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Options trading is a type of derivatives trading where traders buy the right (but not the obligation) to buy or sell an underlying asset—such as stocks, indices, or commodities—at a fixed price before a specified date.
This right is granted through an “option contract,” which is of two types:
Options are traded heavily on Indian exchanges like NSE and BSE, with regulatory oversight by SEBI. Whether you're a retail trader or an institutional investor, options provide flexible opportunities to hedge risk, speculate on market direction, or generate income.
Options help protect your portfolio. If you own stocks and fear a market downturn, buying a Put Option acts as insurance.
Example: You hold ₹5L worth of Reliance shares. You can buy a Put Option at ₹2,500 to sell if prices fall, capping your losses.
Want to benefit from short-term price movements? Options let you trade directionally without needing full capital exposure.
Example: You expect Nifty to rise from 22,000 to 22,500. You can buy a Call Option for a small premium and benefit from the move.
Strategies like Covered Calls can earn passive income on stocks you already own.
You own the stock and sell a Call Option to earn a premium.
You own the stock and buy a Put Option to hedge downside.
Buy both a Call and Put at same strike. Profits in volatility, regardless of direction.
Buy a lower strike Call, sell a higher strike Call. Limits both loss and profit.
✅ Pro Tip: Always backtest strategies and understand your risk appetite. Options can lose 100% of premium if not exercised in time.
Always backtest strategies, stay updated with market trends, and never overleverage.
Say you buy a Call Option on Infosys at a strike of ₹1,500 with a premium of ₹30, and Infosys goes to ₹1,580.
Your profit = (₹1,580 - ₹1,500 - ₹30) × Lot size
= ₹50 × Lot size (say 300) = ₹15,000
But if Infosys stays below ₹1,500, your maximum loss is just ₹30 × 300 = ₹9,000
Yes. It's regulated by SEBI and traded on NSE and BSE.
Yes. You can buy/sell options contracts independently of the underlying.
Yes, especially if misused. However, it can be safe and strategic when used for hedging.
Profits from options are taxed as business income under Income Tax Act.
Yes, but only after understanding concepts and starting small with proper risk management.
Swastika, a SEBI-registered and trusted Indian broker, offers:
🧠 Ready to trade smart with confidence?
👉 Start your options trading journey with Swastika
Introduction
Beginners who want to build wealth from the stock market hesitate to take the first step towards stock market trading because the fear of losing money stops them from entering into it.
Stock Trading as the name suggests is a trading method where people are involved in the transaction of shares of different companies in the stock market.
You may feel surprised to know that investing in the stock market with limited funds actually helps you double your wealth.
Trading stocks can seem challenging, especially if you have limited funds. However, with the right strategies and tools, even small investors can maximize their potential returns. One such tool is margin trading. Margin trading allows you to borrow money from your broker to buy more stocks than you could with just your available cash. This blog will guide you on how to trade stocks with limited funds using the margin trading facility, providing you with tips and tricks to get started.
A small investment with a regular amount will give you a wide experience of trading in the stock market. You only need to take care of a few things:
An investment whether it is small or big has a specific reason to invest. Hence, many stock analysts advise you to set a goal before getting into the stock market as, without a clear objective, one can never achieve desired wealth.
Secondly, the goal of achieving outstanding returns, helps you decide the type, tenure and risk appetite. If you are a beginner, it is suggested to invest in the long run. This is because long term investment gives you ample opportunity to earn knowledge of the stock market. Also, setting a goal lowers the chances of investment errors.
Equity trading investment gives you a steady return if you invest in the stocks for the long term.
Excessive emotions can harm your investment amount. Hence it is suggested to control your emotions while doing stock trading. Positive stock trading returns make people happy, however, negative returns like losses make people unhappy and that’s why many people stop investing.
Successful investments can be done only if investors have an in-depth understanding of the stock market. You can invest and earn a potential return from the stock market only if you focus on the fundamentals of the stock market and keep a track of every stock market movement. You can do this by doing proper stock market research. Having adequate knowledge of the stock market can mitigate your stock market risks.
One of the best investment strategies to mitigate the risks is diversification. It allows investors to divide the investment amount into different investment categories along with their risks. Diversification of the money into different stocks will help you balance your portfolio as if one stock underperforms, the other performs well.
