Comprehensive Analysis of Malpani Pipes and Fittings IPO: Everything Investors Need to Know
The Malpani Pipes and Fittings IPO is a much-anticipated event in the Indian SME IPO space. Scheduled to open for bidding on 29th January 2025, the IPO offers an opportunity for investors to participate in a fast-growing company operating in the pipes and fittings sector. Below is a comprehensive analysis of the IPO, including financial highlights, competitive positioning, risks, and potential for investors.
Overview of Malpani Pipes and Fittings IPO
- IPO Open Date: 29th January 2025
- IPO Close Date: 31st January 2025
- Face Value: Rs 10 per share
- Price Band: Rs 85 to Rs 90 per share
- Lot Size: 1,600 shares
- Issue Size: 28,80,000 equity shares (Rs 25.92 crore)
- Issue Type: Book Built Issue
- Listing At: BSE and SME platforms
- Registrar: Bigshare Services Pvt. Ltd.
- Lead Manager: Interactive Financial Services Ltd.
This IPO consists entirely of a fresh issue of 28,80,000 shares. The proceeds will primarily be used for capital expenses, debt repayment, and general corporate purposes.
Company Overview
Incorporated in 2017, Malpani Pipes and Fittings Limited is a manufacturer of high-quality plastic pipes and fittings. The company’s products cater to diverse sectors, including irrigation, sewerage, water supply, boreholes, tube wells, and optical fiber installations. The company’s offerings include HDPE pipes, MDPE pipes, drip irrigation pipes, and lateral pipes (LLDPE).
Manufacturing Facility
- Location: Ratlam, Madhya Pradesh
- Production Lines: 10
- Installed Capacity: 11,500 M.T.P.A.
- Workforce: 51 full-time employees and 30 contractors (as of December 2024)
The company has demonstrated consistent growth, backed by effective inventory management and a focus on expanding its product portfolio.
Financial Performance
Financial analysis is critical in understanding the potential of the IPO. Below are the key financial highlights:
Revenue and Profit Growth
- FY2023-24 Revenue: Rs 141.16 crore (70.97% growth from Rs 82.57 crore in FY2022-23)
- Profit After Tax (PAT): Rs 7.40 crore (255.76% increase from Rs 2.08 crore in FY2022-23)
Balance Sheet Highlights
| Year Ended | 30th Sept 2024 (in cr.) | 31st Mar 2024 (in cr.) | 31st Mar 2023 (in cr.) | 31st Mar 2022 (in cr.) |
|---|---|---|---|---|
| Assets | 90.76 | 61.35 | 38.94 | 21.30 |
| Borrowings | 35.74 | 30.29 | 19.59 | 8.98 |
| Net Worth | 19.73 | 14.77 | 5.83 | 3.76 |
Key Ratios
| Indicator | Value |
|---|---|
| Price-to-Earnings (PE) | 2.42 |
| Price-to-Book (PB) | 1.48 |
| Earnings Per Share (EPS) | Rs 37.17 |
| Return on Equity (ROE) | 71.52% |
| Return on Capital Employed (ROCE) | 21.74% |
| Debt-to-Equity Ratio | 2.04 |
The financial data highlights strong revenue growth, a significant increase in profits, and an efficient capital structure.
Grey Market Premium (GMP) Trends
Grey Market Premium (GMP) indicates the sentiment around an IPO. As of 28th January 2025, the GMP for Malpani Pipes and Fittings IPO is Rs 25, suggesting an estimated listing price of Rs 115 and potential listing gains of 27.78%.
| Date | GMP (in Rs) | Estimated Listing Price | Estimated Listing Gains |
|---|---|---|---|
| 28-01-2025 | Rs 25 | Rs 115 | 27.78% |
| 24-01-2025 | Rs 20 | Rs 110 | 22.22% |
| 23-01-2025 | Rs 19 | Rs 109 | 21.11% |
While GMP is a good indicator of demand, it is subject to fluctuations based on market sentiment.
