The Rs 410.05 crore-initial public offering (IPO) of Standard Glass Lining Technology kicks off for subscription today, that is, on Monday, January 6, 2025. It is offering its shares in the range of Rs 133-140 apiece, for which one can apply for a minimum of 107 equity shares and its multiples thereafter. The issue shall close for bidding on Wednesday, January 8, 2025.
Incorporated in September 2012, Hyderabad-based Standard Glass Lining Technology is a manufacturer of engineering equipment for the pharmaceutical and chemical sectors in India. The IPO of Standard Glass includes a fresh share sale of Rs 210 crore and offer-for-sale (OFS) of 1,42,89,367 equity shares by its existing shareholders and promoter entities.
The net proceeds from the issue shall be utilized to fund the capital expenditure needs; repayment/prepayment of outstanding borrowing; investment in wholly owned subsidiaries; funding inorganic growth; and general corporate purposes. Last head, it was commanding a grey market premium of Rs 95-100 apiece, suggesting up to 70 per cent listing pop for the investors.
Ahead of its IPO, Standard Glass raised Rs 123 crore from nine institutional investors via anchor book by allocating 87,86,809 equity shares at Rs 140 apiece. Amansa Holdings, Kotak Asset Management Company, Clarus Capital, 3P India Equity Fund, Massachusetts Institute of Technology, ICICI Prudential MF, Tata MF, Motilal Oswal MF and ITI MF participated in the anchor book.
Standard Glass provides turnkey solutions, including design, engineering, manufacturing, assembly, installation, and standard operating procedures for pharmaceutical and chemical manufacturers. It manufactures specialized engineering equipment using glass-lined materials, stainless steel, and nickel alloy. It has eight manufacturing units situated in Hyderabad.
Standard Glass reported a net profit of Rs 36.27 crore with a revenue of Rs 312.1 crore for the six months ended on September 30, 2024. The company's revenue came in at Rs 549.68 crore with a revenue of Rs 60.01 crore for the financial year ended on March 31, 2024. The company shall command a total market capitalization close to Rs 2,793 crore.
Standard Glass Lining Technology has reserved 50 per cent equity shares for qualified institutional bidders (QIBs), while 15 per cent of the offer has been allocated towards the non-institutional investors (NIIs). Retail investors will get the remaining 35 per cent of the allocation in the IPO.
IIFL Securities and Motilal Oswal Investment Advisors are the book running lead managers of the Standard Glass Lining IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with January 13, Monday as the tentative date of listing. Here's what a host of brokerage firms said about the IPO of Standard Glass Lining:
Indsec Research Rating: Subscribe The IPO is priced at a post-IPO dilutive FY24 P/E of 47.8 times, which is 13 per cent discount to industry average. The company has achieved strong growth with a revenue, Ebitda and PAT CAGR of 50 per cent, 53 per cent and 52 per cent, respectively, over FY22-24 and managed to clock impressive FY24 ROE of 14.3 per cent and ROCE of 17.5 per cent, said Indsec Research.
It specializes in fabrication and precision engineering equipment for pharma and chemical companies and is well-positioned to benefit from increasing global demand driven by the China+1 strategy and government support through the PLI scheme. The pharma capital spending is expected to remain at Rs 12,000-15,000 crore annually until FY27, it said with a 'subscribe' rating.
SBI Securities Rating: Subscribe for long term Standard Glass is valued at FY24 P/E and EV/Ebitda multiples of 47.8 times and 28.6 times, respectively based on the upper price band. It has delivered strong performance with revenue, Ebitda and PAT growing at 50.5 per cent, 53.1 per cent and 54.5 per cent CAGR to Rs 543.7 crore, Rs 94.9 crore and Rs 60 crore, respectively between FY22-FY24, said SBI Securities.
"The growth outlook is robust as it is likely to grow its revenue between 20-25 per cent in the medium term with geographical and product expansion. The company is targeting 20 per cent of revenue from export by 2026 versus present 0.5 per cent. While comparing with its close peers, the issue is fairly valued with superior margin profile," it said with a 'subscribe for long-term' tag.
SMIFS Rating: Subscribe Standard Glass Lining has outlined a comprehensive growth strategy focused on diversifying its product offerings, enhancing its manufacturing capabilities, and increasing its presence in international markets. It is leveraging its engineering expertise to develop differentiated products, while also expanding its portfolio to target additional end-user industries, said SMIFS.
"We recommend subscribe to the issue as the company increases its manufacturing capacity to address growing demand, expansion into the export market and strategic partnerships which will increase its market share as in the past and production of new differentiated products separates the company from its peers," it said.
Canara Bank Securities Rating: Subscribe Standard Glass Lining boasts a robust order book valued at Rs 450 crore, emphasizing automation and operational efficiency. It aims for a 20 per cent contribution from export revenues in the next fiscal year by leveraging proprietary technology from its Japanese partner AGI, known for high-margin products, said Canara Bank Securities.
"The company is currently valued at a P/E ratio of 39.77 times, which is favourable compared to the industry average of 52.50 times. It exhibits a strong RoE of 20.74 times. Anticipated capacity expansion and export-driven growth are projected to further bolster the company’s financial ratios," it said with a 'subscribe' rating to the issue.
Anand Rathi Research Rating: Subscribe for long-term Standard Glass Lining is specialized engineering equipment manufacturers for pharma and chemical sectors in India with products across entire value chain with customized and innovative product offering across the entire pharmaceutical and chemical manufacturing value chain and strategically located manufacturing facilities with advanced technological capabilities, said Anand Rathi Research.
"At the upper price band, the company is valuing at P/E of 43.01 times, with an EV/Ebitda of 30.08 times and market cap of Rs 2,792.8 crore post issue of equity shares and return on net worth of 20.74 times. We believe that the IPO is fairly priced and recommend a 'subscribe for long term' rating to the IPO," it added.
Geojit Financial Services Rating: Subscribe for long-term Standard Glass has agreements with industry leaders like HHV Pumps for vacuum pumps and with Asahi Glassplant and GL Hakko for glass procurement, strengthening its position in the glass lining and vacuum pumps market in India. It plans to invest in expanding capacities for existing and new products to enhance its offerings, said Geojit Financial Services.
Standard Glass' valuation appears fairly priced compared to peers. The growing demand for glass-lined equipment in pharma and chemicals offers significant growth potential. Its healthy margins, consistent revenue growth, robust growth outlook, a diverse product portfolio with a focus on customization, and inorganic growth plans support a 'subscribe for long term rating," it said.