Emmvee Photovoltaic IPO Review: Bright Future or Overheated Valuation?

Pyramid Technoplast Limited is an industrial packaging company engaged in the business of manufacturing polymer based molded products (Polymer Drums) mainly used by chemical, agrochemical, speciality chemical and pharmaceutical companies for their packaging requirements. They are one of the leading manufacturers of rigid Intermediate Bulk Containers (IBC) in India manufacturing 1,000 litre capacity IBC. They also manufacture MS Drums made of mild steel (MS) used in the packaging and transport of chemicals, agrochemicals and speciality chemicals.

OBJECTS OF THE ISSUE

• Prepayment or repayment of certain outstanding borrowings.
• Funding working capital requirements of the company.
• General corporate purposes.

KEY MANAGERIAL PERSONNEL

1. Bijaykumar Agarwal

Managing Director & Chairman of the Company. He has been associated with the Company since 2002. He has over three decades of experience in packaging industry. He looks after various functions in the Company such as finance, raw material procurement, customer servicing, and business development.

2. Jaiprakash Agarwal

Whole-time Director & Chief Financial Officer of the Company. He has been associated with the Company since June 2003. He has over 19 years of experience in the packaging industry. He looks after various functions in the Company such as manufacturing, finance, accounts, sales & marketing and business development.

3. Madhu Agarwal

Whole-time Director of the Company. She holds a bachelor’s degree of commerce from the Calcutta University. She has been associated with the Company since May 2006. She has over sixteen (16) years of experience in human resource compliance and administration.

4. Chandrakant Joge

e Company Secretary and Compliance Officer of the Company. He looks after the overall corporate governance and secretarial matters of the Company. He has an experience of more than seven years.

COMPANY PROFILE

• The Company use blow molding technology to manufacture Polymer Drums and IBCs. Injection molding technology is used for manufacturing caps, closures, bungs, lids, handles, lugs, etc. for in-house use. Their products are marketed and sold under the brand name “Pyramid”.
• The company started commercial production in the year 1998 in Unit I. Presently, they have six strategically situated manufacturing units out of which four (4) are in Bharuch, GIDC, Gujarat and two (2) are situated at Silvassa, UT of Dadra and Nagar Haveli. The seventh (7) manufacturing unit is under construction at the Bharuch, GIDC, Gujarat adjacent to the existing six units.
• The total installed capacity of their Polymer Drum manufacturing units is 20,612 MTPA. The total installed capacity of their IBC manufacturing unit is 12,820 MTPA and the total installed capacity of MS Drums unit is 6,200 MTPA.

COMPETITIVE STRENGTHS

• Diverse customer base. Comprehensive product portfolio.
• Strategic location of their manufacturing units.
• Quality Standard Certifications & Quality Tests.
• Experienced Promoters and senior management team.

KEY STRATEGIES

• Continued focus on Intermediate Bulk Containers (IBC) by expanding their existing facilities.
• Continued focus on Polymer Drums and Mild Steel (MS) drums.
• Explore organic growth opportunities to increase capacity and business.
• Exploit industry opportunities arising out of the current geo-political situation and government policies.

KEY CONCERNS

• Unsecured loans of ₹ 205.39 lakhs taken by the Company from lenders can be recalled at any time. Polymer including polypropylene and polyethylene is the primary raw material consumed by the Company. Polymer is a derivative of crude oil and any substantial increase in price of crude oil or decrease in the supply of polymer could materially adversely affect the Company’s business.
• Their Business has substantial working capital requirements. They require significant amount of working capital for purchasing key raw materials which they procured from domestic and international suppliers.
• The company has experienced negative net cash flow from operating activities in the past . The company face competition from various domestic manufacturers and traders.
• Any ban on polymer based packaging by the Government of India may affect the business.

COMPARISON WITH LISTED INDUSTRY PEERS (AS ON 31ST MARCH 2023)

FINANCIALS (RESTATED CONSOLIDATED)

OUTLOOK & VALUATION

Pyramid Technoplast is a well-established player in the plastic packaging industry with a proven track record of financial performance. The company has a strong brand presence and a wide customer base, and it is also expanding its operations. It has strategic locations for its manufacturing units. However, the company faces some risks, such as competition from new entrants, fluctuations in the price of raw materials, and changes in government policies. Additionally, the company has experienced negative cash flow in the past. Nevertheless, the IPO is fairly priced at a P/E of around 16.24x. Thus, after considering all these factors, high-risk investors may apply for this IPO.

