HP Adhesives Ltd IPO
IPO Details
- Open Date 15-Dec-21
- Close Date 17-Dec-21
- Lot Size 50
- IPO Size ₹ 125.96 Cr
- IPO Price Range ₹ 262 to ₹274
- Min Investment ₹ 13,100
- Listing Exchange NSE, BSE
- Basis of Allotment 22-Dec-21
- Refunds 23-Dec-21
- Credit to Demat Account 24-Dec-21
- Listing Date 27-Dec-21
HP Adhesives Ltd IPO Subscription Status
| Category | Subscription Status |
| Qualified Institutional (QIB) | 1.82 Times |
| Non-Institutional (NII) | 19.04 Times |
| Retail Individual | 81.24 Times |
| Total | 20.96 Times |
HP Adhesives IPO Subscription Details (Day by Day)
| Date | QIB | NII | Retail | Total |
| December 15, 2021 17:00 | 0.00x | 0.38x | 18.57x | 3.48x |
| December 16, 2021 17:00 | 0.34x | 1.90x | 40.29x | 8.03x |
| December 17, 2021 17:00 | 1.82x | 19.04x | 81.24x | 20.96x |
IPO Synopsis
HP Adhesives Ltd, the adhesives and sealant company’s IPO is to open for subscription between December 15 and December 17. The company is going to be listed on the stock exchange on December 27th. The price band of the issue is set as Rs.262-Rs.274 per share. The minimum investment required to apply for the IPO is Rs.13,700 that is, 50 shares* Rs.274 (1 lot= 50 shares).
The issue comprises of a fresh issue of 41,40,000 equity shares and an offer for sale up to 4,57,200 equity shares which are being sold by the various shareholders as well as Anjana Haresh Motwani. The entire issue stands at a total of 45,97,200 equity shares. The book running lead manager to the issue is Unistone Capital Private Ltd. The promoters are Anjana Haresh Motwani and Karan Haresh Motwani.
Objectives of the issue:
1. Rs.2,550.86 lakhs is going to be kept aside to fund the capital expenditure for expansion of the current facility in Maharashtra
2. Rs.5,400 lakhs is to be kept aside for the incremental capital expenditure of the company
About HP Adhesives Ltd
HP Adhesives, founded in 1978 by the Motwani family, is a very essential part of the HP Group. The company has a wide portfolio of sealants and consumer adhesives including, PVC, cPVC, uPVC solvent cement, PVA adhesives, silicone sealant, synthetic rubber adhesive, acrylic sealant and PVC pipe lubricant. These products that are produced by the company have uses in many industries like building, construction, woodwork, footwear, foam furnishing. They also manufacture products for third parties on an order basis. The largest category produced by the company is PVC solvent cement. HP Adhesives is also one of the largest manufacturing companies in India, in the adhesive industry.
As of 30 September, 2021, the distribution of HP Adhesives comprise of 4 depots that are situated in Kolkata, Delhi, Bangalore and Indore. They engage with more than 750 distributors who cater to over 50,000 dealers in the country. The products that are produced by the company are sold in 21 countries, namely; Bahrain, Bangladesh, Ghana, Greece, Iraq, Kuwait, Mauritius, Nepal, Nigeria, Oman, Philippines, Quatar, Republic of Malawi, Saudi Arabia, Turkey, UAE, Uganda, UK, USA and Yemen.
HP Adhesives Ltd Financial Status
|
Particulars (In Rs Lakhs) |
Q2 ended 30 September, 2021 |
FY21 |
FY20 |
FY19 |
|
Total Income |
7,273.23 |
1,2387.96 |
9,790.75 |
8,797.64 |
|
Revenue |
7,051.58 |
11,816.16 |
9,547.93 |
8,741.75 |
|
PAT |
310.24 |
1,005.97 |
(467.50) |
400.07 |
|
EPS |
2.22 |
7.74 |
(3.59) |
3.08 |
|
Particulars (In Rs Lakhs) |
Q2 ended 30 September, 2021 |
FY21 |
FY20 |
FY19 |
|
Total Assets |
10,491.04 |
8,977.89 |
5,681.12 |
5,671.74 |
|
Total Borrowings |
2,973.81 |
4,220.44 |
3,461.05 |
2,358.33 |
|
Equity share capital |
1,423.49 |
1,300 |
1,300 |
1,300 |
|
Debt to Equity ratio |
0.79 |
3.33 |
13.93 |
1.61 |
Key ratios:
|
Particulars
|
Q2 ended 30 September, 2021 |
FY21 |
FY20 |
FY19 |
|
EBITDA Margin |
10.41% |
14.97% |
7.30% |
9.95% |
|
PAT Margin |
4.40% |
8.51% |
-4.89% |
4.57% |
|
ROE% |
8.30% |
79.50% |
188.00% |
27.30% |
|
ROCE% |
20.80% |
31.60% |
12.10% |
20.50% |
Key Points for HP Adhesives IPO are
IPO Key Points
-
Strengths:
1. The company has a well established brand presence and has seen a strong growth spurt of 37.5% CAGR over the last 11 years. Despite the pandemic, the company’s revenue from operations grew by 23.75% YoY form FY20 to FY21
2. HP Adhesives has a wide range of products to offer which are used by different industries, across 21 countries across the globe
3. They have a very diversified customer base
4. The company has a very extensive customer distribution network across the country with their 750 distributors, spread across 23 states and 4 union territories
5. The company is expanding its current manufacturing facility at Raigad in Maharashtra which in turn will help them in achieving their goal of a Pan-India presence. -
Risks:
1. The growth of the company is dependent on the company’s relationships with their distributors and suppliers and if there are any changes in these relationships or if the company cannot enter into further relationships, it can materially affect the business
2. The company does not have long term arrangements with their distributors and if they cannot forge new arrangements, it will affect the financials of the company
3. Under-utilization and inefficient use of the new expansions done in the manufacturing facilities will have a very adverse effect on the company
4. The company has borrowed substantial sums of money from commercial banks and if the company is unable to repay their debts, it will affect the financials of the company
Valuation and Recommendation
HP Adhesives Ltd is demanding a Price to Sales ratio of 4.26X the earnings in FY21 and a PE ratio of 35.4X, taking into consideration the upper price band of Rs.274. Compared to its competitor, Pidilite Industries that trades at a PE of 81.28X the earnings in FY21, HP Adhesives is largely undervalued. Looking at the positives, the company has a wide product portfolio, an established brand presence, plans for future expansion and a strong hold in the adhesives and sealant industry. All of this leads us to give a “Subscribe” recommendation for this company.
How to apply for IPO?
-
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current IPO section -
Enter the number of lots and price at which you wish to
apply for -
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bid will be placed with the exchange -
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Approve the mandate request on your UPI and funds
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