The Solve Plastic Products IPO is set to garner good interest around itself as the same is getting open for subscription from 13th August 2024 to 16th August 20204. It is an equity issue of an aggregate of ₹11.85 crores of face value shares which will be a fresh issuance of the shares from the enterprise. This brings a very interesting opportunity for the market and also the investors who always seek the opportunity to invest in SMEs. Here’s a more in-depth look at the salient points of the Solve Plastic Products IPO, factoring in information about the company, its background, financial about it and the offered rewards and risks in investing with it.
About Solve Plastic Products
Solve Plastic Products Limited was incorporated in the year 1994 and since then realization of being the largest manufacturer of unplasticized polyvinyl chloride pipes and Rigid PVC Electrical conduitsung,NULL. The brand name under which the products of the company are found is “BALCOPIPES”, which is one of the leading brands present in Kerala and Tamil Nadu.
Solve Plastic Products Limited has three manufacturing units in Kerala and another one in Tamil Nadu and has been known for its contribution in catering to the people’s needs for over a couple of decades. Not only to the people, but according to the data, it is revealing that it has also contributed to the welfare of the government in helping with its construction under the Bureau of Indian Standards (BIS) and the Central Public Works Department (CPWD).
Details of the Solve Plastic Products IPO
The Solve Plastic Products IPO is a fixed price issue at ₹91 per equity share. The IPO is of 1,302,000 equity shares aggregating ₹11.85 crores; the retail portion of the IPO can be applied for a minimum of 1200 shares valuing approximately ₹109,200. The shares held through the IPO will be listed on the NSE SME platform, and Black Fox Financial is the market maker.
Important Dates:
- IPO Opening Date: 13 August 2024
- IPO Closing Date: 16 August 2024
- Finalization of Basis of Allotment: 19 August 2024
Overview
The financial health of Solve Plastic Products Limited shows a mixed trend since the company reported revenue of ₹4,715.73 lakhs at the end of the financial year on March 31, 2024, reflecting a decline of 24.25 percent from the previous year. Even after the reduction in revenue, profit after tax increased by 18.47 percent to ₹142.48 lakhs, indicating that profitability improved. Key Financial Metrics:
- Revenue (FY 2024): ₹4,715.73 lakhs
- Profit After Tax (FY 2024): ₹142.48 lakhs
- Total Assets (FY 2024): ₹2,211.53 lakhs
- Debt/Equity Ratio: 0.23
- Return on Net Worth (RoNW): 15.56%
The financial performance of the company has been dismal, with specifically the revenue not consistent, and the concern sustains if this organization will be able to develop in such a competitive environment. Moreover, the post-issue P/E stands around 28.12, which is actually very high and clearly indicates that the IPO would be aggressively priced.
Solve Plastic Products IPO GMP (Grey Market Premium)
As of the latest update on August 12, 2024, the Solve Plastic Products SME IPO Grey Market Premium (GMP) stands at ₹0. With the IPO price set at ₹91 per share, the estimated listing price remains ₹91, reflecting no gain or loss per share based on current GMP trends. Over the last four sessions, no significant movement has been observed in the GMP, suggesting a stable trend leading up to the listing day. Please note that GMP figures are speculative and not an official indicator of stock performance. Stay tuned for daily updates on the Solve Plastic Products SME IPO GMP.
Disclaimer: The GMP prices are for informational purposes only. We do not engage in or recommend trading in the grey market.
Objectives of the Solve Plastic Products IPO
The primary objects of the Solve Plastic Products IPO are:
- Capital Expenditure: To fund the purchase of additional plant and machinery, which will improve their production capacity.
- Meeting Working Capital Requirements: To ensure their operations run on a smooth basis, and to satisfy the increasing demand.
- Issue Expenses: To manage the expenses of the IPO.
- General Corporate Purposes: These are intended to use for the growth and expansion of the business in general.
Promoter and Shareholding Details
The promoters of Solve Plastic Products Limited include Mr. Sudheer Kumar Balakrishnan Nair, Mr. Susil Balakrishnan Nair, and Mr. Balakrishnan Nair. At pre-IPO levels, the promoters are holding 90.22%. Post-IPO, this would come down to 49.87%, resulting in high dilution.
Read More: Sunlite Recycling IPO GMP, Price, Review, Allotment Details
IPO Reservation and Subscription Details
According to the offer document, the IPO has been equally reserved for retail investors as well as other categories:
- Retail Investors: 50% of the net offer
- Other Investors: 50% of the net offer
Investors can apply for a minimum of 1 lot (1200 shares) and a maximum of 1 lot for retail investors with a minimum investment of ₹109,200. The minimum investment for HNIs would be 2 lots of 2400 shares costing ₹218,400
Risk Factors
Investment in the Solve Plastic Products IPO involves various kinds of uncertain risks, including:
The IPO by Solve Plastic Products thus presents an opportunity for investors to ride on the explosive growth of this fast-growing SME, which started dominating the markets for uPVC and rigid PVC products. Hence, high competition, volatility in revenues, and aggressive pricing are possible risks for this IPO. The potential returns are high if this company can execute on its plans for expansion and improvement in financial performance.
Aggressive Valuation: The IPO is representative of a P/E ratio that is high enough considering the firm’s erratic financial performance over history.
These may include changes in regulations, environmental concerns, and fluctuating prices of the raw material—all of which could impinge on plastic product profitability.
Solve Plastic Products IPO Expert Review
A few market experts have also issued warnings against the Solve Plastic Products IPO. Given the lack of consistency in the company’s revenue, coupled with the high valuation that Solve Plastic Products enjoys, certain analysts have cautioned potential investors against going in for this offering, suggesting that this is a ‘High Risk/Low Return’ investment bet. A small post-IPO equity base could also imply a longer gestation period for yielding high returns for investors.
Conclusion
The IPO by Solve Plastic Products offers an opportunity for investors to participate in the growth of this fast-growing SME, which has begun to dominate the uPVC and rigid PVC products markets. This therefore demands careful reflection on high competition, revenue volatility, and aggressive pricing as a potential risk for the IPO. Also, on these risks are potential returns if this company can execute on its plans of expansion and better the financial performance.
Frequently Asked Questions (FAQs)
1. What is the issue price for the Solve Plastic Products IPO?
The issue price is ₹91 per share.
2. What is the minimum investment required for the Solve Plastic Products IPO?
Retail investors need to invest a minimum of ₹109,200 for 1200 shares.
3. When will the Solve Plastic Products IPO be listed on the NSE SME?
The IPO is expected to list on August 21, 2024.
4. What are the main objectives of the Solve Plastic Products IPO?
The main objectives include funding capital expenditure, meeting working capital requirements, covering issue expenses, and supporting general corporate purposes.
5. What are the risks associated with investing in the Solve Plastic Products IPO?
Risks include high competition, revenue volatility, aggressive valuation, and sector-specific challenges.