Shiv Texchem Limited IPO Message Board (Page 7)

Laga Do....................."Pushpa Jukega Nahi"

Hello members... Given the conflict in the Middle East and the company’s reliance on imported hydro and petrochemicals, is this IPO still a safe investment?

LM has good limited track, not so with the MM. Focus is more on the LM due to the 100% underwriting, but comparison to LM's previous issues is not feasible since those companies were in totally different biz. Decent anchor set.

Co. is into import and export and supply of hydro and petro chemicals which are not available in India. Promoter group are pvt ltd companies inherently owned by the 2nd gen individual promoters. Have good educational background and have been around from 2005 in the biz. The end use of their chemicals is pretty diverse from households items, plastics, paints, pharmaceuticals etc. Over 60 suppliers all across world and more than 700 active customers at any time. Material is sourced from US, Japan, Europe, China, Korea etc. Product fleet is more than 45 products now from 2-3 products at start.
They have entered in co-sharing partnership to use around 10K Ton storage capacity at JNPT Terminal and Kandla port. Some customers include names like Apcotex Industries, Hemani Industries, Gujarat Fluorochemicals Limited.

Top 10 products is catering to around 71% revenues. Client concentration is low at 16% for top 10 customers. There is one litigation around 13 cr (actual litigation value is even lesser) with a Hong Kong vendor but the same is under Arbitration and Reconciliation Act, which generally means an arbitrator is appointed with the view to settle it off the court. There are a good set of pvt ltd companies with which the promoters are associated and interest is paid from Shiv Texchem to these (Mack Trading, Hemanshu Syntex). Mack Trading was voluntarily delisted in 2018 at 6 times lower than its per share book value at that time.

Cash flows from operating activities are only positive due to advance from suppliers. IPO proceeds around 75 cr is for working capital which project near 2300 cr revenues FY25 which is in-line with June 30 results. PAT margins are near 2% due to the high volume low margin biz. Most borrowings out of the total borrowings are short term credit loans to cater to heavy working capital requirements. IPO price is near 10 P/E which becomes near 9 P/E FY25.

The trading biz has little unique traits. Promoters themselves have reflected margins are likely to remain in the same vicinity. But for that part the pricing is favorable for short term. Allotment may be tough being the sole decent issue apart from Garuda. The biz volume speaks for steady operations going ahead but value addition in their products profile will be key in longterm keeping the geo-political and logistics risks aside.

​@ipo share Partly agree with you but Gretex at that time had multiple issues and the overall market mood was different. The current market mood is somewhat better and this is the sole issue so LM can't do away with reasonable listing citing market mood. On the contrary, if the listing is not good, that would cement the fact no LM/MM combo can be relied upon and as you said Biz matters. Here in this case, biz wise this isn't something great but some space left in valuations.

Very good and useful analysis!!

​@MuStrFc

LM with a sparse track record whose last 3 issues have become multi bagger’s.
MM can make you multi beggar.

19 year old company with hands on highly qualified (academically and operationally) promoters.
It caters primarily to customers in Western India and has storage facilities (owned, leased, pay per usage) at Kandla and JNPT
Company imports and sells hydrocarbon based chemicals. It also provides analytical insights to customers and suppliers and offers storage solutions to its customers. It’s products find use in diverse industries like paints, coatings, agrochemicals, speciality polymers, speciality industrial chemicals, pharmaceutical products.

Company states that it aggregates orders from local customers and in turn places back to back order on vendors. It also sells some of its inventory on spot basis. Spot sales can be risky as price could vary due to exchange rate fluctuations, oil price volatility and geo political risks. Management needs to be sharp and proactive to handle such volatility.
For Q1FY25, it had 43+ products in its portfolio for servicing 700 customers

IPO proceeds to be used for working capital needs and general corporate purpose.
Based on working capital projections, company is targeting turnover of Rs 2271 cr for FY25.
For FY24, it had sales of Rs 1535 cr and for Q1FY25, sales was Rs 566 cr.
Top 10 customers gave 16.8% of revenue while top 10 suppliers provided 61% of purchases for Q1FY24.