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DISCLAIMER:

The information contained herein are strictly confidential and are meant solely for the information of the recipient and shall not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written permission of Swastika Investmart Ltd. (“SIL”). The contents of this document are for information purpose only. This document is not an investment advice and must not alone be taken as the basis for an investment decision. Before taking any decision to invest, the recipient of this document must read carefully the Red Herring Prospectus (“RHP”) issued to know the details of IPO and various risks and uncertainties associated with the investment in the IPO of the Company. All recipients of this document must before acting on the given information/details, make their own investigation and apply independent judgment based on their specific investment objectives and financial position. They can also seek appropriate professional advice from their own legal and tax consultants, advisors, etc. to understand the risks and investment considerations arising from such investment. The investor should possess appropriate resources to analyze such investment and the suitability of such investment to such investor’s particular circumstances before making any decisions on the investment. The Investor shall be solely responsible for any action taken based on this document. SIL shall not be liable for any direct or indirect losses arising from the use of the information contained in this document and accept no responsibility for statements made otherwise issued or any other source of information received by the investor and the investor would be doing so at his/her/its own risk. The information contained in this document should not be construed as forecast or promise or guarantee or assurance of any kind. The investors are not being offered any assurance or guaranteed or fixed returns on their investments. The users of this document must bear in mind that past performances if any, are not indicative of future results. The actual returns on investment may be materially different than the past. Investments in Securities market products and instruments including in the IPO of the Company are highly risky and they are generally not an appropriate avenue for someone with limited resources/ limited investment and low risk tolerance. Such Investments are subject to market risks including, without limitation, price, volatility and liquidity and capital risks. Therefore, the users of this document must carefully consider all the information given in the RHP including the risks factors before making any investment in the Equity Shares of the Company.Swastika Investmart Ltd or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither Swastika Investmart Ltd nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. Swastika Investment Ltd may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any compensation/benefits from the Subject Company or third party in connection with the Research Report.CORPORATE & ADMINISTRATIVE OFFICE - 48, Jaora Compound, M.Y.H. Road, Indore - 452 001 | Phone 0731 - 6644000Compliance Officer: Ms. Sheetal Duraphe Email: compliance@swastika.co.inPhone: (0731) 6644 241Swastika Investmart Limited, SEBI Reg. No. : NSE/BSE/MSEI: INZ000192732 Merchant Banking: INM000012102 Investment Adviser: INA000009843 MCX/NCDEX: INZ000072532 CDSL/NSDL: IN-DP-115-2015 RBI Reg. No.: B-03-00174 IRDA Reg. No.: 713.

SBFC Finance Limited is a non-deposit taking non-banking finance company (“NBFC-ND-SI”) offering Secured MSME Loans and Loans against Gold, with a majority of its borrowers being entrepreneurs, small business owners, self-employed individuals, salaried and working-class individuals.

• Among MSME-focused NBFCs in India, SBFC has one of the highest assets under management (“AUM”) growth, at a CAGR of 44% in the period from Fiscal 2019 to Fiscal 2023.
• The company has a diversified pan-India presence, with an extensive network in its target customer segment. As of March 31, 2023, it has an expansive footprint in 120 cities, spanning 16 Indian states and two union territories, with 152 branches.

• The Company’s complete portfolio of loans has in-house origination and benefits from its risk management framework. Leveraging its significant operational experience, it has set up stringent credit quality checks and customised operating procedures that exist at each stage for comprehensive risk management.
• The company primarily focus on small enterprise borrowers, whose monthly income is up to ₹ 0.15 million, with a demonstrable track record of servicing loans such as gold loans, loans for two-wheeler vehicles and have a CIBIL score above 700 at the time of origination.
• SBFC source customers directly through its sales team of 1,911 employees as of March 31, 2023, and has adopted a direct sourcing model through branch-led local marketing efforts, repeat customers or through walk-ins, which has helped it to maintain contact with customers and establish strong relationships with them.
• The company has also created an onground collections infrastructure that is extensive, to ensure that it maintain a high asset quality.

