Platinum Industries Restricted – IPO Observe

Objects of the provide

• Funding in Subsidiary, Platinum Stabilizers Egypt LLC (“PSEL”) for financing its capital expenditure necessities in relation to the establishing of a producing facility for PVC Stabilizers in Egypt.
• Funding of capital expenditure necessities in the direction of establishing of a producing facility for PVC Stabilizers at Palghar, Maharashtra.
• Funding basic working capital necessities of the corporate.
• Basic company functions.

Funding Rationale

• Broadening world footprint – To cater to the rising market demand for the corporate’s merchandise, particularly PVC stabilizers, and to increase its presence in new areas, Platinum Industries is within the means of deepening its presence within the Center East and North Africa (MENA) area. The corporate’s subsidiary PSEL is establishing a brand new manufacturing facility for PVC stablizers at Egypt. At the moment, as per CRISIL report, there are not any producers of PVC stabilizers in Egypt. The proposed facility is predicted to have a capability of 30,000 TPA and is predicted to start operations by the fourth quarter of FY2024-25.

• Growth plans – The corporate is establishing a brand new manufacturing facility for PVC components at Palghar, Maharashtra, India. That is as a part of the corporate’s technique to have a devoted, modernised and automatic non-lead-based facility for PVC stabilizers, which can enable the corporate to fabricate high quality stabilizers and PVC components in a well timed and cost-efficient method. The put in capability of the ability is proposed to be an combination of 60,000 MTPA of PVC stabilizers (Non-Lead Based mostly).

• Diversified product portfolio – The corporate has various merchandise for the PVC business available in the market and a number of product classes akin to low lead-based stabilizer, calcium zinc-based stabilizer and natural based mostly stabilizer. In PVC purposes, it has developed greater than 400 grades, which assist covers nearly all of prospects in addition to totally different purposes.

• Monetary observe report – Income from operations have grown from Rs. 89.14 crores in FY2021 to Rs.234.06 crores in FY2023, registering a CAGR of 62.04% within the final three fiscal years. EBIDTA have grown from Rs.0.17 crores in FY2018 to Rs.50.94 crores in FY2023, registering a CAGR of 158.43% in six years due to improve in gross sales of excessive margin merchandise i.e. lead-free merchandise, introduction of recent merchandise i.e. CPVC components, improve in manufacturing capacities and management on uncooked materials buy prices. PAT has grown from Rs.4.82 crores in FY2021 to Rs.37.58 crores in FY2023, registering a CAGR of 174.04% in final three fiscal years.

Key dangers

• Dependence on single manufacturing facility – The corporate operates out of a single manufacturing facility which is positioned at Palghar, Maharashtra, any localized social unrest, pure catastrophe or breakdown of companies or every other pure catastrophe in and round Palghar, Maharashtra or any disruption in manufacturing at, or shutdown of, the manufacturing unit might have materials hostile impact on enterprise and monetary situation.

• Foreign exchange Threat – The corporate is uncovered to international change dangers, because it conducts a good portion of operations from worldwide markets in foreign exchange. Fluctuations in change charges might have an effect on its monetary efficiency.

Outlook

The Indian specialty chemical business is predicted to succeed in $48.1 billion by fiscal 2026, rising at 8.3% CAGR over 2023-26. In response to the CRISIL Report, Platinum Industries Ltd. is the third largest participant of PVC stabilizer by way of gross sales with an ~13.00% market share for the monetary 12 months 2022-23 within the home market. As per RHP, there are not any listed firms that solely undertake the manufacturing of PVC stabilizers and CPVC components. Therefore, foundation components akin to the size of the enterprise, publicity to the development and industrial applicant business (as speciality chemical substances business contributes nearly all of income from operations for the Firm), a proxy set of listed friends of Supreme Petrochem Ltd and Apcotex Industries Ltd (the “Business Friends”) have been recognized for Platinum Industries. The friends are buying and selling at a median P/E of 23.38x with the best P/E of 24.39x and the bottom being 22.36x. On the larger worth band, the itemizing market cap of Platinum Industries Restricted might be round ~Rs.939.22 crores and the corporate is demanding a P/E a number of of 24.99x based mostly on publish problem diluted FY23 EPS of Rs.6.84. Compared with its friends, the problem appears to be totally priced in (pretty valued). Based mostly on the above views, we offer a ‘Subscribe’ score for this IPO for a medium to long-term Holding.

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