Size | 66.30 Crs |
| Fresh Issue | 66.30 Crs |
| Opening Date | 30 Dec 2022 |
| Closing Date | 04 Jan 2023 |
| Allotment | 09 Jan 2023 |
| Initiation of Funds | 10 Jan 2023 |
| Credit to Demat | 11 Jan 2023 |
| Listing Date | 12 Jan 2022 |
| Pre Issue Share Holding | 100% |
| Post Issue Share Holding | 60.46% |
| 1 lot | 230 Shares (₹ 14,950/-) |
| Retail Quota | 10% |
| QIB Quota | 75% |
| NII Quota | 15% |
| Retail (Min) | 1 Lot (230 Shares ~ ₹ 14,950/-) |
| Retail (Max) | 13 Lots (2990 Shares ~ ₹ 1,94,350/-) |
| S-HNI (Min) | 14 Lots (3220 Shares ~ ₹ 2,09,300/-) |
| B-HNI (Min) | 67 Lots (15410 Shares ~ ₹ 10,01,650/-) |
| Promoters | Sat Industries Limited |
| Draft Red Herring Prospectus | DRHP |
| Red Herring Prospectus | RHP |
| Grey Market Premium | Click Here |
| Allotment Status | Check Here |
The Sah Polymer Limited IPO’s bid period is from Dec 30, 2022, at 10:00 A.M., to Jan 04, 2023, at 5:00 P.M. UPI Mandate confirmation must be received by 5 PM on the day the issue closes.
EBITDA & PAT (in Crs)
EBITDA– Earnings Before Interest Tax Depreciation & Amortization PAT – Profit After Tax
Total Assets, Share Capital and Borrowings (in Crs)
Revenue Growth (in Crs)
Peer Comparison
| Particulars | Sah Polymers Limited | Rishi Techtex Limited | Jumbo Bag Limited | SMVD Poly Pack Limited | EMMBI Industries Limited | Commercial Synbag Limited |
|---|---|---|---|---|---|---|
| Face Value | 10 | 10 | 10 | 10 | 10 | 10 |
| EPS | 2.81 | 1.78 | 1.27 | 2.11 | 10.76 | 15.48 |
| PE | 23.13 (taking 65 as the listing price) | 15.67 | 17.37 | 7.17 | 8.60 | 21.20 |
| RoNW% | 16.42 | 4.46 | 3.35 | 6.01 | 12.41 | 17.32 |
| Revenue from Operations (in ₹ Crs) | 805.11 | 1008.58 | 1305.65 | 862.41 | 4356.22 | 3215.80 |
| EBITDA Margin (%) | 9.61 | 6.29 | 7.50 | 8.11 | 11.29 | 10.85 |
| PAT Margin (%) | 5.43 | 1.30 | 0.81 | 1.21 | 4.37 | 5.65 |
| ROE | 16.42 | 17.83 | 3.35 | 4.65 | 12.41 | 0.20 |
| Debt to Equity Ratio | 1.15 | 0.98 | 2.61 | 1.40 | 0.94 | 0.69 |
Analysis:
If we analyse the financial parameters , then it can be clearly seen that the firm is on the growth path with both EBITDA and PAT increasing on year to year basis. Total assets of the company in comparison to its borrowings are continuously increasing on YOY bais. However, increasing debt consistently on YoY basis is a major concern. During FV 22, company’s PAT was approx 4.40 crores against the debt of 30.5 crores which is on the higher side. Also, debt to equity ratio of 1.15 simple depicts that its debts are not covered by its earnings. This is a major negative point for this IPO. Since, companies main product portfolio consists of manufacturing plastic packages for its customers so in future there might be risk associated if Govt. bans plastic packages. We have already seen banning of plastic packages in most of the western countries. Though firm’s revenue growth is good in the last 3 years.
Now moving to other financial parameters, if we take EPS as 2.81 as per RHP till March 2022, PE ratio as per the cut off listing price is coming around 23.13 which is on the higher side in comparison to its peers. This simply depicts that the IPO price is on the higher side but we cannot make any decision without considering other fundamental parameters.
RoNW of 16.42% if second highest in comparison to its peer companies. But if you compare its PAT Margin and EBITDA margin growth then it is second last in PAT margin and last in EBITDA magin in comparison to its peers. These parameters again pointing the balance on the negative side.
Since, the IPO is priced at a lower price band then it is possible to get some listing gains. However, due to current market conditions, grey market premium and subscription status should be checked on the second day before applying purely for listing gains. For long term, this IPO may be avoided.