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Review By Dilip Davda on August 10, 2023
• PTL is one of the leading industrial packaging companies manufacturing polymer-based moulded products.
• It marked steady growth in its top and bottom lines for the reported periods.
• The company is expanding its capacity with the construction of 7th plant.
• Well-informed investors may park funds for the medium to long-term rewards.
ABOUT COMPANY:
Pyramid Technoplast Ltd. (PTL) is an industrial packaging company engaged in the business of manufacturing polymer-based moulded products (Polymer Drums) mainly used by chemical, agrochemical, speciality chemical and pharmaceutical companies for their packaging requirements. It is one of the leading manufacturers of rigid Intermediate Bulk Containers (IBC) in India manufacturing 1,000-litre capacity IBC (Source: Marketysers Report).
IBCs are industrial-grade containers engineered for the mass handling, transport, and storage of liquids, semi-solids, pastes, or solids. rigid IBCs are manufactured across a volume range that is in between that of standard shipping drums and intermodal tank containers, hence the title intermediate bulk container. The company also manufactures MS Drums made of mild steel (MS) used in the packaging and transport of chemicals, agrochemicals and speciality chemicals.
PTL uses blow moulding technology to manufacture Polymer Drums and IBCs. Injection moulding technology is used for manufacturing caps, closures, bungs, lids, handles, lugs, etc. for in-house use. Its products are marketed and sold under the brand name "Pyramid". PTL started commercial production in the year 1998 in Unit I. Presently, it has six (6) strategically situated manufacturing units out of which four (4) are in Bharuch, GIDC, Gujarat and two (2) are situated at Silvassa, UT of Dadra and Nagar Haveli. The seventh (7) manufacturing unit is under construction at the Bharuch, GIDC, Gujarat adjacent to the existing six units. The total installed capacity of Polymer Drum manufacturing units is 20,612 MTPA. The total installed capacity of the IBC manufacturing unit is 12,820 MTPA and the total installed capacity of the MS Drums unit is 6,200 MTPA. As of June 30, 2023, it had 493 employees on its payroll.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden combo IPO of 5500000 (Rs. 91.30 cr. at the upper cap) fresh equity shares issue and an offer for sale (OFS) of 3720000 shares (Rs. 61.75 cr. at the upper cap), thus an overall size of 9220000 equity shares (Rs. 153.05 cr. at the upper cap). It has announced a price band of Rs. 151 - Rs. 166 per share of Rs. 10 each. The issue opens for subscription on August 18, 2023, and will close on August 22, 2023. The minimum application is to be made of 90 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 25.07% of the post-issue paid-up capital of the company.
The company has allocated not more than 30% for QIBs, not less than 20% for HNIs and not less than 50% for Retail investors.
From the net proceeds of the fresh equity issue, the company will utilize Rs. 40.00 cr. for repayment, prepayment of certain outstanding borrowings, Rs. 40.21 cr. for working capital and the rest for general corporate purposes.
PNB Investment Services Ltd. and First Overseas Capital Ltd. are the joint Book Running Lead Managers (BRLMs) and Bigshare Services Pvt. Ltd. is the registrar of the issue.
Having issued initial equity shares at par, the company issued further equity shares in the price range of Rs. 78.00 - Rs. 400.00 between October 2005 and June 2018. It has also issued bonus shares in the ratio of 10 for 1 in March 2018 and 7 for 1 in May 2022. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 0.97, Rs. 1.02, Rs. 1.48, Rs. 2.03, Rs. 3.74, and Rs. 5.27 per share.
Post-IPO, PTL's current paid-up equity capital of Rs. 31.29 cr. will stand enhanced to Rs. 36.79 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 610.63 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, PTL has posted a turnover/net profit of Rs. 316.18 cr. / Rs. 16.99 cr. (FY21), Rs. 402.64 cr. / Rs. 26.15 cr. (FY22), and Rs. 482.03 cr. / Rs. 31.76 cr. (FY23).
For the last three fiscals, the company has reported an average EPS of Rs. 8.83 and an average RoNW of 32.19%. The issue is priced at a P/BV of 4.84 based on its NAV of Rs. 34.28 as of March 31, 2023, and at a P/BV of 3.08 based on its post-IPO NAV of Rs. 53.98 per share. (at the upper cap).
If we attribute FY23 earnings to the post-IPO fully diluted paid-up equity capital of the company, then the asking price is at a P/E of 19.24. Thus the issue is fully priced based on its FY23 performance.
DIVIDEND POLICY:
The company has not declared/paid any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Time Techno, TPL Plastech, and Mold-Tek Packaging as their listed peers. They are currently trading at a P/E of 27.70, 20.37, and 41.23 (as of August 10, 2023). However, they are not truly comparable on an apple-to-apple basis.
MERCHANT BANKER'S TRACK RECORD:
On the merchant banker's performance front, this is the first mandate from PNB Investment Services Ltd. and hence it has no track record, while First Overseas Capital has handled 17 issues in the last three years out of which 11 issues closed below the offer price on the listing dates.
Review By Dilip Davda on August 10, 2023
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Pyramid Technoplast Limited offers an early investment opportunity in Pyramid Technoplast Limited. A stock market investor can buy Pyramid Technoplast IPO shares by applying in IPO before Pyramid Technoplast Limited shares get listed at the stock exchanges. An investor could invest in Pyramid Technoplast IPO for short term listing gain or a long term.
Read the Pyramid Technoplast IPO recommendations by the leading analyst and leading stock brokers.
Pyramid Technoplast IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Pyramid Technoplast IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Pyramid Technoplast IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Pyramid Technoplast IPO.
The Pyramid Technoplast IPO allotment status will be available on or around August 25, 2023. The allotted shares will be credited in demat account by August 29, 2023. Visit Pyramid Technoplast IPO allotment status to check.
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