The initial public offering (IPO) of Shree Tirupati Balajee Agro Trading Company (STBATCL) kicks off-for bidding on Thursday, September 5 and the issue can be subscribed until Monday, September 9. The packaging solutions provider is offering its shares in the range of Rs 78-83 apiece, where investors can apply for a minimum of 180 equity shares and its multiples thereafter.
Incorporated in October 2001, Shree Tirupati Balajee Agro Trading Company manufactures and sells Flexible Intermediate Bulk Containers (FIBCs) including large flexible bags, and other industrial packaging products such as woven sacks, woven fabric, narrow fabric, and tapes in the Indian domestic market and overseas.
The company is looking to raise a total of Rs 169.65 crore via its primary stake sale, which includes a fresh sale of shares worth Rs 122.43 crore and offer-for-sale (OFS) of up to 56.90 lakh shares worth Rs 47.23 crore by its promoter Binod Kumar Agarwal.
The net proceeds from the fresh issue shall be utilized towards repayment and/or prepayment of debt; investment in the subsidiaries; funding the incremental working capital requirements and general corporate purposes. Proceeds from the OFS shall go to the selling shareholders.
Shree Tirupati Balajee Agro Trading Company raised Rs 50.89 crore from anchor investors as it allocated 61,32,000 shares at Rs 83 per share. Its anchor book included names like NAV Capital VCC - NAV Capital Emerging Star Fund, Chanakaya Opportunities Fund I, Next Orbit Growth Fund III, Saint Capital Fund, Steptrade Revolution Fund and Astorne Capital VCC - Arven.
Shree Tirupati Balajee Agro Trading Company offers customized products and caters to the bulk packaging needs of clients from various industries, including chemicals, agrochemicals, food, mining, waste disposal, agriculture, lubricants, and edible oil. It operates through subsidiaries- Honourable Packaging (HPPL), Shree Tirupati Balajee FIBC (STBFL), and Jagannath Plastics (JPPL).
Shree Tirupati Balajee Agro Trading Company reported a net profit of Rs 36.07 crore with a revenue of Rs 552.82 crore for the financial year ended on March 31, 2024. The company reported a net profit of Rs 20.72 crore with a revenue of Rs 478.14 crore for the fiscal year 2022-23.
The company has reserved 50 per cent of the net offer for the qualified institutional bidders (QIBs), while 15 per cent of the issue has been reserved for the non institutional investors (NIIs). Remaining 35 per cent shares shall be allocated towards retail investors of the issue.
PNB Investment Services and Unistone Capital are the book running lead managers of the Shree Tirupati Balajee IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with Thursday, September 12 as the tentative date of listing. Here's what a host of brokerage firms said about the IPO of Shri Tirupati Balajee Agro:
Anand Rathi Research Rating: Subscribe Shree Tirupati Balajee Agro trading Company caters to the bulk packaging solutions of its clients from various industries like chemicals, agrochemicals, food mining, waste disposal industry, agriculture industry, lubricants and edible oil by supplying them customized FIBC products for transportation purposes and their packaging requirement, said Anand Rathi.
"At the upper price band, the company is valuing at P/E of 18.7 times with a market cap of Rs 677 crore post issue of equity shares and return on net worth of 20.8 per cent. On the valuation front, we believe that the company is fairly priced. Thus, we recommend an 'subscribe' rating to the IPO," it said.
Swastika Investmart Rating: Subscribe with caution The company is a market leader in FIBC and industrial packaging, with strong financial performance with consistent growth and improved margins. It issues at fair valuation. High debt-equity ratio, corporate guarantees, and negative cash flow pose risks, said Swastika Investmart in its IPO note.
"Given the company's market leadership and potential for debt reduction, long-term investors may consider subscribing to the IPO. However, careful evaluation of the debt and cash flow risks is essential," it added.
Stoxbox Rating: Subscribe for long term Despite facing risks from regulatory changes affecting plastic use, raw material supply fluctuations, and regional concentration of manufacturing facilities, the company has demonstrated steady financial growth. The current issue is priced at a P/E ratio of 14.5 times on the upper price band based on FY24 earnings, aligning well with its peers, said StoxBox.
"Given the industry’s promising growth trajectory and the company’s strategic focus on capacity optimization, new product development, and expansion in domestic and global presence, we recommend a 'subscribe' rating for the issue with a medium to long-term investment," it added.
SMIFS Rating: Subscribe FIBCs are a more sustainable packaging solution than traditional packaging materials, such as drums and sacks. The company’s manufacturing capacity utilization is gradually expanding from 71.65 per cent in FY22 to 84.65 per cent in FY24 reflecting growth in customer base and company responding to growing demand for FIBC consumption, said SMIFS.
"We recommend to subscribe to the issue as a good long term investment as the company has scope for margin improvement going forward as oil prices trend lower resulting in lower raw material costs, which have been oscillating wildly over the last few years, the company has one of the best profitability and return ratios amongst its peers and the recent capex completed," it said.
Master Capital Services Rating: Subscribe Growing demand over the years, especially from the chemicals, construction, and food agriculture sectors has helped the FIBC sector reach healthy capacity utilization levels resulting in players going for capacity expansion. The company plans on taking advantage of this situation by focusing on its core competencies along with optimum utilization of its capacity, said Master Capital.
"The company also intends to develop a new product line following the trends of the market and using its vast product portfolio along with enhancing its technological capabilities to create a Global and Domestic presence. Investors looking to invest can invest in the IPO for the medium to long term," it said.
Arihant Capital Markets Rating: Subscribe The company is strengthening its presence in the FIBC sector by enhancing its manufacturing capabilities to meet rising demand, considering the global shift towards increased FIBC usage. With the growing traction for FIBCs in India, driven by increased industrial and agricultural production, the company foresees significant market opportunities, said Arihant Capital Markets.
"The company is also focusing on optimal capacity utilization. Company has seen substantial growth in domestic revenue, rising to Rs 275 crore in FY24 from Rs 170.55 crore in FY23, marking a 61 per cent increase. At the upper price band of Rs 83, the issue is priced at a P/E of 18.77 times based on the FY24 EPS of Rs 4.4. We have a 'subscribe' rating for the issue," it said.