Margin trading provides you with a way to purchase stocks that you can’t afford. Here, you need to borrow some amount of money from the stockbroker. In margin trading, the margin is being paid in both cash and in shares.
It is a prominent feature in stock trading as it allows investors to take larger portions and uplift their returns to another level. Here, the stockbroker plays a pivotal role as it funds your margin trading transactions.
In other words:
Margin trading involves borrowing money from your broker to purchase stocks. Here's how it works:
Set a Clear Goal
Before you begin margin trading, set a clear financial goal. Ask yourself why you want to use margin trading. Are you looking to increase your returns over a short period, or are you investing for long-term growth? Having a goal helps you stay focused and make smart decisions.
Educate Yourself
Understanding the basics of margin trading is crucial. Learn about the following:
Start Small
Begin with a small amount that you can afford to lose. Margin trading amplifies both gains and losses, so it's important to start cautiously. This way, you can learn and make mistakes without significant financial impact.
Select a brokerage firm that offers favorable margin trading terms. Look for brokers with:
By choosing Swastika Investmart, you can benefit from low costs and exceptional resources, setting you on the path to successful margin trading.
Control Your Emotions
The stock market can be unpredictable, and prices can fluctuate significantly. Stay calm and avoid letting emotions drive your investment decisions. Stick to your strategy and remain focused on your long-term goals.
Monitor Your Investments
Regularly review your investment portfolio to ensure it aligns with your goals. Keep track of the performance of your stocks and make adjustments if necessary. However, avoid checking your portfolio too frequently, as short-term fluctuations can be misleading.
Be Aware of Risks
Margin trading comes with significant risks. Here are a few to keep in mind:
Best Practices for Margin Trading
The first and foremost step towards margin trading is to place a request to the stockbroker so that it can open a margin trading facility account. After opening the margin trading facility account, the stockbroker maintains a minimum balance which is called minimum margin.
Before getting started into a trade, investors are required to deposit a fixed per cent of the whole traded amount and the rest of the amount will be funded by the stockbroker.
Please note that the interest rate is charged by the stock broker.
The margin can be settled later when all the positions are squared off.
In margin trading, the profit can be counted only if you earn a profit that is higher than the margin, otherwise, you will suffer from a huge loss.
The amount of money cannot act as a limitation for investing in the stock market. A strong goal with the right decision can help you achieve great wealth. You are only required to Open Demat Account with a reputed brokerage firm like Swastika and you are ready to go. With Swastika’s Demat account, you can start an investment journey with a little money.
A new variant of COVID 19 has been identified which was named Omicron by the World Health Organization (WHO). Many share trading analysts suggested that this new variant tends to spread quicker than the Delta variant and is much more infectious than other COVID variants.
Also, they said that the vaccines available now are less effective against this new variant. As we are trying to recover from the second wave, this omicron variant caused precariousness in the market.
If we talk about the current week, then we will get to know that the GDP for the July-Sept quarter of FY 2022 showed a total growth of 8.4%, which is the fourth consecutive quarter of positive growth post the major contraction.
If India wants to remain in the position of the fastest-growing economy in the year 2023, all restrictions are lifted and the growth continues to rise.
As said above, if the new strain emerges again, the government will take the necessary steps to bring back the restrictions.
Recently the government has announced that it will invest Rs 257 Billion into the electric vehicle initiatives by the year 2025.
The pandemic has acted as a catalyst of a positive change to shape the healthcare sector across the world.
Here are some of the potential stocks you need to pay attention to in India as the new variant of concern spreads.
Its product portfolio contains generics and medications in key helpful fragments.
In India, Cipla is one of the biggest pharma organizations and the biggest Indian exporter to developing business sectors.
During the pandemic, Cipla carried out 7 products as a piece of their Covid-19 portfolio. These incorporate medications, sanitisers, and antigen and counter antibody testing kits.
During the sensitive days of the pandemic, it went into various associations to advertise items in oncology, biosimilars, and metabolic illnesses.
Cipla saw a solid 12% year on year (YoY) development in income in the monetary year 2021 predominantly due to respiratory opening in the US and their Covid portfolio.
During a similar period, Cipla's (EBITDA) margin grew by more than 350 basis points to 22.5% from 18.9%. Lower expenses because of cost enhancement drives and lower on-ground activities because of lockdown prompted extension in margins.