Peer Comparison
Comparing Malpani Pipes and Fittings with its peers offers a clear perspective on its market positioning.
| Company Name | Revenue (in cr.) | PE Ratio | EPS (in Rs) | RoNW (%) | Dividend Yield | NAV (in Rs) |
|---|---|---|---|---|---|---|
| Malpani Pipes | 141.16 | 2.42 | 37.17 | 50.07% | – | 60.80 |
| Kirti Industries | 865.94 | 29.49 | 4.40 | 3.45% | 0.15% | 39.97 |
| Supreme Industries | 3,000.10 | 43.25 | 80.44 | 28.50% | 0.92% | 417.70 |
| Astral Ltd. | 1,630.30 | 74.96 | 19.56 | 23% | 0.26% | 125.34 |
| Finolex Industries | 1,240.10 | 15.35 | 12.92 | 7.43% | 1.26% | 109.39 |
Malpani Pipes has a low PE ratio and high EPS, reflecting its value for investors. However, its smaller scale of operations compared to established players may be a limiting factor.
Strengths of Malpani Pipes and Fittings IPO
- Strong Financial Growth: Revenue and PAT have shown impressive growth over the past two years, reflecting operational efficiency and market expansion.
- High ROE and ROCE: Return on Equity (71.52%) and Return on Capital Employed (21.74%) indicate strong profitability and efficient use of capital.
- Efficient Inventory Management: The inventory turnover ratio increased by 38%, showcasing improved operational efficiency.
- Focused Product Portfolio: A well-defined product line catering to high-demand sectors like irrigation and infrastructure enhances its market positioning.
Risks and Challenges
Despite its strengths, the IPO also poses certain risks:
- High Reliance on Limited Customers and Suppliers: The company’s dependency on a small group of suppliers and customers increases its vulnerability to disruptions.
- Pending Litigations: Ongoing legal proceedings may impact its financial stability and market reputation.
- Debt Levels: The company’s debt-to-equity ratio of 2.04 indicates a high reliance on borrowed funds, which could impact profitability in the long term.
- SME IPO Volatility: Listing on the SME platform may result in lower liquidity and higher volatility in the stock price.
IPO Objectives
The proceeds from the IPO will be used to achieve the following objectives:
- Capital Expenditure: Upgrading machinery and expanding manufacturing capacity.
- Debt Repayment: Reducing the company’s high debt levels to improve its financial position.
- General Corporate Purposes: Funding day-to-day operations and enhancing working capital.
Subscription Details and Investor Reservations
The IPO includes reservations for different categories of investors:
| Investor Category | Reservation Percentage |
|---|---|
| Qualified Institutional Buyers (QIB) | <50% |
| Retail Investors | >35% |
| Non-Institutional Investors (NII) | >15% |
Retail investors can bid for a minimum of 1 lot (1,600 shares), amounting to Rs 1,44,000. High Net Worth Individuals (HNIs) must apply for at least 2 lots (3,200 shares), requiring an investment of Rs 2,88,000.
Should You Invest in Malpani Pipes and Fittings IPO?
Pros
- High Growth Potential: The company has shown strong financial performance, including significant revenue and profit growth.
- Low Valuation Metrics: A PE ratio of 2.42 and high EPS indicate the IPO is attractively priced.
- Sectoral Growth: The pipes and fittings industry is witnessing robust demand due to increased infrastructure spending and irrigation projects.
Cons
- Operational Risks: High reliance on a limited number of suppliers and customers increases operational risks.
- Debt Dependency: A high debt-to-equity ratio could strain the company’s financial health.
- SME Market Risks: Listing on the SME platform may lead to lower liquidity.
Industry experts suggest that cash-surplus investors with a medium-term investment horizon may consider applying for this IPO. However, conducting thorough research is recommended.
Conclusion
The Malpani Pipes and Fittings IPO offers an intriguing opportunity for investors seeking to capitalize on the growth of the SME sector. With strong financials, a well-defined product portfolio, and attractive valuation metrics, the IPO has garnered positive sentiment in the market. However, investors should carefully evaluate the risks, including its dependency on a limited customer base and high debt levels.
Conducting detailed research on the company’s financial health, market positioning, and growth potential is crucial before making an investment decision. As always, consulting a financial advisor can help navigate the complexities of IPO investing. For live updates on subscription status and GMP, consider platforms like Univest.
Disclaimer: This article is for informational purposes only. Investors should consult their financial advisors and conduct independent research before investing in IPOs.
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