OBSC Perfection IPO: Price Band of ₹95 to ₹100 Per Share

OBSC Perfection Limited, established in 2017, is a precision metal components manufacturer offering a wide range of high-quality engineered parts for various end-user industries and regions. The company caters to Original Equipment Manufacturers (OEMs) who supply components to leading automobile manufacturers in India, as well as manufacturers in the defense, marine, and telecom infrastructure sectors. As of 23rd July 2024, the company has a product portfolio of 24 products and operates four manufacturing facilities, three in Pune, Maharashtra, and one in Chennai, Tamil Nadu.

The Objectives of the Issue

OBSC Perfection IPO aims to utilize the Net Proceeds for key objectives, including:

• Funding capital expenditure requirements for purchasing machinery for the existing manufacturing facility ("Unit III") in Tamil Nadu
• Funding capital expenditure requirements for purchasing machinery for the existing manufacturing facility ("Unit IV") in Maharashtra
• Funding working capital requirements of the Company
• General Corporate Purposes

Highlights of OBSC Perfection IPO

OBSC Perfection IPO is set to launch with a book-built issue of ₹66.02 crores, which is entirely a fresh issue. Here are the key details of the IPO:

• The IPO opens for subscription on 22nd October 2024 and closes on 24th October 2024.
• The allotment is expected to be finalised on 25th October 2024.
• Refunds will be initiated on 28th October 2024.
• Credit of shares to Demat accounts is also expected on 28th October 2024.
• The company will tentatively list on NSE SME on 29th October 2024.
• The price band is set at ₹95 to ₹100 per share.
• The fresh issue comprises 66.02 lakh shares, aggregating to ₹66.02 crores.
• The minimum lot size for the application is 1200 shares.
• Retail investors need to invest a minimum of ₹120,000.
• The minimum investment for HNI is 2 lots (2,400 shares), amounting to ₹240,000.
• Unistone Capital Pvt Ltd is the book-running lead manager for the IPO.
• Bigshare Services Pvt Ltd serves as the registrar.

OBSC Perfection IPO - Key Dates

The cut-off time for UPI mandate confirmation is 5:00 PM on 24th October 2024. This deadline is crucial for investors to ensure their applications are processed successfully. Investors are advised to complete their applications well before this deadline to avoid any last-minute technical issues or delays.

OBSC Perfection IPO Allocation & Minimum Investment Lot Size

OBSC Perfection IPO is scheduled from 22nd October to 24th October 2024, with a price band of ₹95 to ₹100 per share and a face value of ₹10. The total issue size is 66,02,400 shares, raising up to ₹66.02 crores through a fresh issue. The IPO will be listed on NSE SME. The pre-issue shareholding is 1,78,50,000 shares, and the post-issue shareholding will be 2,44,52,400 shares.

OBSC Perfection IPO Allocation & Minimum Investment Lot Size

The IPO shares are allocated across different investor categories as follows:

Investors can place bids for a minimum of 1200 shares, with additional bids required in multiples of this figure. The table below illustrates the minimum and maximum investment amounts for retail investors and HNIs, expressed in shares and monetary values.
 

SWOT Analysis: OBSC Perfection Ltd

Strengths:

• Production facilities in two major automotive hubs in India
• Strategic advantage through close supply chain with neighboring raw material suppliers
• Consistent track record of growth and financial performance
• Experienced and dedicated promoter and professional management team

Weaknesses:

• Relatively new company (established in 2017)
• High dependence on the automotive sector

Opportunities:

• Expansion into new industrial sectors beyond automotive
• Potential for technological advancements in precision engineering
• Growing demand for high-quality engineered parts in various industries

Threats:

• Intense competition in the precision engineering sector
• Fluctuations in raw material prices
• Economic slowdowns affecting the automotive industry

Financial Highlights: OBSC Perfection Ltd

Below are the financial results for recent periods:

OBSC Perfection Limited has shown significant growth in recent years. The company's revenue increased by 20%, and profit after tax (PAT) rose by 167% between the financial year ending on 31st March 2024 and 31st March 2023. 
Revenue has seen substantial growth, rising from ₹5,672.42 lakh in FY22 to ₹11,611.41 lakh in FY24, marking an impressive increase of 104.7% over two years. 

The company's profitability has improved significantly. Profit After Tax increased from ₹360.11 lakh in FY22 to ₹1,221.21 lakh in FY24, representing a substantial growth of 239.1% over two years. 

Net Worth has shown strong growth, increasing from ₹1,328.47 lakh in FY22 to ₹3,007.1 lakh in FY24, which represents an increase of about 126.4% over two years. 

However, Total Borrowings have also increased from ₹1,897.54 lakh in FY22 to ₹4,147.25 lakh in FY24, which represents an increase of about 118.6% over two years.

The company's financial performance shows a trend of strong revenue growth and significantly improving profitability, particularly in the most recent fiscal year. 

The substantial increase in PAT and Net Worth indicate a strengthening financial position. However, the increasing debt levels should be considered alongside the company's growth trajectory. The Debt-to-Equity Ratio stood at 1.38 in FY24, down from 1.87 in FY23 but still higher than 1.43 in FY22.

Investors should view these trends positively while considering the IPO, but also pay attention to the company's ability to manage its increasing debt load.