KEY MANAGERIAL PERSONNEL    

1. Neeraj Swaroop is an Independent Director and Chairperson of the Board. He has been associated with the Company since November 21, 2017. Prior to joining this Company, he was associated with Pond’s (India) Limited, Bank of America, HDFC Bank Limited, Standard Chartered Bank and Singapore Exchange Limited
2. Aseem Dhru is the Managing Director and Chief Executive Officer of the Company. He has over 25 years of experience in the banking industry and has been associated with the Company since September 28, 2017.
3. Narayan Barasia, is the Chief Financial Officer of the Company. In his current role, he is responsible for financial management, accounts, tax, treasury, secretarial and legal matters. He has more than two decades of experience.
4. Jay Mistry, is the Company Secretary and Compliance Officer of the Company. In his current role, he is responsible for secretarial and regulatory compliance of the Company. He has more than five years of experience in securities and corporate laws, and corporate compliances.
5. Mahesh Dayani, is chief business officer of the company. He has over 22 years of experience across wholesale and retail banking.
6. Saiprashant Menon is the chief collection officer of the company.He has more than 21 years of experience in collections.

COMPETITIVE STRENGTHS

• Diversified pan-India presence with an extensive network to cater the target customer segment.
• 100% in-house sourcing, leading to favourable business outcomes.
• Comprehensive credit assessment, underwriting and risk management framework.
• Extensive on-ground collections infrastructure leading to maintenance of asset quality.
• Healthy liability franchise with low cost of funds.
• Consistent financial performance backed by profitable growth
• Experienced, cycle-tested and professional management team

KEY STRATEGIES

• Leverage pan-India network to deepen its penetration in the target customer segment.
• Expand its product portfolio through offering affordable housing finance.
• Diversify its source of borrowings and improve operating leverage.

KEY CONCERNS

• It require substantial capital for its business and any disruption in its sources of capital could have an adverse effect on the business.
• Their business is particularly vulnerable to interest rate risk, and volatility in interest rates for both lending and treasury operations, could have an adverse effect on it.
• Inability to compete effectively in an increasingly competitive industry may adversely affect its net interest margins, income and market share.
• Any downgrade in its credit ratings could increase borrowing costs.
• Risk arising from collateral for its portfolio.

COMPARISON WITH LISTED INDUSTRY PEERS (AS ON 31ST MARCH 2023)

FINANCIALS (RESTATED CONSOLIDATED)

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‍OUTLOOK & VALUATION:

SBFC is a well-established company with consistent financial performance and a stable asset quality; it is showing growing AUM and a decline in its NPAs. It has a diversified presence across India, and its access to diversified funding sources is a key contributor to its growth. However, there are a few risks as well. SBFC is dependent on a few key customers. Secondly, The company is also exposed to fluctuations in the price of securities it takes as collateral for loans. Additionally, an increase in interest rates could pose a challenge for the company. Nevertheless, the Issue looks fairly priced, and after considering all these factors, we believe that investors may consider to apply for this IPO.

Disclaimer: The content provided above is for informational and educational purposes only. It does not constitute or imply a recommendation to engage in any securities transactions or investment strategies. We do not provide personalized advice or determine suitability for individuals' financial needs. Please conduct your own analysis and consider your personal circumstances before making any investment decisions.

कीमती धातुओं में इस सप्ताह भी ब्याज दरों में बढ़ोतरी की सम्भावना के बीच, कीमतों में बिकवाली का दबाव देखा गया। दुनिया की सबसे बड़ी अर्थव्यवस्था में मजबूती और मुद्रास्फीति में बढ़ोतरी निवेशकों को वैश्विक ब्याज दरों के दायरे पर पुनःविचार करने के लिए बाध्य कर रहा है। ग्लोबल बॉन्ड मार्केट में बिकवाली के कारण अमेरिकी बेंचमार्क ट्रेज़री यील्ड 2007 के स्तरों के करीब जबकि यूके में बांड यील्ड 2008 के उच्च स्तरों के करीब पहुंच गई है। दरसल, पिछले सप्ताह फेड के मीटिंग मिनट्स जारी हुए जिसमे स्पष्ट हुआ है की फेड के ज़्यादातर सदस्य आगे भी ब्याज दर बढ़ोतरी के पक्ष में है, जिससे बांड यील्ड में बढ़ोतरी देखने को मिल रही और इसके सपोर्ट से अमेरिकी डॉलर इंडेक्स मजबूत हुआ है। मजबूत बांड यील्ड से डॉलर 83.1 रुपये हो गया है जिससे घरेलु बाज़ार में सोने में कॉमेक्स वायदा की तुलना में कम गिरावट रही।अमेरिकी डॉलर के मुकाबले रुपये के मूल्य में गिरावट के प्रमुख कारणों में से एक 10-वर्षीय भारत सरकार बांड और अमेरिकी सरकार बांड के बीच कम होती स्प्रेड है। भारत और अमेरिका में बॉन्ड यील्ड स्प्रेड 2007 के बाद न्यूनतम स्तरों पर है। एमसीएक्स सोने में लगातार तीसरे सप्ताह भी गिरावट रही है और अक्टूबर वायदा सोने में पिछले सप्ताह 0.90 प्रतिशत की गिरावट दर्ज की गई है और भाव 58375 रुपये प्रति दस ग्राम के स्तरों पर पहुंच गए है। हालांकि एमसीएक्स में सितम्बर वायदा चांदी में पिछले सप्ताह मामूली बढ़ोतरी दर्ज की गई है।