The organization's net overall revenue remained at a notable high of 12.6% in FY 2021 against 9% in the monetary year 2020. Operational efficiency and lower finance costs because of prepayment of debt have prompted higher net margins
During the year, the company launched 9 abbreviated new drug applications (ANDA), filed for 8 ANDAs out of which it has received approval for the 7 ANDAs.
Alkem Laboratories is a multinational pharmaceutical company that primarily manufactures and sells pharmaceutical generics, nutraceuticals, in India and globally.
As per the sources, Alkem is considered the fifth largest Indian pharmaceutical company in terms of market share. As of now, the company has manufactured 20 facilities and 6 R&D facilities in India and US.
The company has more than 800 brands out of which 12 brands have annual sales of more than Rs 1 billion.
During the pandemic, the company’s operations were little affected. However, it saw a full recovery during the whole phase.
In 2021, the company’s total revenue grew up to 6.2% in FY 2021, which was 13.4% in the previous year.
Furthermore, the company has also experienced a drop in sales, which might affect the company’s growth. However, the company managed to recover as the sales growth was primarily supported by their international business.
The EBITDA margin for FY 2021 is 21.9%, which has grown from 17.72% from the last year.
Thyrocare Technologies is an Indian multinational chain of diagnostic and preventive care technologies that are known for offering more than 279 tests and 79 profiles of tests to detect several disorders.
The company has a centralized processing laboratory where it fulfills the requirement of the customers. The company also operates regional processing laboratories in metro cities to ensure speedy processing.
Thyrocare has a network across India as it supports a logistic network and IT infrastructure.
The company further declared a revenue growth of 14% in FY 2021 because of an increase in the diagnostic revenue due to COVID 19 testing.
Dr Lal Pathlabs is an international service provider and one of the top diagnostic chains in India. The company is located in Delhi.
It offers more than 5000 diagnostic tests, related healthcare tests and services across 3,705 centres.
During the lockdown, the company extended its reach digitally and physically to improve its covid testing.
The revenue of Dr Lal path labs grew by 18% in FY 2021 against a 10.6% growth in the financial year 2020.
The EBITDA of the year 2021 was marked at 29.3% as compared to the last year which was 27.5% in the last financial year.
The healthcare industry remains resilient even in the pandemic. However, the companies have also gone through losses but due to the demand for healthcare and antibiotics, these companies have managed to perform better than others.
Other sectors such as FMCGs, and eCommerce companies could also do the same.
The pandemic has completely changed business ethics and the way of doing business.
If you want to invest in good companies, pay attention to those companies that can leverage the changes happening in the economy and push their long term growth terms.
It is suggested to not try to time the market. Instead, invest in the companies that give you better stock market trading returns in the long term.
The SME-IPO boom is still on fire. This year many companies have gone public and many are in the queue. As the year comes to an end, the list of companies going public is not in a mood to take a pause.
Even at the year-end, seven companies claimed to conduct the IPOs in the next 10-15 days, intending to raise more than Rs 19 000 Crore.
The IPO of star health has already come in the first week of December, while the IPOs of the tech companies like Rate Gain Technologies, Anand Rathi Wealth and CE Info Systems will begin in the next week.
The IPOs of Adani Wilmer and Go First Airlines are expected to open for the subscription in the third or fourth week of December.
While the subscription of Tega Industries has already begun and as per the sources, the IPO of the same subscribed 14 times on Day 2.
Adani Wilmer, the maker of Fortune Edible Oil, has already filed DRHP to the stock market regulator organization and the issue is expected to open by December 15. Newly issued shares up to Rs 4500 Crores will be sold by the organization.
The company nearly spends Rs 1900 Crore on the capital investment, Rs 50 Crore on the strategic acquisition and general corporate purposes from the proceeds.
Star health and allied insurance is an Indian health insurance company located in Chennai. The company offer services in a different segment of health such as personal accident, overseas travel insurance, either directly or through other methods like agents, brokers and online.
Rate Gain technologies is a software as a service company that mainly provide services to a wide range of verticles in the travel and hospitality industry.
The services include hotels, airlines, online travel agents, vacation rentals, metasearch companies rail, travel management companies and more.
