Sah Polymers IPO closer to full subscription, 3 days to go. Subscribe or not?

The initial public offering (IPO) of polymer manufacturer Sah Polymers has opened for subscription on Friday, December 30, 2022 and conclude on January 4, 2023. The company has fixed a price band of ₹61 to ₹65 per share for its issue.

Sah Polymers IPO is a fresh issue of 1,02,00,000 equity shares. Pantomath Capital Advisors is the manager to the offer.

The offer consists 75 per cent of the issue is reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors (NIIs) and the remaining 10 per cent for retail investors.

The initial share-sale received bids for 48,04,470 shares against 56,10,000 shares on offer, according to data available on BSE. The category meant for retail individual investors (RIIs) received subscription for 2.07 times, non-institutional investors was subscribed fully and qualified institutional buyers (QIBs) 38 per cent.

Sah Polymers has its presence in 5 states and 1 union territory for their domestic market, based on sales made in 1QFY23 and FY22. The company proposes to utilize the net proceeds towards funding of the following objects setting up of a new manufacturing facility to manufacture new variant of Flexible Intermediate Bulk Containers (FIBC), repayment/ Prepayment of certain secured and unsecured borrowings in full or part availed by the company and the subsidiary company, funding the working capital requirements of the company, and general corporate purposes.

Marwadi Shares and Financial Services has assigned a ‘buy’ rating to this IPO as the company has a diversified product portfolio with a customer base across geographies and industries

“The Polymers market size is expected to reach $790bn by 2027, growing at a CAGR of 5.5% during the period of 2022-27. The company manufactures and sells Polypropylene which is a very lightweight polymer and used as a substitute for various other polymers. Moreover, the global market for FIBC is estimated at $6701.5mn in 2022 and is projected to reach $9109.7mn by 2028, growing at a CAGR of 5.3% which is likely to aid in the company’s growth. Based on FY22 earnings the company is valued at 38.3x P/E, 27.9x EV/EBITDA and 2.4x EV/Sales. While, the company has a quality product mix, strong customer base across geographies and industries, good financials and a wide product portfolio, the issue seems pricey based on the current financials,” said Reliance Securities.

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