May 13, 2024

Pyramid Technoplast Lists At 13% Premium To IPO Price

Pyramid Technoplast, a manufacturer of polymer-based molded products, made its debut on the stock exchanges on August 29. The company’s initial public offering (IPO) was priced at Rs 166 per share. However, when it started trading, the stock was listed at a premium of 13 percent, opening at Rs 187 on the National Stock Exchange (NSE) and Rs 185 on the Bombay Stock Exchange (BSE).

During the subscription period, which took place from August 18 to August 22, the IPO raised a total of Rs 153 crore. The subscription statistics indicate strong demand from various investor categories:

1. Retail Category: The retail category, which includes individual investors, showed significant interest in the IPO. The subscription in this category was 14.72 times, meaning that the total number of shares applied for was almost 15 times the number of shares available for retail investors.

2. Non-Institutional Investors (NII) Category: This category includes high-net-worth individuals and other non-institutional investors. The subscription in the NII category was 32.24 times, indicating a substantial oversubscription. Similar to the retail category, the demand from NIIs far exceeded the available shares.

3. Qualified Institutional Buyers (QIB) Category: QIBs are institutional investors like mutual funds, insurance companies, and banks. The subscription in the QIB category was 9.94 times, implying that these institutional investors also showed a strong appetite for the company’s shares.

Overall, the oversubscription in all three investor categories highlights the positive sentiment and demand for Pyramid Technoplast’s shares among retail investors, high-net-worth individuals, and institutional buyers.

Pyramid Technoplast, a company based in Gujarat, has garnered attention with its successful entry into the stock market, marked by a 13 percent premium listing at Rs 187 on the NSE and Rs 185 on the BSE, surpassing its issue price of Rs 166.

The company had earlier raised Rs 27.55 crore through an anchor book allocation a day prior to the official IPO opening on August 17. Notably, prominent investors like Vikas Khemani-led Carnelian Structural Shift Fund and Alchemie Ventures Fund-Scheme I participated as anchor investors, indicating a positive outlook on the company’s prospects.

Pyramid Technoplast specializes in manufacturing polymer-based molded products, with a primary focus on polymer drums. These drums serve as essential packaging solutions for various industries, including chemicals, agrochemicals, specialty chemicals, and pharmaceuticals. The strong demand for its products stems from their critical role in safeguarding and transporting substances integral to these sectors.

The company’s strategic manufacturing units, numbering six at present, are strategically located to efficiently cater to its customer base. Moreover, an additional manufacturing unit is currently under construction in Bharuch, Gujarat, adjacent to the existing facilities.

This expansion signifies the company’s commitment to meeting growing demands while optimizing its operational capabilities. As the seventh unit takes shape, Pyramid Technoplast aims to further solidify its position in the market and continue its trajectory of success within the polymer-based molded products industry.

Pyramid Technoplast’s presence in the market is marked by its distinctive brand, “Pyramid,” under which its diverse range of products is marketed and sold. The company boasts a substantial manufacturing capacity that underscores its commitment to meeting industry demands.

In terms of polymer drum production, Pyramid Technoplast has established a noteworthy total installed capacity of 20,612 metric tons per annum (MTPA). This sizeable capacity showcases the company’s readiness to cater to the requirements of industries reliant on polymer drums for packaging and transportation needs.

Furthermore, the company extends its manufacturing capabilities to include intermediate bulk containers (IBCs), with an installed capacity of 12,820 MTPA. IBCs play a crucial role in the storage and transportation of various liquids and materials, serving industries with specific bulk packaging needs.

Adding to its diverse portfolio, Pyramid Technoplast operates in the domain of mild steel (MS) drums, boasting an installed capacity of 6,200 MTPA. These drums, known for their durability and sturdiness, cater to industries where materials necessitate a robust containment solution.

Collectively, Pyramid Technoplast’s extensive installed capacities across polymer drums, IBCs, and MS drums emphasize the company’s dedication to providing versatile and efficient packaging solutions across multiple sectors. This capacity demonstrates its ability to serve a wide range of industries, enhancing its potential for growth and market reach.

As evaluated by analysts from SBI Securities, Pyramid Technoplast’s valuation, measured at a price-to-earnings (P/E) multiple of 19.2x based on its FY23 earnings, is considered reasonable when compared to its direct peers in the industry. The analysts further emphasize that potential investors should adopt a long-term perspective when considering their investment decisions.

In the context of similar companies in the sector, Time Technoplast is valued at a P/E ratio of 13x, Mold-Tek Packaging at 40.2x, and TPL Plastech at 19.7x. This comparison underscores Pyramid Technoplast’s competitive position within its industry, with its valuation aligning more closely with that of TPL Plastech.

In the fiscal year 2023 (FY23), Pyramid Technoplast achieved noteworthy financial performance, with a net profit of Rs 31.76 crore. This figure reflects a substantial growth of 21.5 percent compared to the corresponding period of the previous year. Additionally, the company managed to expand its net profit margin by 9 basis points, resulting in a margin of 6.62 percent. These financial metrics signify the company’s ability to enhance profitability while maintaining efficient cost management.

Overall, the company’s performance, combined with its reasonable valuation in comparison to peer companies, provides investors with a basis for considering long-term investment in Pyramid Technoplast. However, potential investors should perform thorough due diligence and consider the broader market and industry trends before making any investment decisions.