L.K. Mehta Polymers Lists Flat at 0.14% Premium on BSE SME, Faces Selling Pressure

L.K. Mehta Polymers Limited, a plastic products manufacturer operating since 1995, made a muted entry into the public markets on Friday, February 21, 2025. The company, which specializes in manufacturing ropes, twines, and plastic granules under the "Super Pack" brand, commenced trading on BSE SME with a marginal premium despite strong IPO subscription numbers before facing selling pressure.

L.K. Mehta Polymers Listing Details 

The company's market debut presented a disconnect between primary market enthusiasm and secondary market valuation:

• Listing Time & Price: When trading commenced at market open, L.K. Mehta Polymers shares debuted at ₹71.10 on BSE SME, showing a marginal premium of 0.14% against the issue price of ₹71. This tepid opening came as a surprise given the IPO's strong oversubscription of 44.57 times.
• Issue Price Context: The company had fixed the IPO price at ₹71 per share. The market's initial response suggests investors were cautious about the valuation despite the strong subscription numbers, particularly given the company's small size and competitive sector dynamics.
• Price Evolution: By 11:27 AM IST, the stock showed weakness, trading at ₹70 after hitting an intraday high of ₹71.10 and low of ₹67.54, representing a decline of 1.41% from the issue price.

First-Day Trading Performance of L.K. Mehta Polymers

The trading activity showed active participation with bearish sentiment:

• Volume and Value: Within the first few hours, trading volume reached 5.78 lakh shares, generating a turnover of ₹4.08 crore, with 100% of traded quantity marked for delivery.
• Demand Dynamics: The stock's trading pattern showed buy orders for 16,000 shares against sell orders for 80,000 shares, indicating significant selling pressure at current levels.

Market Sentiment and Analysis

• Market Reaction: Flat opening followed by selling pressure
• Subscription Rate: The IPO had been subscribed 44.57 times overall
• Category-wise Response: Retail portion showed strongest interest at 46.25 times, followed by NII at 42.88 times

Growth Drivers and Challenges 

Expected drivers of future performance:

• Experienced promoters
• Generational management
• Quality service focus
• Strong customer relationships
• Established brand presence
• Diverse product portfolio

Potential challenges:

• High competition intensity
• Market fragmentation
• Working capital needs
• Raw material price volatility
• Small operational scale
• Margin sustainability concerns

Utilisation of IPO Proceeds 

The ₹7.38 crore raised through fresh issue will be used for:

• Working capital requirements
• General corporate purposes

Financial Performance of L.K. Mehta Polymers

The company has shown mixed results:

• Revenue of ₹18.87 crore in FY2024
• 9M FY2025 (ended December 2024) showed revenue of ₹11.98 crore with PAT of ₹0.42 crore
• Net Worth of ₹3.74 crore as of December 2024
• Total borrowings of ₹6.69 crore
• Total assets of ₹11.87 crore as of December 2024

As L.K. Mehta Polymers begins its journey as a listed entity, market participants will closely monitor its ability to maintain growth momentum and improve profitability metrics. The flat listing despite strong subscription numbers suggests investors are concerned about aggressive valuations and small scale of operations. The company's ability to manage working capital while expanding in a highly competitive plastic products sector will be crucial for potential price recovery and long-term investor confidence.