तकनिकी विश्लेषण : इस सप्ताह कीमती धातुओं के भाव दबाव में रहने की सम्भावना है। एमसीएक्स अक्टूबर वायदा सोने में सपोर्ट 57000 रुपये पर है और रेजिस्टेंस 59000 रुपये पर है। सितम्बर वायदा चांदी में सपोर्ट 68000 रुपये पर है और रेजिस्टेंस 71500  रुपये पर है।

Introduction

Bond futures—a financial instrument that’s widely used by investors, traders, and institutions to hedge against interest rate risks or speculate on the future movements of bond prices. If you’re new to bond futures, don’t worry! We’ll break down the concept in simple terms and help you understand how they work, why they’re used, and their potential benefits.

What are Bond Futures?

Bond futures are standardized contracts that allow investors to buy or sell a bond at a predetermined price on a future date. These contracts are traded on exchanges, and they derive their value from an underlying bond, often a government bond like the Indian Government Securities (G-Secs).

For example, if you buy a bond future contract, you’re agreeing to purchase a specific bond at a set price on a set date in the future. This allows you to lock in the bond’s price today, regardless of future market fluctuations.

Why Do Investors Use Bond Futures?

1. Hedging Interest Rate Risk: One of the primary uses of bond futures is to hedge against interest rate fluctuations. Since bond prices are inversely related to interest rates, investors use bond futures to protect themselves from potential losses due to rising interest rates.
2. Speculation: Traders also use bond futures to speculate on the direction of interest rates. For instance, if a trader believes that interest rates will rise, they might sell bond futures, anticipating that bond prices will fall.
3. Leverage: Bond futures allow investors to gain exposure to bonds without having to pay the full price upfront. This leverage can amplify both potential gains and losses.

How Do Bond Futures Work?

Here’s a simple example to illustrate how bond futures work:

• Assume you are an investor who believes that interest rates will drop in the next three months. You buy a bond future contract at a price of ₹1,000.
• If interest rates do drop, the price of the bond in the market increases, say to ₹1,050. You can now sell your bond future contract at this higher price, making a profit of ₹50 per contract.
• However, if interest rates rise instead, and the bond price drops to ₹950, you would incur a loss if you decide to sell the contract.

Benefits of Bond Futures

1. Risk Management: Bond futures are an excellent tool for managing interest rate risk. By locking in prices, investors can protect their portfolios from unfavorable market movements.
2. Liquidity: Bond futures are traded on exchanges, making them highly liquid. This allows investors to enter and exit positions with ease.
3. Transparency: Since bond futures are traded on regulated exchanges, they offer a transparent pricing mechanism, ensuring fair value transactions.

Examples of Bond Futures in the Indian Market

• NSE Bond Futures: The National Stock Exchange (NSE) in India offers bond futures contracts based on government securities. These contracts allow investors to hedge their positions or take speculative bets on the movement of government bond yields.
• 10-Year G-Sec Futures: A popular bond future in India is based on the 10-year government bond. Investors use this contract to hedge against long-term interest rate movements.

Risks and Considerations

1. Leverage Risk: While leverage can magnify gains, it can also magnify losses. Investors must be cautious when using leverage in bond futures trading.
2. Market Risk: The value of bond futures is affected by changes in interest rates and bond prices. Unexpected market movements can lead to significant losses.
3. Complexity: Bond futures can be complex instruments, requiring a solid understanding of interest rates, bond pricing, and market dynamics.

Conclusion

Bond futures are powerful tools for managing interest rate risks and speculating on bond price movements. They offer benefits such as risk management, liquidity, and transparency but also come with risks like leverage and market volatility. 