Also, the organization offers inter-connected products that are equipped for taking revenue creation value chain for their customers by utilizing large information capacities and coordination with other innovation stages to acquire more guests, retain them via personalized guest experiences and seek to maximize their margins.
Anand Rathi is considered India’s leading full-service financial services firm that offers several services such as Wealth Management, Investment Banking, Brokerage and Distribution, Corporate Finance and Advisory and more.
As soon as the IPO of the company has launched, it saw an outstanding response from the investors because the issue was fully subscribed on the first day itself.
The issue received approximately 10 times bids as per the date of NSE. investors bid for 8,29,21,509 equity shares and the total offering was 84,75,000 shares. Initially, the company is selling its shares in the range of Rs 530 - 550.
GO First Airlines is Indian’s first ultra-low-cost airline, headquartered in Mumbai. As of October 2017, the company was the fifth-largest airline in India with a market share of 8.4%.
Go Air began its operations using an Airbus A320 and worked its first departure from Mumbai to Ahmedabad on 4 November 2005.
CE Info Systems aka Mapmyindia is the main service provider of cutting edges digital technologies such as digital maps, geospatial software and location-based IOT technologies in India.
It is a data & technology company offering exclusive digital maps as a service (MaaS), PAAS (Platform as a service) and Software as a Service SAAS.
As per sources, investors of Adani Enterprises, the parent organization of Adani Wilmar, will probably get a 10% decrease in the IPO cost.
CE Info Systems, which possesses MapmyIndia, will dispatch a public offering one week from now to produce generally Rs 1,400 crore.
Promoters and other existing investors, including Qualcomm Asia Pacific, are selling the whole 7.55 million shares on sale.
The organization gives SAAS and stage as help for its digital maps. Its map covers cover 750,000 towns, more than 7,500 towns on a road by-road premise, and 6.3 million kilometers of the road network.
सोने की कीमतों में पिछले सप्ताह दबाव रहा लेकिन कई राज्यों में ओमीक्रॉन वायरस के कारण शुरू हुई सख्ती से इसके भाव सपोर्ट लेते दिखे है। जबकि पिछले सप्ताह में चांदी के भाव में हल्की तेज़ी दर्ज की गई है जो इस सप्ताह के लिए सोने और चांदी के भाव के लिए तेज़ी के संकेत है। क्रिसमस छुट्टियों के कारण सोने और चांदी के भाव अभी सीमित दायरे में बने होने के साथ अस्थिर भी है जिसमे स्थिरता के बाद तेज़ी आ सकती है।
ओमीक्रॉन के मामले अब यूरोप के बाद भारत और अन्य एशिया देशो में बढ़ने लगे है जिसके कारण आर्थिक गतिविधियों में रुकावटें शुरू हो सकती है जो सोने और चांदी में निवेश के लिए सेफ हेवन मांग को बढ़ा सकते है। डॉलर जो सोने के विपरीत दिशा में चलता है, पिछले सप्ताह नरमी रही। अध्ययन से यह भी पता चला है कि ओमाइक्रोन संक्रमण से अस्पताल में भर्ती होने की संभावना कम है, लेकिन यह भी कहा गया है कि इसके संक्रामक होने के कारण गंभीर मामले अभी भी महत्वपूर्ण संख्या में उत्पन्न हो सकते हैं।
नवीनतम कोविड-19 के प्रकोप को रोकने के लिए चीन ने गुरुवार को शीआन शहर को बंद कर दिया ताकि पश्चिमी शहरों में वायरस को फैलने से रोका जा सके। शहर के 130 करोड़ निवासियों को अपने घरों में रहने और ज़रूरतों के लिए हर दूसरे दिन एक व्यक्ति को बाहर जाने के लिए कहा गया है। चीन का यह लॉकडाउन 2020 की शुरुआत की महामारी के बाद से सबसे बड़ा है।
पिछले सप्ताह अमेरिका से जारी होने वाले कोर पीसीई प्राइस इंडेक्स, बेरोज़गारी के दावे और घरो की बिक्री के आकड़ो से कीमती धातुओं को सपोर्ट मिला है। कॉमेक्स वायदा सोना पिछले सप्ताह 6 डॉलर तेज़ होकर 1810 डॉलर प्रति औंस के स्तरों पर पहुंच गया है। कॉमेक्स वायदा चांदी भी 50 सेंट मजबूत होकर 22.90 डॉलर के स्तरों पर रही।
इस सप्ताह सोने और चांदी के भाव सकारात्मक दायरे में रह सकते है। सोने में 47800 रुपये पर सपोर्ट और 49000 रुपये पर प्रतिरोध है। चांदी में 61000 रुपये पर सपोर्ट और 63500 रुपये पर प्रतिरोध है।
