LK Mehta Polymers Shares Make Flat Debut on BSE SME at ₹71.10
LK Mehta Polymers Shares : In a modest market entry, LK Mehta Polymers Limited’s shares commenced trading on the BSE SME platform at ₹71.10 on Friday, February 21, 2025. This opening price reflects a slight 0.14% increase over the IPO issue price of ₹71 per share.
IPO Overview
The company’s initial public offering (IPO) aimed to raise ₹7.38 crore through the issuance of 10.40 lakh fresh equity shares. The subscription window was open from February 13 to February 17, 2025, with a fixed price of ₹71 per share. Investors were required to apply for a minimum lot size of 1,600 shares, translating to a minimum investment of ₹1.13 lakh.
Subscription Details
The IPO witnessed robust demand, being oversubscribed by 44.57 times. It received bids for 4.39 crore shares against the 9.85 lakh shares on offer. The retail investor segment saw a subscription rate of 46.25 times, while non-institutional investors (NII) subscribed 42.88 times.
Company Profile
Incorporated in 1995, LK Mehta Polymers Limited specializes in the trading and manufacturing of plastic products, including ropes and twines. The company also engages in the trading and reprocessing of raw materials such as polypropylene and polyethylene granules, serving a diverse clientele. Operating under the brand name “Super Pack,” the company emphasizes quality and customer satisfaction. It has implemented stringent systems to ensure timely deliveries and minimize errors, with meticulous checks at each stage of production and distribution.
Financial Performance
For the period ending December 2024, LK Mehta Polymers reported revenues of ₹11.85 crore and a profit after tax of ₹41 lakh. While the company has demonstrated growth in its top-line figures, its bottom-line performance has shown variability.
Utilization of IPO Proceeds
The funds raised from the IPO are earmarked for several purposes:
- Working Capital: A significant portion will address incremental working capital requirements, facilitating operational expansion and liquidity management.
- General Corporate Purposes: Remaining funds will strengthen the company’s financial position, support strategic initiatives, and address unforeseen business needs.
Market Sentiment and Grey Market Premium
Prior to the listing, the grey market premium (GMP) for LK Mehta Polymers’ shares was noted at ₹10, indicating a 14% premium over the issue price. However, the flat listing suggests that market sentiments may have tempered, aligning the trading price closely with the IPO price.
Financial Ratios and Metrics
Below is a summary of key financial metrics for LK Mehta Polymers Limited:
| Metric | Value |
|---|---|
| Market Capitalization | ₹25.9 Cr |
| Current Price | ₹67.7 |
| Stock P/E | 30.1 |
| Return on Capital Employed (ROCE) | 20.7% |
| Return on Equity (ROE) | 33.1% |
| Debt to Equity Ratio | 2.15 |
| Earnings Per Share (EPS) | ₹13.8 |
| Free Cash Flow (Last 3 Years) | ₹-0.64 Cr |
| Total Debt | ₹6.48 Cr |
Note: Some financial metrics such as Book Value, Dividend Yield, High/Low, Promoter Holding, and others were not available at the time of reporting.
Industry Context
The plastic products industry is highly competitive and fragmented. Despite the company’s efforts to carve out a niche with its “Super Pack” brand, it faces challenges from numerous players in the market. The industry has seen modest growth, with the rope segment registering a 0.24% increase in value shipments in 2022 compared to 2021, and a 10.51% compound annual growth rate (CAGR) over the period from 2017 to 2022.
Lead Managers and Registrars
Swastika Investmart Ltd served as the book-running lead manager for the IPO, while Bigshare Services Pvt Ltd was appointed as the registrar. Swastika Investmart Ltd also functioned as the market maker for the issue.
Investor Considerations
Potential investors should weigh the company’s growth prospects against the inherent risks of operating in a competitive and fragmented market. The flat debut of LK Mehta Polymers’ shares suggests a cautious market sentiment. As always, conducting thorough research and consulting with financial advisors is recommended before making investment decisions.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.