Difference in revenue from top 10 customers and others seems to be large. 700 odd customers would give revenue of Rs 2270 crs. Excluding top 10 customers giving revenue of Rs 380 crs (16.8%), the remaining 690 customers average annual revenue would be Rs 2.72 cr (1880 cr / 690 customers). So company needs strong credit control and customer relationship management to prevent bad debts.
With EBIDTA of 3.3 %, even 1 customers default could wipe out OPM generated from 33 customers.
Company disclosed that for certain customers it keeps post dated cheques as security and has customer advances of Rs 11.57 cr as on 30-Jun-24.

Since it is a trading company, it hardly has any fixed assets. Out of Gross Block of Fixed Assets as on 30-Jun-24 of Rs 1.8 cr, Rs 1.09 cr is vehicles.
Company has deployed significant capital in inventory, it has increased from Rs 130 cr as on 31-Mar-22 to Rs 406 cr as on 30-Jun-24. Correspondingly, it’s inventory turnover ratio has reduced from 12.35 for FY22 to 3.9 for FY24.
Typically trading is a high volume low margin business with strong emphasis on timely collection and faster stock rotation. Company seems to have added more products and large customer base in previous years which has resulted in high inventory and debtors.
Debtors of Rs 215 cr as on 30-Jun-24, all of which are outstanding for more than 6 months. Company is confident of 100% recovery and has not accounted any Bad Debt Provision in the last 3 years and 1 quarter.
Company’s business model appears to hold large inventory and liberal credit to customers thereby positioning itself as 1st choice supplier.
Even though all of its material is imported, company does not seem to hedge its foreign exchange exposure as not hedging related costs / gains / losses can be seen in the financials.
Other income for Q1FY25 includes storage and handling charges of Rs 92 lacs whereas for FY24 whole year it was Rs 71 lacs.

Promoters and related parties have given loans of Rs 38.3 cr to company as on 30-Jun-24. While the rate of interest is not disclosed from related party transactions it is assumed to be around 2-3 % per annum, quite low.
No change in statutory auditor in the last 3 years is a good sign.
Company had 59 permanent employees as on 30-Jun-24.
Bank borrowings carry interest rate of 9 – 11%.
2 major litigations, 1 against company for Rs 13 cr for breach of contract and 1 by the company for Rs 1.6 cr for cheque bouncing.
Bank and other borrowings at FY25 exit estimated at Rs 375 cr with avg interest rate of 10%
Standard anchor book

Post IPO, BV is assumed to be Rs 130/- per share, P/BV at issue price works out to be 1.3 (for EBITDA of 3.3%)
Anmol Ltd, in coal trading, with TTM EBITDA margin of 1% trades at P/BV of 1.8
Agarwal Industrial Corp, trading in petro products, LPG etc, having TTM EBITDA of 9% trades at P/BV of 3.3
FY 25, EPS estimate

Turnover, based on working capital projections, Rs 2270 cr
EBITDA @ 3.3 % will be Rs 75 cr
Interest @ 10% on bank loans of Rs 275 cr – Rs 27.5 cr
Interest on other borrowings (9% on Rs 60 cr) – Rs 5.5 cr
Depreciation – immaterial value, Tax @ 25%
PAT at Rs 31.5 cr on equity of 2.32 cr shares, giving EPS of 13.6 and PE of 12.2 on issue price, without considering other income.

​@YBPK Thanks for your review 👍

​@YBPK thanks for analysis

NII subscription 400 times? @diwan kapoor ji

​@Palka Ji.. Subam paper's allotte are still trying to get exit at par.. While it was subscribe more than 240 times in nii..!!
So i am not sure about it's subscription level..
But should remain less than of Subam paper imo..!!
I think sme craze is over now for the time being..!!

​@Palka Imo hni 320 time

Can someone please join me with 30 or 31 lot

Joined for 30

Joined for 30

The absence is felt only when something is actually absent

@MuStrFc missing your detailed review :)

TO ALL OUIR RESPECTED SENIOR COLLEAGUES

What is the GMP for this issue
Are there BUYERS OR SELLERS

Bhai pichhle 18 mahino se SME try kar raha hu par mere dedh lakh bekar hi sad rahe hai, kash kisi bhi achchi company me share kharid liye hote to kum se kum dugune to ho gaye hote.jab 4 guna hote the tab bhi nahi mila aur aaj discount me bhi nahi mil raha,kasam se aaj se bandh, tata,,bye bye👋☠️😡

Yes, applying in SME IPO in retail is wasting time and energy. Better to buy quality stocks or MF and use the time in your profession.

