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Review By Dilip Davda on June 25, 2023
• GPIL claims to be the only manufacturer of PET machines and related parts.
• While its top line has marked growth, the bottom line posted inconsistency.
• Based on 9M-FY23 financial performance, the issue is fully priced.
• Well-informed/cash surplus investors may consider parking funds for long-term rewards.
ABOUT COMPANY:
Global Pet Industries Ltd. (GPIL) is engaged in the business of manufacturing pet machines, pet blow machines, fully automatic pet machines, semi-automatic pet machines, pet blow moulding machines, pet bottle moulds, industrial semi-automatic pet machines and spares, components, parts and accessories of such machines and equipment and other mechanical products including their components, parts and accessories.
The company is engaged in manufacturing PET Stretch Blow Moulding Machines which is used for manufacturing of machine which is suitable in the business segment of Pet stretch blow moulding solutions from 50ml to 20 Litres of PET bottles such as fridge bottles, packaged drinking mineral water bottles, carbonated soft drinks bottles, hot fill juice bottles, edible oil bottles, liquid detergent bottles, cosmetic products bottles, confectionery jars, Pharma bottles, liquor & distilleries bottles, pesticides bottles, etc. Apart from manufacturing PET Stretch Blow Moulding Machine, it also provides after-sales services such as providing spares, components, and accessories and providing repairs and maintenance of the machines after delivery. As of December 31, 2022, it had 89 employees on its payroll.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden IPO of 2700000 equity shares of Rs. 10 each at a fixed price of Rs.49 per share to mobilize Rs.13.23 cr. The issue opens for subscription on June 28, 2023, and will close on July 03, 2023. The minimum application to be made is for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.59% of the post-IPO paid-up capital of the company. GPIL is spending Rs. 0.50 cr. for this IPO process, from the net proceeds, it will utilize Rs. 9.44 cr. for the construction of the factory building, and Rs. 3.29 cr. for general corporate purposes.
Shreni Shares Ltd. is the sole lead manager as well as the market maker for the company. Bigshare Services Pvt. Ltd. is the registrar of the issue.
The company has issued/converted entire equity shares at par. It has also issued bonus shares in the ratio of 15 for 1 in January 2023. The average cost of acquisition of shares by the promoters is Rs. 0.625 per share.
Post-IPO, GPIL's current paid-up equity capital of Rs. 7.09 cr. will stand enhanced to Rs. 9.79 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 47.96 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, GPIL has posted a turnover/net profit of Rs. 20.02 cr. / Rs. 0.95 cr. (FY20), Rs. 22.86 cr. / Rs. 1.43 cr. (FY21), and Rs. 28.00 cr. / Rs. 1.16 cr. (FY22). For 9M of FY23 ended on December 31, 2022, it earned a net profit of Rs. 1.56 cr. on a turnover of Rs. 23.06 cr. Its yearly export turnover has been on an average 27% of the total revenue.
For the last three fiscals, GPIL has reported an average EPS of Rs. 1.71 and an average RoNW of 19.84%. The issue is priced at a P/BV of 4.04 based on its NAV of Rs. 12.14 as of December 31, 2022, and at a P/BV of 2.25 based on its post-IPO NAV of Rs. 21.80 per share.
Its PAT margins have posted a rollercoaster ride as it was 4.79% FY20), 6.33% (FY21), 4.20% (FY22), and 6.93% (9M-FY23).
If we annualize FY23 earnings and attribute it to the post-IPO fully diluted paid-up equity capital of the company, then the asking price is at a P/E of 23, making it a fully priced IPO.
DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy post-listing, based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.
MERCHANT BANKER'S TRACK RECORD:
This is the 18th mandate from Shreni Shares in the last three fiscals (including the ongoing one). Out of the last 10 listings, 1 opened at a discount and the rest listed at premiums ranging from 4.29% to 101.18% on the listing date.
Review By Dilip Davda on June 25, 2023
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Global Pet Industries Limited offers an early investment opportunity in Global Pet Industries Limited. A stock market investor can buy Global Pet Industries IPO shares by applying in IPO before Global Pet Industries Limited shares get listed at the stock exchanges. An investor could invest in Global Pet Industries IPO for short term listing gain or a long term.
Read the Global Pet Industries IPO recommendations by the leading analyst and leading stock brokers.
Global Pet Industries IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Global Pet Industries IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Global Pet Industries IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Global Pet Industries IPO.
The Global Pet Industries IPO allotment status will be available on or around July 6, 2023. The allotted shares will be credited in demat account by July 10, 2023. Visit Global Pet Industries IPO allotment status to check.
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