Stallion India Fluorochemicals IPO kicks off: Should you subscribe to it?

The Rs 199.45 crore-initial public offering (IPO) of Stallion India Fluorochemicals kicks-off today, that is, Thursday, January 16 and can be subscribed till Monday, January 20. The refrigerant and industrial gases player is offering its shares in the range of Rs 85-90 apiece, for which investors can apply for a minimum of 165 equity shares and its multiples thereafter.

Mumbai-based Stallion India Fluorochemicals, incorporated in 2002, is engaged in the business of selling refrigerant and industrial gases and related products. Its primary business includes debulking, blending and processing refrigerant and industrial gases, and selling of pre-filled cans and small cylinders/containers.

Brokerage firms, tracking the stock are mostly positive on the issue and suggest to subscribe to it on the back rising demand of its products, strong market positive, solid financial performance and fair valuations of the issue. However, dependance on key markets, rise in input costs, imports from China and seasonal nature of the business are some of its key concerns.

Stallion India Fluorochemicals has created a unique space in the segment with quality and economical products. The company holds a prominent position with a market share of 10 per cent in the fluorochemicals industry. With its planned business strategy and capex mode, there is a significant headroom to improve earnings in coming years, said Anand Rathi Research.

"On the valuation front, at an upper band, the company is fairly priced at a P/E of 48 times post issue of equity shares on FY24 earning basis. We believe that the company has a scope of business improvement on the back of industry tailwinds and business scalability. Thus, we recommend a 'subscribe for long-term' rating for this IPO," it added.

The IPO of Stallion India Fluorochemicals includes a fresh share sale of Rs 160.73 crore and offer-for-sale (OFS) of up to 43.02 lakh equity shares worth Rs 38.72 crore. The net proceeds from the fresh issue shall be utilized towards funding incremental working capital requirements, funding capital expenditure requirements; and general corporate purposes

Stallion India Fluorochemicals has raised Rs 59.83 crore from six anchor investors as it finalised the allocation of 66.48 lakh shares at a price of Rs 90 apiece. Its anchor book included names like Saint Capital Fund, Ashika Global Securities, Craft Emerging Market Fund, Mint Focussed Growth Fund, Ashika India Select Fund, and Leading Light Fund.

Stallion India Fluorochemicals shall utilize IPO proceeds will help them fund the planned capex for the expansion of semiconductor, specialty and refrigerant Gas, said Arihant Capital Markets. The issue is valued at an EV/Ebitda multiple of 26.2 times based on FY24 Ebitda and P/E ratio of 35.4 times, it said with a 'subscribe' rating for the issue.

Stallion India Fluorochemicals deals in gases that are broadly classified as fluorochemicals. They are majorly used as refrigerants in various industries. It has four Plants in Khalapur, Raigad (Maharashtra), Ghiloth, Alwar (Rajasthan), Manesar, Gurugram (Haryana) and Panvel, Raigad (Maharashtra).

For the six months ended on September 30, Stallion India Fluorochemicals reported a net profit of Rs 16.57 crore with a revenue of Rs 141.53 crore. The market capitalization of Stallion India IPO stands at Rs 713.93 crore. Last heard, the company commanded a grey market premium (GMP) of Rs 48 apiece, suggesting more 53 per cent gains for investors.

Stallion India is engaged in the refrigerant and industrial gases business. The company has strong market recognition. It has a track record of strong financial performance while the IPO is priced at a fair valuation, said Swastika Investmart. "We recommend subscribing to the Stallion India IPO given its strong market position and financial performance," it added.

Stallion India Fluorochemicals has reserved 50 per cent of the net offer for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent the allocation in the net issue. Remaining 35 per cent of the net offer shall be allocated to the retail investors of the issue.

Sarthi Capital Advisors is the book running lead manager of the Stallion India IPO, while Bigshare Services is the registrar for the issue. Shares of the company shall be listed at both BSE and NSE with Thursday, January 23 as the tentative date of listing on the bourses.