1. Definition:

LTP, or Last Traded Price, is the price at which the most recent trade of a stock or security occurred. Think of it as the latest snapshot of a stock's value on the market. For instance, if you're looking at the stock of Reliance Industries, the LTP is the price at which the last trade of Reliance shares was executed.

2. Importance:

The LTP is crucial for investors because it represents the current market value of a stock. It reflects the most recent transaction and provides insight into how the market views that security at this very moment. For example, if the LTP of HDFC Bank is ₹1,500, this is the price at which the last trade happened, indicating the latest sentiment and valuation for HDFC Bank shares.

3. How It Works:

LTP is updated in real-time or at short intervals on stock exchanges. Every time a trade is executed, the LTP is refreshed to reflect the new transaction price. This means that if you check the LTP of Infosys now, it might be different from what it was a few minutes ago due to ongoing trades.

4. Usage:

Traders and investors use LTP to make informed decisions about buying or selling stocks. If you see that the LTP of Tata Motors has increased from ₹400 to ₹420, it may indicate that the stock is trending upwards, which could influence your decision to buy or sell. Essentially, LTP helps you gauge the current market conditions and decide your next move.

5. Example:

Let’s say the LTP of ICICI Bank is ₹800. This means the most recent trade was executed at ₹800 per share. If previously the price was ₹780, the new LTP suggests that the stock has seen a recent rise in value. This change can signal various things, such as positive news about the company or general market trends.

6. Difference from Other Prices:

• LTP vs. Bid Price: The bid price is the highest price a buyer is willing to pay for a stock. For example, if you see a bid price of ₹795 for State Bank of India, it means buyers are willing to pay up to ₹795. In contrast, LTP is the price at which the most recent trade occurred, which could be higher or lower than the bid price.
• LTP vs. Ask Price: The ask price is the lowest price a seller is willing to accept for a stock. If the ask price for Bharti Airtel is ₹805, it means sellers are willing to accept at least ₹805. The LTP, however, reflects the price at which the last trade happened, which might be close to or different from the ask price.

Understanding LTP helps investors stay updated about the latest trading activity and make better investment decisions. By keeping track of the LTP of various stocks like SBI, Infosys, or Tata Motors, you can get a clearer picture of market trends and the current value of your investments.

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An Initial Public Offer (IPO) marks a pivotal moment for a privately held company as it ventures into the public market, offering its shares to the general public for the first time. This transition requires meticulous planning and preparation. A critical element that contributes to the triumph of an IPO is the involvement of Anchor Investors. This blog will delve into the significant role these institutional investors play in the IPO process.

What are Anchor Investors?

Anchor Investors refer to prominent institutional investors such as investment banks, mutual funds, pension funds, insurance companies, and other significant players. They play a vital role by making substantial investments in an IPO, aiming to provide stability to the stock price and inspire confidence among potential investors.

Role of Anchor Investors in an IPO:

Providing Stability to Stock Price:

• Anchor Investors' substantial investment in the IPO stabilizes the stock price during its initial listing phase.
• This stability instills confidence in other investors and encourages them to participate in the IPO.

Offering Validation:

• The presence of Anchor Investors sends a strong signal that the company is financially sound and possesses promising prospects.
• Their investment serves as an endorsement of the company's future potential, attracting more investors to participate in the IPO.

Building Credibility:

• Anchor Investors' extensive experience and expertise in investing lend credibility to the company.
• Their participation boosts investors' confidence, positioning the company as an attractive investment opportunity.

Improving Allocation:

• Anchor Investors typically receive a preferential allocation of shares in the IPO.
• This strategic allocation enhances the overall distribution of shares, mitigates the risk of oversubscription, and fosters market stability.

Providing Liquidity:

• The investment from Anchor Investors ensures sufficient demand for the stock, preventing excessive falls in the stock price.
• This liquidity attracts more investors to participate in the IPO, allowing the company to raise the necessary capital.

Offering Support:

• Beyond the IPO, Anchor Investors continue to hold their shares even during challenging times.
• Their unwavering support sustains confidence among other investors and contributes to the company's ongoing financial stability.

In conclusion, Anchor Investors play an indispensable role in the triumph of an IPO. Their significant investment imparts stability to the stock price, enhances the company's credibility, and entices more investors to partake in the IPO. Furthermore, their ongoing support contributes to the company's continued financial stability. For companies planning an IPO, understanding and seeking the support of Anchor Investors is pivotal to navigating this transformative process successfully.