RatingSUSBCRIBE Issue OfferIssue Opens onDec 14, 2021Issue Close onDec 16, 2021Total IPO size (cr)588.22Fresh issue (cr)240.00Offer For Sale (cr)348.22Price Band (INR)555-585Market Lot25Face Value (INR)2Retail Allocation35%Listing OnNSE, BSEObjects of the issue ⮚ For Repayment of borrowings ⮚ For Funding working capital requirementIssue Break-up (%)QIB Portion 50NIB Portion 15Retail Portion ⮚ 35Shareholding (No. of Shares)Pre Issue 47,784,086Post Issue 51,886,650Indicative TimetableFinalisation of Basis of Allotment 21-12-2021Refunds/Unblocking ASBA Fund 22-12-2021Credit of equity shares to DP A/c 23-12-2021Trading commences 24-12-2021
Established in 1985, Data Patterns is a defence and aerospace electronics solutions provider specializing in indigenously designed defence equipment. The firm provides equipment for all types of defence and aerospace systems, including space, air, land, and sea.
Electronic hardware design and development, software and firmware design and development, mechanical design and development, product prototype design and development, functional testing and validation, environment testing and verification, and engineering services opportunities are among the company's core competencies.
⮚ It was one of the fastest-growing firms in terms of revenues among significant Indian defence and aerospace companies between Fiscal 2019 and Fiscal 2021, according to the Company Commissioned F&S Report, with a revenue increase of 71%.
⮚ The company's strengths throughout the gamut of defence and aerospace electronics solutions from design to delivery give it a considerable competitive edge in terms of overall development time and cost, as well as competitive pricing when bidding on defence and aerospace contracts.
⮚ The company has design capabilities across the entire spectrum of strategic defence and aerospace electronics solutions including processors, power, radio frequencies (“RF”) and microwave, embedded software and firmware and mechanical engineering.
⮚ The company is upgrading and expanding its facility, with a proposed doubling of available floor area and manufacturing capacity, as well as the addition of large and heavy equipment handling capability, large radar and mobile electronic warfare system integration, and a satellite integration facility. Its testing capabilities are also proposed to be further strengthened.
In the last 3 years, the company has shown strong growth in revenue where it grew at a CAGR of 19% from Rs 132.50 cr to Rs 226.55 cr over the period of FY19 to FY21, during the same period profit has grown at a CAGR of 97% from Rs 7.70 cr in FY19 to Rs 54.6 cr in FY21. The margins of the company are also expanding.
As part of the 'Make in India' initiative, the company will bid on bigger, more challenging contracts. Data Patterns increased its net profitability by approximately 158% between FY20 and FY21.
We believe that the company has enormous potential to grow rapidly thanks to the government's focus on Defense and Aerospace. The IPO is priced at a 49x PE and 13x P/BV to its FY21 earnings at an upper price band of Rs 585. Attractiveness in the defence sector is likely to boost sentiment for the IPO.
DATA PATTERNS (INDIA) LIMITED
⮚ Srinivasagopalan Rangarajan is the Chairman and Managing Director of the Company. He has been associated with the Company since its incorporation. He holds a Bachelor’s Degree of Technology in Chemical Engineering and he has over three decades of experience in business development, corporate affairs, finance and marketing.
⮚ Venkata Subramanian Venkatachalam is the Chief Financial Officer of the Company. He is a fellow member of the Institute of the Chartered Accountants of India. He has over two decades of experience in the finance sector.
⮚ Manvi Bhasin is the Company Secretary and Compliance Officer of the Company. She is an associate of the Institute of the Company Secretaries of India. She has three years of experience in legal and secretarial matters.
⮚ Vijay Ananth K is the Chief Operating Officer and Chief Information Security Officer of the Company. He has more than two decades of experience in software engineering and product management.
