Archives: Ipos

Standard Glass Lining Technology is one of the few companies in India offering end-to-end customized solutions in the specialized engineering equipment used in the pharmaceutical and chemical sectors. As of September 2024, the company’s comprehensive product portfolio consists of 65+ products & offerings across the pharma and chemical industries and is also developing 15 more products.  The company can also manufacture 300-350 pieces of equipment per month across the product portfolio. The company is further looking to expand capacity and is venturing into the 150 MM thickness segment, providing a gateway to sectors like Oil & Gas, Edible oil, Heavy engineering, etc. The company’s revenue has grown at a compound annual growth rate (CAGR) of 7% during FY2022-24 period. The company intends to continue strengthening its existing product portfolio in line with its capabilities and further diversify into products with prospects for increased growth and profitability. The company is targeting 20% of revenue from exports by 2026 v/s present 0.5% contribution. The issue is valued at a P/E of 39.8x on the upper price band based on FY24 earnings. Compared to its peers, we believe that the issue is fairly valued with a superior margin profile. Therefore, we recommend a SUBSCRIBE rating for the issue.

Indo Farm Equipment, with over two decades of experience, is a fully integrated and established manufacturer of Tractors & Pick & Carry Cranes. The company also produces ancillary farm equipment such as harvester combines, rotavators, and related spare parts, although these do not significantly contribute to its total revenue. In addition, Indo Farm operates an asset financing business through its wholly owned subsidiary, Barota Finance Ltd., an RBI-registered NBFC. The mobile crane market is expected to grow to USD 29.1 billion, at a CAGR of 6.65%, during the 2024-29 period, while the global tractor market is projected to reach USD 114.5 billion, growing at a CAGR of 5.90% during the same period. The global agricultural equipment market is estimated to reach USD 296.61 billion, growing at a CAGR of 7.3% from 2023 to 2029. Indo Farm’s fully integrated manufacturing facilities enhance product efficiency and ensure timely delivery to its customers. The company’s diverse tractor range meets around 80% of global market requirements, while its Pick & Carry Cranes are widely utilized in infrastructure development. Additionally, the company’s investment in its subsidiary NBFC is expected to drive tractor sales by facilitating easier financing options. Indo Farm also plans to expand its dealer network from 175 to 500 dealers over the next five years. Financially, Indo Farm has maintained a profitable track record and consistent performance. It reported a PAT of Rs. 155.95 million, Rs. 153.72 million, and Rs. 137.19 million in FY24, FY23, and FY22, respectively, and has consistently achieved EBITDA margins of 16.63%, 15.79%, and 14.77% during the same periods. The issue is priced at a P/E ratio of 51.8x on the upper price band, based on FY24 earnings, which is relatively high compared to its peers. However, given the company’s improving sales, growth-oriented investment in its NBFC, and favorable industry trends, we recommend a “SUBSCRIBE” rating for the issue.

Incorporated in 2016, Unimech Aerospace and Manufacturing Limited specializes in the manufacture of complex tools, including mechanical assemblies, electromechanical systems, and components for aero-engine and airframe production. The company provides engineering solutions tailored to meet clients’ specific requirements in industries such as aerospace, defense, energy, and semiconductors. Their offerings include “build to print” and “build to specifications,” which encompass machining, fabrication, assembly, testing, and the development of new products. The Asian region is expected to witness the largest fleet expansion, with an anticipated addition of 11,925 aircrafts by 2042, solidifying its status as a global aviation leader. In the energy sector, there is a growing focus on renewable energy sources, including solar and wind, along with government support for cost-effective and environmentally friendly projects. Notable Asian countries with advanced semiconductor manufacturing capabilities include Taiwan, South Korea, China, and Japan, while India is emerging as a key player in the precision components sector for the chip manufacturing industry. Unimech’s systems and processes ensure efficient order fulfilment and on-time delivery. As of September 2024, the company had an order backlog valued at Rs. 807.52 million, with delivery timelines ranging from 4 to 16 weeks. In terms of financial performance, Unimech is the fastest-growing company in its sector, having recorded an impressive compound annual growth rate (CAGR) of 139.7% in revenue between FY22 and FY24. Their EBITDA saw a remarkable growth rate of 220.2% during the same period. Additionally, Unimech achieved the third-highest PAT margin of approximately 27.9% in FY24, up from 24.2% in FY23. The issue is valued at a price-to-earnings (P/E) ratio of 59.3x on the upper price band based on FY24 earnings, which is comparatively lower than its peers. Considering the company’s strong financial performance, industry tailwinds & attractive valuation, we recommend a “SUBSCRIBE” rating for this issue.

