Shiv Texchem Limited, an importer and distributor of hydrocarbon-based chemicals, is set to launch its IPO from October 8, 2024, to October 10, 2024. With a growing portfolio of chemicals used across industries such as paints, coatings, agrochemicals, and pharmaceuticals, the company has seen substantial growth in revenue and profit over recent years. This IPO will be listed on the BSE SME exchange. Here’s a closer look at the details of the IPO and whether you should consider applying.
Shiv Texchem IPO Details:
| Details | Values |
|---|---|
| IPO Open Dates | October 8, 2024 – October 10, 2024 |
| Price Band | ₹158 to ₹166 per share |
| Lot Size | 800 shares |
| Minimum Investment | ₹1,26,400 |
| Total Issue Size | ₹101.35 crore |
| Fresh Issue | 6,105,600 shares (aggregating to ₹101.35 Cr) |
| Listing at | BSE SME |
| Listing Date | October 15, 2024 |
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About Shiv Texchem
Shiv Texchem, founded in 2005, is engaged in importing and distributing hydrocarbon-based chemicals, including acetyls, alcohols, aromatics, and other secondary and tertiary chemicals. These chemicals are essential raw materials for industries such as paints, coatings, agrochemicals, specialty polymers, and pharmaceuticals. The company sources chemicals from international markets like China, the US, the Netherlands, South Korea, and more, redistributing them to large domestic companies.
Key Customers: Shiv Texchem supplies to well-known domestic firms such as Apcotex Industries, Hemani Industries, and Gujarat Fluorochemicals, which demonstrates its robust business relationships.
Financial Performance
Shiv Texchem has shown consistent financial growth over the past few years, expanding both its product portfolio and customer base. Here’s a snapshot of its financials:
| Metrics | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenue (₹ Cr) | 859 | 1,118 | 1,535 |
| Total Assets (₹ Cr) | 425 | 602 | 799 |
| Profit (₹ Cr) | 13.86 | 16.03 | 30.11 |
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Strengths of Shiv Texchem
- Expanding Product Portfolio: The company has expanded its product range from 21 products in FY22 to 39 by FY24, enabling it to serve a broader range of industries.
- Growing Customer Base: Shiv Texchem’s customer base has increased from 400 customers in FY22 to over 650 customers in FY24, showing its successful market penetration.
- Steady Financial Growth: The company has shown consistent revenue growth, with an increase from ₹858.66 crore in FY22 to ₹1,534.90 crore in FY24. The profit after tax (PAT) also nearly doubled from ₹13.86 crore in FY22 to ₹30.11 crore in FY24.
- Established Supplier Network: The company has expanded its network of suppliers from 30 in FY22 to 60 in FY24, which helps in ensuring a stable supply chain.
Risks
- Low Profit Margins: Despite growing revenues, Shiv Texchem operates with relatively low profit margins (PAT margin of 1.78%), which can make it vulnerable to market fluctuations.
- Industry Dependency: The company’s business depends heavily on the availability of raw materials and prices in the global petrochemical market, which can be volatile.
- Debt-to-Equity Ratio: Shiv Texchem has a Debt/Equity ratio of 1.33, indicating moderate leverage. High debt could impact profitability, especially in an economic downturn.
- Niche Market Exposure: The company’s focus on specific chemicals and industries could limit its growth potential if demand from these industries declines.
Key Performance Indicators (As of March 31, 2024)
- ROE: 5.08%
- ROCE: 7.16%
- Debt/Equity: 1.33
- P/BV: 1.4
- PAT Margin: 1.78%
Objects of the IPO
The funds raised from this IPO will be used to meet:
- Long-term working capital requirements – This will help Shiv Texchem continue its growth trajectory by ensuring sufficient liquidity.
- General corporate purposes – These funds may be used for operational expansion, enhancing business operations, or any future investments.
Shiv Texchem IPO Lot Size
Investors can bid for a minimum of 800 shares and in multiples thereafter. Below is the investment requirement based on the price band:
| Application | Lots | Shares | Amount (₹) |
|---|---|---|---|
| Retail (Min) | 1 | 800 | 1,32,800 |
| Retail (Max) | 1 | 800 | 1,32,800 |
| HNI (Min) | 2 | 1,600 | 2,65,600 |
Shiv Texchem IPO Promoter Holding
- Pre-Issue Holding: 100% (Promoters: Vikas Pavankumar, Hemanshu S. Chokhani, Pavankumar Sanwaria Realty Pvt Ltd, and Hemanshu Syntex Pvt Ltd).
- Post-Issue Holding: Will be diluted based on the fresh issue of shares.
Shiv Texchem IPO Review: Apply or Not?
Investment Verdict: [Apply]
According to Dilip Davda, Shiv Texchem presents a promising opportunity for medium to long-term investors. The company operates with an asset-light model, focusing on importing and distributing essential hydrocarbon-based chemicals. It has shown consistent growth in revenue and profits, indicating strong business fundamentals. Moreover, the IPO is reasonably priced based on FY25 earnings, making it an attractive bet for investors looking for long-term gains.
Why You Should Apply:
- Consistent Growth: The company has shown consistent growth in both revenue and profits.
- Strong Industry Relationships: With a growing customer base and solid supplier networks, Shiv Texchem is well-positioned for continued expansion.
- Attractive Valuation: Based on its recent financial performance, the IPO price appears to be well within reasonable valuation limits.
Why You Might Avoid:
- Low Profit Margins: The company operates on thin profit margins, which could be risky in volatile market conditions.
- Debt Levels: While manageable, the company’s debt-to-equity ratio may be a red flag for conservative investors.
Overall, Shiv Texchem’s solid growth, combined with its reasonable valuation, makes this IPO a good opportunity for those looking for medium to long-term investment.
Shiv Texchem IPO Registrar
- Registrar: Link Intime India Private Ltd
- Phone: +91-22-4918 6270
- Email: shivtexchem.smeipo@linkintime.in
- Website: Link Intime IPO Status