⮚ Desinguraja Parthasarathy is the Chief Technical Officer of the Company. He has 32 years of experience in Product Development.
⮚ Thomas Mathuram Susikaran is the Senior Vice President-Business Development. He holds a bachelor’s degree in engineering. He has over 21 years of experience in business development and marketing.
⮚ Nandaki Devi Ramachandracharya is the Deputy General Manager and Management Representative Quality Management System. She has 22 years of experience in test engineering.
⮚ Integrated and strategic defence and aerospace electronics solutions provider based in India, well-positioned to profit from the Make in India initiative.
⮚ Innovation focused business model.
⮚ Sound order book with orders from several prestigious customers in the Indian defence ecosystem. ⮚ The modern certified manufacturing facility of international standards.
⮚ Track record of profitable growth.
⮚ The experienced management team and skilled workforce.
⮚ Continue expansion of product portfolio with complex technology-based products.
⮚ Focus on repeat large volume production orders.
⮚ Improving manufacturing infrastructure and enhancing design and development capabilities
⮚ Augmenting the design and development capabilities and expanding manufacturing infrastructure
⮚ Focus on increasing revenues by leveraging core competencies and growing the services business
⮚ Focus on increasing export business
⮚ The company depends on a limited number of customers for major business.
⮚ Subject to strict quality requirements, customer inspections and audits, and any failure to comply with quality standards may lead to cancellation of existing and future orders
⮚ Failure to qualify for or win bids could have an adverse effect on its business.
⮚ If it does not maintain its technical information and processes discreet, it may lose its competitive advantage.
⮚ The company has significant working capital requirements.
DATA PATTERNS (INDIA) LIMITED
COMPARISON WITH LISTED INDUSTRY PEERS (AS ON 31ST MARCH 2021)
Name of the Company EPS (Basic) NAV P/E Operational Rev (cr) RoNW Data Patterns (India) Ltd 11.89 44.38 49 223.95 26.79% Peer Group MTAR Technologies Ltd 16.99 154.99 83.56 246.43 9.66%Astra Microwave Products Ltd 3.33 64.51 51.28 640.91 5.16%Centum Electronics Ltd 13.31 173.14 34.90 817.43 5.40%Bharat Electronics Ltd 8.62 45.39 23.49 14,108.69 18.99%
FINANCIALS (RESTATED CONSOLIDATED)
Particulars (Rs. In Millions) FY 2021 FY 2020 FY 2019Equity Share Capital 17.00 17.00 17.00Other Equity 2060.70 1517.95 1311.93Net Worth 2077.70 1534.95 1328.93Total Borrowings 332.21 605.66 601.33Revenue from Operations 2239.50 1560.98 1310.63EBITDA 945.88 472.50 269.93Profit Before Tax 745.34 284.29 103.59Net Profit for the year 555.71 210.48 77.02
Issue Opens on Dec 15, 2021Issue Close on Dec 17, 2021 Total IPO size (cr)125.96 Fresh issue (cr) 113.44 Offer For Sale (cr) 12.53 Price Band (INR) 262-274 Market Lot 50 Face Value (INR)10 Retail Allocation 10% Listing On NSE, BSE
⮚ For funding the working capital.
⮚ Capital expenditure for expansion.
QIB Portion 75 NIB Portion 15 Retail Portion 10
Pre Issue1,42,34,947Post Issue1,83,74,947
Finalization of Basis of Allotment 22-12-2021 Refunds/Unblocking ASBA Fund 23-12-2021 The credit of equity shares to DP A/c 24-12-2021 Trading commences 27-12-2021
Registered in 2019, HP Adhesives Limited is an adhesives and sealants company. The company manufactures a wide range of consumer adhesives and sealants such as PVC, cPVC, and uPVC solvent cement, synthetic rubber adhesive, PVA adhesives, silicone sealant, acrylic sealant, gasket shellac, other sealants, and PVC pipe lubricants.
These adhesives and sealant products have applications in multiple industries such as plumbing and sanitary, drainage and water distribution, general-purpose building/ construction, and interior operations as well as for glazing operations, woodwork, footwear, automotive, foam-furnishing, and other varied industries.
⮚ Apart from the above products, the company also sells ancillary products like ball valves, thread seals, and other tapes and FRP products for drainage and architectural solutions.
