What You Must Know About Interarch Building Products IPO: Price ₹900 per share

About Interarch Building Products

Interarch Building Limited, an Indian corporation founded in 1983, offers complete pre-engineered steel construction solutions. The business provides complete pre-engineered steel building (PEB) installation and construction facilities, including design, engineering, manufacture, and on-site project management.

With 141,000 metric tonnes annually, the firm had the second-highest installed capacity as of March 31, 2023. Among integrated PEB firms in India, it also held a 6.1% market share in operating income in the fiscal year 2023. The company provides PEBs through pre-engineered steel building contracts ("PEB Contracts") and pre-engineered steel building materials ("PEB Sales"), such as metal ceilings, corrugated roofing, PEB steel structures, and light gauge frame systems.

Two of the company's four manufacturing facilities are in Sriperumbudur, Tamil Nadu, India; the other two are in Pantnagar, Uttarakhand, and Kichha, Uttarakhand, respectively. The company employs sales and marketing employees in Chandigarh, Punjab, and Haryana; Lucknow, Uttar Pradesh; Coimbatore, Tamil Nadu; Bhubaneshwar, Odisha; and Raipur, Chhattisgarh.

Each manufacturing facility owned by the corporation has received ISO 9001:2015 certification for its quality management systems. As of September 30, 2023, the company's internal design and engineering staff consisted of 111 competent structural design engineers and detailers. These team members have worked for the company for an average of 8.05 years.

The Objective of the Issue

• The objective involves allocating funds to establish a new Pre-Engineered Buildings (PEB) manufacturing unit in Andhra Pradesh. As part of the company’s Phase 2 capacity development, this unit aims to expand production capabilities and meet increasing market demand, enhancing operational efficiency and product offerings.
• The company plans to upgrade these key manufacturing facilities to modernise equipment, optimise production processes, and improve overall operational efficiency. This will enhance product quality, increase output capacity, and ensure the facilities remain competitive in the evolving market landscape.
• The company intends to invest in advanced IT assets to stay competitive and efficient. Upgrading the current IT infrastructure will streamline operations, enhance data management, and bolster cybersecurity, ultimately driving better decision-making and operational agility across all business functions.

Highlights of Interarch Building Products IPO

Interarch Building Products IPO is set to launch with a fixed price issue of ₹600.29 crores. The issue comprises a fresh issue of 0.22 shares with a ₹0.44 crore offer-for-sale component. Here are the key details of the IPO:

• The IPO opens for subscription on August 19, 2024, and closes on August 21, 2024.
• The allotment is expected to be finalised on Monday, August 22, 2024.
• Refunds will be initiated on Tuesday, August 23, 2024.
• Credit shares to Demat accounts are also expected on Friday, August 23, 2024.
• The company will tentatively list on BSE SME on Wednesday, August 26, 2024.
• The price band is set at ₹850 to ₹900 per share.
• The lowest lot size for the IPO application is 16 shares.
• Retail investors need to invest a minimum of ₹14,400.
• The minimum investment for High-Net-Worth Individuals (HNIs) and bNII is 14 lots (224 shares) and 70 lots (1,120 shares) amounting to ₹201,600 and ₹1,008,000.
• Ambit Private Limited and Axis Capital Limited are the book-running lead managers for the IPO.
• Link Intime India Private Ltd serves as the registrar.

Interarch Building Products IPO - Key Dates

The overall timeline for the  Interarch Building Products Limited IPO are as follows:

Interarch Building Products Issue Details/Capital History

Interarch Building Products Limited is launching an Initial Public Offering (IPO) to raise ₹600.29 crores. The issue comprises a fresh issue of 0.22 crore shares aggregating to ₹200.00 crores and an offer for sale of 0.44 crore shares aggregating to ₹400.29 crores. The IPO will be available for subscription from August 19, 2024, to August 21, 2024, with an expected allotment date of August 22, 2024. The shares will be listed on the BSE and NSE, with a tentative listing date set for August 26, 2024.

The IPO price band is fixed between ₹850 to ₹900 per share, and the minimum lot size for application is 16 shares. Retail investors will need to invest a minimum of ₹14,400, while the minimum lot size investment for small Non-Institutional Investors (sNII) is 14 lots (224 shares), amounting to ₹201,600. For large Non-Institutional Investors (bNII), the minimum lot size is 70 lots (1,120 shares), requiring an investment of ₹1,008,000.

