What you must know about Global Pet Industries IPO

Global Pet Industries Ltd, is an SME IPO on the NSE which is opening for subscription on 29th June 2023. The company, Global Pet Industries Ltd, was incorporated in 2013 to manufacture and export 2-stage PET-stretch Blow Moulding Machines. These machines are used to manufacture a complete range of PET bottles ranging from 50 ML bottles to 20 Litre bottles. These PET bottles are made of resistant plastic and are meant for fridge bottles, mineral water storage, carbonated soft drinks and hot fill juices. Some of other applications of these PET bottles are also in the storage of edible oils, liquid detergents, cosmetic products, and confectionary jars.

The Blow Moulding Machines manufactured by Global Pet Industries are customized to the requirements of the customers and cater to different and chemical resistance needs. Global Pet Industries Ltd also provides after sales service and necessary accessories for repairs and maintenance of such machinery. The company has 2 manufactured plants located at Palghar, near Mumbai. It has a separate domestic sales division and an international exports division. It exports to over 19 global markets with some of its chief markets being Ghana, Haiti, Kenya, Mozambique, Nigeria, Nepal, Qatar, South Africa, Tanzania etc.

Key terms of the SME IPO of Global Pet Industries Ltd

Here are some of the highlights of the Global Pet Industries IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 29th June 2023 and closes for subscription on 03rd July 2023; both days inclusive.
   
• The company has a face value of ₹10 per share and the issue price for the fresh issue portion has a fixed price of ₹49 per share.
   
• The company will issue a total of 27 lakh shares at the price of ₹49 per share aggregating to a total fund raising of ₹13.23 crore.
   
• The company has allocated 50% of the issue size for the retail investor while the balance 50% is allocated to HNI / NII investors.
   
• HNI / NII investors can invest a minimum of 2 lots comprising of 6,000 shares and having a minimum lot value of ₹294,000. There is no upper limit on what the HNI / NII investors can apply for.
   
• Like every SME IPO, this issue also has a marketing making portion with a market maker portion allocation of 138,000 shares. Shreni Shares Ltd will act as the market maker to the issue providing two-way quotes to ensure liquidity on the counter.
   
• The company has been promoted by Bipin Nanubhai Pancha and the promoter stake in the company stands currently at 100%. Post the IPO, being a fresh issue of shares, the promoter stake will be get diluted proportionately 72.41%.
   
• While Shreni Shares Ltd will also be the lead manager to the issue, Bigshare Services Private Limited will be the registrar to the issue.

The minimum lot size for the IPO investment will be 3,000 shares. Thus, retail investors can invest a minimum of ₹147,000 (3,000 x ₹49 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. The table below captures the gist.

Key dates to be aware of in the Global Pet Industries Ltd IPO (SME)

The SME IPO of Global Pet Industries Ltd IPO opens on Thursday, June 29th, 2023 and closes on Monday July 03rd, 2023. The Global Pet Industries Ltd bid date is from June 29th, 2023 10.00 AM to July 03rd, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is the 03rd of July 2023.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account.

Financial highlights of Global Pet Industries Ltd

The table below captures the key financials of Global Pet Industries Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

The profit margins have been fairly stable in the range of 4-5% on an average. However, this is only data up to FY22. We have the profits showing further growth in the first nine months of FY23, which could justify better valuations for the company. It is important to note here that the company will be using the fresh funds for capex and for factory building, which is a productive use and would be able to generate ROI for the company. The sector is fairly niche and that should give an edge to the company in this line of business.

The weighted average EPS of the last 3 years is ₹1.71 while for the 9 months to December 2022, the EPS is ₹2.20. If we use the latest EPS, we are looking at an annualized EPS of close to ₹2.03 per share which discounts the IPO price in the range of 16 times to 18 times the EPS for FY23 on an annualized basis. That is not a very steep discounting and does leave room for investors on the table. Also, the RONW has been in the range of 18% to 20% in the last four years, which should be able to justify the current P/E ratio. The IPO can be considered by investors with a higher risk appetite.