Premium Plast IPO Lists at 5% Premium above Issue Price

Premium Plast Limited, a Tier-1 supplier directly serving original equipment manufacturers (OEMs) in the automotive sector, made a muted debut on the Indian stock market on Monday, 28th October 2024, with its shares listing on the NSE SME platform. The company specializes in design, manufacturing, and supply of exterior plastic components, interior cabin parts, and under-the-hood components specifically for commercial vehicle OEMs, with automotive plastic components contributing 84% of its revenue in the first nine months of FY24. Operating through three strategically located manufacturing facilities - two in Pithampur, Madhya Pradesh, and one in Vasai, Maharashtra - with a total installed capacity of 1,975 MTPA, the company made its market entry with a ₹26.20 crore initial public offering.

Listing Details

• Listing Price: Premium Plast shares were listed at ₹51.45 per share at 10:00 AM IST on NSE SME, marking a modest start to its journey as a publicly traded company. 
• Comparison to Issue Price: The listing price represents a small premium over the IPO issue price. Premium Plast IPO price band from ₹46 to ₹49 per share, with the final issue price being fixed at the upper end of ₹49.
• Percentage Change: The listing price of ₹51.45 on NSE SME translates to a premium of 5% over the issue price of ₹49.

First-Day Trading Performance

• Opening vs. Latest Price: Following its muted opening, by 11:37:18 AM IST, the stock was trading at ₹48.90, down 4.96% from its previous closing price and hitting the lower circuit.
• Market Capitalisation: As of 11:37:18 AM IST, the company's market capitalisation stood at ₹93.38 crore.
• Trading Volume: The traded volume was 16.35 lakh shares with a traded value of ₹8.34 crore, with 99.63% deliverable quantity.

Market Sentiment and Analysis

• Market Reaction: After listing, within the first 15 minutes of trading, 16.17 lakh shares changed hands with a trading value of ₹8.25 crore.
• Subscription Rate: The IPO was oversubscribed by 38.87 times (as of October 23, 2024, 6:19:58 PM), with retail investors leading at 65.37 times subscription, followed by NIIs at 19.56 times, and QIBs at 6.74 times.
• Trading Range: As of 11:37:18 AM IST, the stock hit a high of ₹51.75 and a low of ₹48.90 during early trading.

Growth Drivers and Challenges

Expected drivers of future performance:

• Long-standing relationships with established customers
• Wide range of specialised plastic products
• Robust design optimisation capabilities
• Strategic location of production units
• Quality certifications and standards compliance

Potential challenges:

• High concentration risk with one client contributing 81% of revenues
• Highly competitive and fragmented segment
• The sudden boost in bottom lines raising sustainability concerns
• Working capital-intensive business

Utilisation of IPO Proceeds

Premium Plast plans to use the funds for:

• Expansion of existing manufacturing facility at Pithampur, Madhya Pradesh
• Setting up rooftop grid solar power plant
• Repayment of borrowings
• General corporate purposes

Financial Performance

The company has demonstrated growth:

• Revenue increased by 6% to ₹4,670.59 lakhs in FY2024 from ₹4,404.83 lakhs in FY2023.
• Profit After Tax (PAT) rose by 200% to ₹477.55 lakhs in FY2024 from ₹159.32 lakhs in FY2023.

As Premium Plast begins its journey as a listed entity, market participants will closely monitor its ability to diversify its client base and maintain growth momentum. The muted listing and subsequent decline suggest cautious market sentiment despite the company's recent financial performance.