Interarch Building Products Allocation & Minimum Investment Lot Size

The IPO shares of the company are distributed as follows:

A minimum of 16 shares, as well as multiples of that number, are up for bid. The minimum and maximum share and amount of investments made by HNIs and retail investors are shown in the table below.

SWOT Analysis: Interarch Building Products

Strengths

• Established Market Presence: Interarch Building Products Limited has a strong brand reputation in the pre-engineered buildings (PEB) and steel structures industry, supported by years of experience and a diverse portfolio of projects.
• Advanced Manufacturing Capabilities: The company’s state-of-the-art manufacturing facilities, located across strategic regions in India, allow for high-quality production with efficient turnaround times, catering to various construction needs.
• Comprehensive Product Range: Interarch offers a broad spectrum of products, from PEB structures to high-end building solutions, which cater to various industries, including automotive, aviation, and industrial sectors.
• Strong Client Relationships: The company has cultivated long-standing relationships with numerous prestigious clients, ensuring repeat business and fostering customer loyalty.
• Innovative Approach: Continuous investment in research and development has enabled Interarch to introduce innovative building solutions, staying ahead of competitors in technology and design.

Weaknesses

• Dependence on Specific Markets: A significant portion of Interarch’s revenue is derived from a few key sectors, making the company vulnerable to downturns or changes in these specific industries.
• High Capital Expenditure: The company’s growth and expansion plans require substantial capital investments, which may strain financial resources and affect profitability in the short term.
• Limited International Presence: Although strong domestically, Interarch has a relatively limited presence in international markets, potentially restricting growth opportunities globally.
• Supply Chain Vulnerabilities: Dependency on specific suppliers for raw materials can lead to production delays or cost increases due to supply chain disruptions.

Opportunities

• Expanding Infrastructure Projects: The Indian government’s focus on infrastructure development presents a significant opportunity for Interarch to increase its market share by participating in large-scale projects.
• Sustainable Building Solutions: The rising demand for eco-friendly and sustainable construction solutions allows Interarch to expand its product offerings and attract environmentally conscious clients.
• Geographical Expansion: Interarch can diversify its customer base and reduce dependence on specific markets by exploring untapped markets in domestic and international regions.
• Technological Advancements: Embracing new technologies, such as Building Information Modeling (BIM) and prefabricated construction, can enhance efficiency, reduce costs, and improve project delivery timelines.

Threats

• Economic Slowdown: A slowdown in the economy, particularly in the construction and infrastructure sectors, could reduce demand for Interarch’s products, impacting revenue and profitability.
• Intense Competition: The PEB and steel structures industry is highly competitive, with numerous players vying for market share, which could lead to pricing pressures and reduced margins.
• Regulatory Changes: Changes in government regulations or building codes could increase compliance costs or necessitate modifications in manufacturing processes, impacting operational efficiency.
• Fluctuating Raw Material Prices: The prices of key raw materials like steel are subject to fluctuations, which could increase production costs and reduce profit margins if not managed effectively

Financial Highlights: Interarch Building Products

Interarch Building Products Limited has demonstrated solid financial growth over the past three years. Between March 31, 2023, and March 31, 2024, the company’s revenue increased by 15%, from ₹1,136.39 crores to ₹1,306.32 crores, reflecting its strong market performance and growing demand for its products. During the same period, Profit After Tax (PAT) rose by 6%, reaching ₹86.26 crores in 2024, compared to ₹81.46 crores in 2023, indicating improved profitability.

The company’s assets have also expanded significantly, rising from ₹675.03 crores in 2023 to ₹755.01 crores in 2024, showcasing a solid asset base. Interestingly, Interarch’s total borrowings have decreased from ₹11.38 crores in 2023 to ₹3.36 crores in 2024, reflecting prudent financial management and reduced debt levels. However, the net worth has decreased from ₹343.8 crores in 2023 to ₹262.65 crores in 2024, which may require further analysis to understand the underlying factors. Overall, the company appears to be on a growth trajectory with increasing revenues and controlled borrowings.