2022's last IPO: Sah Polymers issue open from today. Should you subscribe?

NEW DELHI: The Rs 66.3 crore initial public offering (IPO) of Udaipur-based PP woven fabrics manufacturer Sah Polymers opened for subscription on Friday, the last trading day of the calendar year 2022. Shares in the IPO, which will close on January 4, Wednesday, are being sold in the price band of Rs 61-65.

Investors can make a bid for a minimum of 230 equity shares and then its multiples thereof.

The company intends to utilise the funds raised via IPO for setting up its new manufacturing facility, repayment of borrowings, funding capex requirements and general corporate purposes, which is entirely a fresh issue of 10.2 million shares.

About 75% of the shares are reserved for qualified institutional buyers (QIBs), whereas 15% of shares are for non-institutional investors (NIIs). The remaining 10% of shares will be allotted to retail investors.

Incorporated in the year 1992, Sah Polymers is a leading PP woven bags manufacturer and exporter of PP woven bags and HDPE box bags, flexible intermediate bulk containers (FIBCs), and BOPP laminated bags.

Sah Polymers has a presence in five states and one union territory for their domestic market, based on sales made in 1QFY23 and FY22. Globally they export their products to 14 countries including the US, Algeria, Ghana, UK and Australia.

In FY22, the company reported a net profit of Rs 4.38 crore on a revenue of Rs 80.51 crore. During FY20-22, its revenue and PAT clocked a CAGR of 28% and 284% respectively, while the EBITDA margin increased from 3.7% in FY20 to 8.7% in FY22.

Should you subscribe to Sah Polymers IPO?
Reliance Securities said while the company has a quality product mix, strong customer base across geographies and industries, good financials and a wide product portfolio, the issue seems pricey based on the current financials.

Considering the FY22 adjusted EPS of Rs 1.70 on a post-issue basis, the company is going to list at a PE of 38.32x. While its peers namely Rishi Techtex, Jumbo Bag, SMVD Poly Pack, EMMBI Industries and Commercial Syn Bags are trading at a PE of 14.91x, 6.24x, 14.86x, 10.15x and 25.89x, respectively.

Domestic brokerage firm Marwadi Financial Services has given a subscribe rating to the IPO as the company has a diversified product portfolio with a customer base across geographies and industries. "Also, it is available at reasonable valuations considering the future growth potential of the company," it said.

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