What You Must Know About SPP Polymers IPO: Price ₹59 Per Share

Incorporated in 2004, SPP Polymers Limited (formerly known as SPP Food Products Private Limited) manufactures a wide range of HDPE/PP woven fabric and bags, non-woven fabrics and bags, and Multifilament Yarn. The company is located in Rudrapur City, Uttarakhand.

SPP Polymers Limited's product portfolio includes:

1. HDPE/PP woven Fabric
2. HDPE/PP Woven Bags
3. Non-woven Fabric
4. Non-woven Bags
5. Multifilament PP Yarn
    

Key highlights of SPP Polymers Limited's operations include:

• Installed capacity: HDPE/PP Woven Fabric and bags (12,000 MT), Non-woven Fabric (4,000 MT), and Multifilament Yarn (300 MT) per annum
• ISO certifications: 9001:2015, 45001:2018, 14001:2015, and SA 8000:2014
• Customer base primarily in agro-pesticides, cement, chemical, fertilisers, food products, textile, ceramic, and steel industries
• 4 employees on payroll as of December 31, 2024
• Customised solutions according to client specifications

The Objectives of the Issue

SPP Polymers IPO intends to utilize the net proceeds from the IPO for the following purposes:

1. Expansion of production capacity: Setting up additional facilities to meet growing demand.
2. Working capital requirements: Enhancing liquidity for smooth operations.
3. General Corporate Purposes: Supporting other business-related expenses.

Highlights of SPP Polymers IPO

SPP Polymers IPO is set to launch with a fixed price issue of ₹24.49 crores. The issue is entirely fresh. Here are the key details of the IPO:

• The IPO opens for subscription on 10th September 2024 and closes on 12th September 2024.
• The allotment is expected to be finalised on 13th September 2024.
• Refunds will be initiated on 16th September 2024.
• Credit of shares to Demat accounts is also expected on 16th September 2024.
• The company will tentatively list on NSE SME on 17th September 2024.
• The price is fixed at ₹59 per share.
• The fresh issue comprises 41.5 lakh shares, aggregating to ₹24.49 crores.
• The minimum lot size for the application is 2000 shares.
• Retail investors need to invest a minimum of ₹118,000.
• The minimum investment for HNI is 2 lots (4,000 shares), amounting to ₹236,000.
• Interactive Financial Services Ltd is the book-running lead manager for the IPO.
• Kfin Technologies Limited serves as the registrar.
• B.N. Rathi Securities is the market maker responsible for 2,10,000 shares.

SPP Polymers IPO - Key Dates

The cut-off time for UPI mandate confirmation is 5:00 PM on 12th September 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.

SPP Polymers IPO Issue Details/Capital History

The SPP Polymers IPO is scheduled from 10th September to 12th September 2024, with a fixed price of ₹59 per share and a face value of ₹10. The total issue size is 4,150,000 shares, raising up to ₹24.49 crores through a fresh issue. The IPO will be listed on the NSE SME, with the shareholding increasing from 11,241,160 pre-issue to 15,391,160 post-issue. B.N. Rathi Securities is the market maker responsible for 210,000 shares within the issue.

SPP Polymers 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 2000 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: SPP Polymers Ltd

Strengths:

Diverse product portfolio catering to various industries
ISO certifications ensuring quality management and environmental standards
Customized solutions capability for client-specific needs
Strong presence in key industrial sectors

Weaknesses:

Limited employee base, potentially affecting scalability
High dependence on specific industrial sectors
Geographical concentration in Rudrapur, Uttarakhand

Opportunities:

Growing demand for packaging solutions across industries
Potential for geographical expansion
Increasing focus on eco-friendly packaging materials

Threats:

Fluctuations in raw material prices (HDPE/PP)
Intense competition in the packaging industry
Regulatory changes affecting plastic usage and manufacturing

Financial Highlights: SPP Polymers Ltd

Below are the financial results for the quarter ended June 30, 2024, and the Fiscal years FY24, FY23, and FY22:

SPP Polymers has demonstrated strong financial growth over the past three fiscal years and into the first quarter of FY25. The company's assets have shown consistent growth, increasing from ₹3,821.87 lakhs in FY22 to ₹7,619.39 lakhs in Q1 FY25, representing a growth of about 99.4% over this period. This substantial increase in assets indicates significant investments in the company's operational capabilities and infrastructure.

Revenue has shown fluctuations but overall growth. While there was a dip from ₹8,077.96 lakhs in FY22 to ₹6,677.47 lakhs in FY23, it rebounded strongly to ₹9,381.29 lakhs in FY24, marking a 40% year-over-year growth. The Q1 FY25 revenue of ₹2,895.85 lakhs suggests continued strong performance, representing about 30.9% of the previous full year's revenue in just one quarter.

The company's profitability has seen a remarkable upward trajectory. Profit after tax rose significantly from ₹28.01 lakhs in FY22 to ₹99.4 lakhs in FY24, representing an extraordinary growth of about 255% over two years. The Q1 FY25 PAT of ₹91.33 lakhs is particularly impressive, already reaching 91.9% of the entire previous year's PAT in just one quarter.

Net worth has shown steady growth, increasing from ₹1,971.82 lakhs in FY22 to ₹2,591.64 lakhs in Q1 FY25, a growth of about 31.4% over this period. This increase in net worth reflects the company's ability to generate and retain earnings, strengthening its financial position.

Total borrowings have fluctuated over the years, peaking at ₹2,215.18 lakhs in FY23 before decreasing to ₹1,871.94 lakhs in Q1 FY25. This recent reduction in borrowings, coupled with increasing assets and profitability, suggests improving financial health.

Overall, the financial performance reflects a company that is experiencing robust growth and rapidly improving its profitability. The upcoming IPO appears to be well-timed to capitalize on this growth trajectory and further strengthen the company's capital base for future expansion. Potential investors should, however, also consider the company's ability to sustain this impressive growth rate and manage the challenges that come with rapid scaling in the competitive packaging industry.