Decided to apply but final numbers after 2:00PM

Kya ye bhi discount main list hoga??????

Chances of positive listing is much more than negative listing.

90% positive and 10% negative.

Reason for indecisiveness 🚨⬇️

LM has a record of bumper listing and post listing performance.

MM has a record of wealth destruction.

@SVH Sir is very correct, how to decide?

​@M Gupta  Sir , Finally decided to apply.
QIBs & Anchor Investors combo have very good demand. Better than Garuda.
Fundamentals look good. All the best.

Hi Experts,
Just off topic, does the lot size remain the same for life long or gets adjusted in future based on the price.

​@Reaz You are right. The lot size changes as per the investable amout approximately every 6 months.

Thank you once again. Much appreciated!

Subam paper ipo price 152 open 142

Including in ESM does not change except additional surveillance.

If any stock has rallied based on company's fundamentals and growth without any operator involvement it does not matter if it gets added to ESM list. SEBI has set some pre definted creteria to add/remove stocks to/from ESM list to protect investor interests.

There are lot of stocks which have became multibagger after adding to the ESM list as well.

​@Lokesh Chiru sir , not sure about long term for Subex papers , but tomorrow it will be tough to cross ipo price ... i feel lot of allottess will be waiting in queue to sell ... if market absorbs all selling tomorrow then it will rally further ... hope some miracle happens tomorrow ...

QIB 3x on day 1...

Better to apply in khyati global for decent listing 40-50% gmp running

Wait for a few days. You may easily get at 40-50% discount to issue price just llike Kalana Ispat in your fav scrips.

Tum SEBI registered ho ? Nahi to pahle khud ko Sebi mai registered karwao.

Including in ESM does not change except additional surveillance.

If any stock has rallied based on company's fundamentals and growth without any operator involvement it does not matter if it gets added to ESM list. SEBI has set some pre definted creteria to add/remove stocks to/from ESM list to protect investor interests.

There are lot of stocks which have became multibagger after adding to the ESM list as well.

Wow Retail quota fully subscribed wid in few minutes of opening of d IPO..
Kudos to retail investors..
#Keep Applying &
Happy Investing#

Anchor ⚓ list

Anchor is good. Hopefully GMP sustain and it may oversubscribe well.

​@B.M.SURANA Sir your opinion as of today ??

I was going through the SMEs of September 24. Was wondering, how bad days have come in these SME IPOs. Whom to believe and not to. I was going throgh the REVIEWS of Mr. D D. I sharing here the details of SMEs of Sept. 24.
One of the busiest months of SMEs.

Total 34 got listed during this month.
1 SME of Traficsol ITS Technologies was not listed due to the notice from BSE. This was one of the most heavily subscribed SME. QIB 129x, NII
699x, Retail 317x. Review:APPLY.

Out of 34 SMEs according to Mr. Davda Review:
APPLY 7, +ve listing 6, -ve 1.
AVOID 4, +ve listing 2, -ve 1, at par 1.
MAY APPLY 23, +ve listing 19, -ve 2, at par 2.

Out of total 34 listed
only 19 are at more than offer price and
15 are at less than offer price. (as on 04.10.24).
Today's figures might be more bad.

So behavior of price movement in Share Market is difficult to understand and prediction not at all possible.
From above figures one may decide how to apply in these SMEs. Try to choose good ones and better to avoid taking risk. One or two bad allotment can give some pain. Difficult to get allotment in Good ones.

All the best. Take care of Health. Celebrate Navratri with joy with family and friends.

​@PKRAJ Sir, people are treating IPOs as no cost lottery ticket. No one reading anything about issue. Strategy is simple go on apps, check GMP and apply.
I think probably Hyundai will make lot such investors calm for certain days

​@Smile✍️ Yeah, with all negativity bla bla around Hyundai IPO (in the forum), hopefully it turns out a Ola, FirstCry, Voda and teaches people a lesson to focus less on GMP and read/understand more about the financials/fundamentals of the company.