Senores Pharmaceuticals is a global research-driven pharmaceutical company engaged in developing and manufacturing a wide range of pharmaceutical products predominantly for the regulated markets across various therapeutic areas and dosage forms, with a presence in emerging markets. The company is an R&D-driven company with a differentiated product portfolio across dosage forms, which has enabled the company to reach a range of target markets with a presence in the US, Canada and emerging markets. Senores Pharmaceuticals partners with many CDMO customers early in the drug development process, enabling them to expand relationships as molecules progress through the clinical phase and into commercial manufacturing. This results in sustained relationships with customers and a recurring revenue stream. The company has also entered into long-term marketing arrangements for a period ranging between 5-7 years with major generic pharmaceutical and marketing companies that operate in the regulated market. On the financial front, the company’s Rev/EBITDA/PAT grew at a CAGR of 289.1%/361.6%/474.5%, respectively, during the FY22-24 period. Senores Pharmaceuticals’ financial performance is driven by leveraging its leadership position in key therapeutic areas, established presence in regulated markets, inorganic growth through synergistic acquisitions, niche product portfolios built in a short span in emerging markets, and robust R&D capabilities, all of which have supported strong growth. The issue is valued at a P/E of 32.0x on the upper price band based on FY24 earnings, which is deemed fair. Therefore, we recommend a SUBSCRIBE rating for the issue.

Carraro India was incorporated on April 11, 1997. It is one of the leading independent Tier 1 suppliers of axles, transmission systems, and gears for India’s agricultural tractor and construction vehicle industries. As the Indian subsidiary of the Carraro Group, Carraro India plays a significant role in the global driveline systems market, particularly for off-highway vehicles like tractors and construction machinery. In India, agricultural tractors and construction vehicle sales are projected to grow driven by factors such as farm mechanization, infrastructure development, and favourable government policies. Further, Rs. 27 lakh crores investment under the National Infrastructure Pipeline (NIP) and Rs. 7 lakh crores allocated for road and highway projects over the next 2-3 years are expected to increase the demand for construction vehicles significantly. Overall, agricultural tractors dominate the market with a 90% share due to their essential role in farming, while construction vehicles account for the remaining 10%. This construction segment is further supported by Rs. 10 lakh crores allocated to infrastructure in the 2023-24 budget. In terms of financial performance, the company’s revenue from operations increased by 4.4% YoY to reach Rs 1,770.5 crores in FY24. Additionally, the PAT saw a rise of 29.4% YoY to Rs 60.6 crores in FY24, with margins significantly lower than its peers at 3.50%. The issue is valued at a price-to-earnings (P/E) ratio of 64x on the upper price band based on FY24 earnings, which is comparatively expensive compared to its peers. Considering the company’s sluggish financial performance and relatively high valuation compared to its peers, we recommend an “AVOID” rating for this issue.

The hospitality industry in India and the Maldives is witnessing robust growth, driven by rising domestic demand and an increase in international tourist arrivals. Ventive Hospitality Limited is well-positioned within this expanding market, with a portfolio of 11 luxury properties, including flagship hotels such as JW Marriott Pune, The Ritz-Carlton Pune, and Conrad Maldives. The company benefits from strong partnerships with globally renowned brands like JW Marriott, Hilton, and The Ritz-Carlton, which enhance its brand value and market presence. However, Ventive’s reliance on third-party operators and franchised brands for 78.05% of its keys, including Marriott and Hilton, exposes it to reputational risks and service quality concerns. Any negative impact on the reputation of these brands or failure in quality control could adversely affect the company’s financial performance. In addition to its hospitality assets, Ventive generates approximately 41% of its revenue from annuity assets leased to marquee tenants such as HSBC, Deutsche Bank, and Starbucks. This diversified revenue stream provides stable cash flows and contributes to the company’s profitability. Ventive also boasts a strong financial track record, with FY24 revenue of Rs. 4,780 million, growing at a CAGR of 44% from FY22 to FY24, an EBITDA of Rs. 2,838 million in FY24 with a CAGR of 56%, and PAT of Rs. 1,663 million in FY24, reflecting a CAGR of 138%. Despite a net loss of Rs. 208 million in H1FY25 due to recent acquisitions, the company plans to improve its financial position by utilizing net proceeds to repay part of its debt, which will help reduce finance costs and boost profitability in the future. At a P/E of 40.4x on the upper band, the company’s valuation is lower than its peers, making it an attractive investment opportunity. Furthermore, with plans to expand its footprint with projects in Varanasi, Bengaluru, and Sri Lanka, aiming to add 367 keys by FY28, Ventive is well-positioned for sustained growth. Considering its strong market presence, financial performance, and expansion plans, we recommend a “SUBSCRIBE” rating for the issue, with a medium- to long-term investment horizon.

Transrail Lighting Ltd. (TLL) is a leading EPC company with a market share of 8-10% in the EPC sector, specializing in power transmission and distribution. The company maintains a strong order book, ensuring revenue visibility and steady topline growth, supported by a mix of international and domestic clients. TLL’s strategic expansion into emerging markets and new regions aims to achieve economies of scale and drive global growth. The company’s integrated approach to EPC projects, using industry-leading design and engineering software, ensures high-quality execution. Furthermore, plans to diversify into allied infrastructure sectors and the solar EPC industry will broaden its market reach and reinforce its position in the infrastructure sector. India’s power transmission and distribution system has significantly expanded, with an estimated investment of Rs. 3.0 trillion expected in the transmission sector during FY2025-29 period. Additionally, the distribution segment is projected to attract investments worth Rs 3-4 trillion during the same period, driven by the government’s initiatives to enhance electricity access and ensure 24×7 power for all under the Revamped Distribution Sector Scheme. The substantial investments in the power T&D sector will provide TLL with ample opportunities to expand its market presence, secure new projects, and achieve economies of scale. The company reported strong financial growth between FY22 and FY24, with a CAGR of 32.5% in revenue, 51.8% in EBITDA, and 89.8% in PAT. The company is valued at a P/E ratio of 22.1x on the upper price band based on FY24 earnings, which is lower than the average P/E of the industry. Given its strong position in the market, the company is poised to capitalize on emerging market opportunities. Therefore, we recommend a “SUBSCRIBE” rating for the issue from a medium to long-term perspective.

Mamata Machinery is strategically focused to strengthen relationships with existing customers and expand its product offerings across geographies to drive growth. The company plans to win new customers and explore emerging opportunities within its existing product categories by developing products aligned with customer needs. Currently focused on food packaging, diversification will be advantageous in other FMCG sectors. Additionally, the company plans to capitalize on regulatory changes, such as restrictions on single-use plastics, by offering suitable alternatives. It has already developed technologies that enable customers to use recyclable plastic films. The company has a strong international presence, with manufacturing facilities in India and the US. Mamata Machinery has a strong track record of innovation, evidenced by multiple patents and a focus on customization. On the financial front, the company’s Rev/EBITDA/PAT grew at a CAGR of 10.9%/25.6%/29.0%, respectively, during FY22-24 period. Mamata’s expansive product portfolio, global presence and technological leadership position it for sustained growth in the packaging machinery sector. Focusing on delivering quality products at competitive prices, the company aims to enhance operational efficiencies, increase economies of scale, better absorb fixed costs, and strengthen its competitive position. By improving capacity utilization and increasing production volumes, the company intends to meet growing customer demand while driving productivity and cost reduction. The issue is valued at a P/E of 16.6x on the upper price band based on FY24 earnings. Given the company’s strong market presence, improved financial performance and focus on quality and new product development, we recommend a “SUBSCRIBE” rating for the issue.

DAM Capital Advisors Limited, an Indian investment bank, offers expertise in ECM, M&A, PE, and institutional equities. Founded in 1993, it rebranded as DAM Capital in 2020, with a subsidiary in the USA. DAM is one of the leading investment banks in India, with a 12.1% market share based on a number of IPO offerings. India’s strong economic growth has increased the demand for capital and financial services. In FY24, the Indian capital market experienced significant growth compared to FY23, with the number of issues rising from 234 in FY23 to 316 in FY24. As of October 2024, there have been 215 issues recorded for FY25. During FY24, approximately Rs. 619 billion was raised through primary markets, which included a total of 76 IPOs. In terms of volume, IPOs and FPOs accounted for 46% of total issuances, which encompassed IPOs, FPOs, InvITs, REITs, rights issues, and QIPs. Further, till October 2024, IPOs and FPOs made up 40% of the total issues based on volume. On the financial front, DAM Capital reported the highest growth in total income, achieving a CAGR of 38.8% between FY22 and FY24. The company’s EBITDA rose to Rs. 1,030.2 million in FY24, up from Rs. 342.7 million, reflecting a CAGR of 73.4%. Additionally, the profit after tax increased to Rs. 705.2 million in FY24, compared to Rs. 219 million in FY22, representing a CAGR of 79.4%. Notably, DAM Capital had the highest profit margin among its peers, at 38.7% in FY24 and the first half of FY25. The issue is valued at a price-to-earnings (P/E) ratio of 28.4x on the upper price band based on FY24 earnings, which is relatively expensive compared to its peers. However, considering the company’s improving financials, its rapidly growing merchant banking business, and favourable industry trends, we recommend a “SUBSCRIBE” rating for the issue.

Sanathan Textiles Ltd., a key player in the Indian textile industry, is poised to benefit from the sector’s growth, driven by rising domestic demand, increased discretionary income, and government initiatives such as the PLI scheme. The company’s diversified product portfolio across polyester, cotton, and technical textiles, along with over 50% of its sales coming from high-value, value-added products, gives it a competitive edge. It also benefits from strong manufacturing capabilities, an expansive export network across 14 countries, and long-term relationships with major brands like Welspun India and Page Industries. However, despite these strengths, Sanathan Textiles faces significant challenges. Operating in a highly competitive market, the company holds a modest market share of just 1.7%. The company has also experienced declining revenues and profits, with profit declining from Rs. 3,554 million in FY22 to Rs. 1,338 million in FY24. The company’s reliance on imported raw materials, foreign exchange fluctuations, and high working capital requirements add to the risks. Despite its growth strategy, which includes expanding production capacity and enhancing its recycled yarn business, the financial and operational concerns make it a risky investment at this time. Therefore, we recommend an “AVOID” rating for the issue. We will reassess our recommendation if there is a sustained improvement in financial metrics in the future.