⮚ The company has grown from a single product to a multi-product adhesives company with sales across India (through a pan-India distribution network) and also in international markets.
⮚ Over the years, Company’s brands “HP” and “Strong Weld” in the PVC adhesives product category have gained increasing acceptance on account of high product quality and efficient pricing.
⮚ The company has a solid business model that focuses on consistently expanding its product portfolio by introducing new product categories and SKUs to cater to a wide range of end-use applications and selling them through its distribution network across India.
⮚ As of September 30, 2021, its distribution network comprised of 4 depots situated in Delhi, Kolkata, Bengaluru, and Indore and more than 750 distributors who cater to more than 50,000 dealers in India
⮚ The company wants to expand its manufacturing capacity at Village Narangi, Raigad, Maharashtra to cater to the growing demand for several product categories.
In the last 3 years, the company has shown stable growth in revenue where it grew from Rs 87.97 cr to Rs 123.87 cr over the period of FY19 to FY21, during the same period profit has grown from Rs 4 cr in FY19 to Rs 10.05 cr in FY21, but the company faced a huge loss of Rs. (4.67) cr in FY20 on the back of exceptional item.
The industry is expected to grow at a CAGR of 6-8% while the company is in a growth phase and is expanding installed capacities for its product lines and is also expanding its portfolio.
The IPO is valued at a PE of 35x and P/BV of 28x to its FY21 earnings. However, if we annualized FY22 earnings PE and P/BV work out to be 81x and 10.38x which is in line with the peer. Due to its small size, the SME-IPO is going to be listed in the T2T segment.
We have an "AVOID" rating for the IPO.
For additional information & risk factors please refer to the Red Herring Prospectus
⮚ Anjana Haresh Motwani, with over 40 years of experience in the adhesive industry, is currently designated as the Executive Director and Chairperson of the Company.
⮚ Karan Haresh Motwani currently holds the position of Managing Director of the Company. He was admitted to the partnership M/s. HP International in 2007.
⮚ Mr Mihir Shah, is the chief financial officer of the Company. He has been associated with the Company since May 2021. He has an overall experience of nearly 15 years in investment banking.
⮚ Ms Jyoti Nikunj Chawda is the Company Secretary & Compliance Officer of the Company. She is a commerce and law graduate from the University of Mumbai and holds an overall experience of nearly 7 years in secretarial and compliance functions.
⮚ Ms Nidhi Haresh Motwani is the Vice President – Operations of the Company, She has been associated with the Company since February 2016. She has an overall experience of 10 years in the fields of branding, marketing, and sales.
⮚ Mr Saurabhraj Bhatt is the Vice President – Sales and Marketing, of the Company. He has an overall experience of about 22 years. He handles the product promotion, branding, sales, and marketing functions of the Company.
⮚ Mr. K. P. Unnikrishnan is the Assistant Vice President – New Product Development of the Company. He has a multi-functional experience of 36 years
⮚ Mr. Sabrinath Gopalkrishnan Nair is the Senior Manager – Purchase of the Company. He has experience of over 28 years in accounts, inventory control and logistics operations.
⮚ Consistently growing company with established brand presence
⮚ Wide Product Portfolio and Multiple SKUs
⮚ Focusing on multiple end-user industries
⮚ Extensive distribution network across India catering to customers.
⮚ Efficient manufacturing set-up with scope for expansion
⮚ Effective quality checks
⮚ R&D set up for constant product improvement and new product development
⮚ Further, strengthen brand image
⮚ Expansion of manufacturing facility
⮚ Further expansion of distribution network across India and globally
⮚ The impact of the COVID-19 pandemic on business and operations is uncertain.
⮚ The company does not have any long-term arrangements with its distributors.
⮚ Restrictions on the import of raw materials may adversely impact the business.
⮚ Prices of the principal raw materials are subject to changes in the prices of crude oil.
⮚ The company has incurred losses in the recent past.
HP ADHESIVES LIMITED
COMPARISON WITH LISTED INDUSTRY PEERS (AS OF 31ST MARCH 2021)
Name of the Company EPS (Basic) NAV P/E Total Income (Mn) RoNW (%)HP Adhesives Limited 7.74 9.74 35 118.16 79%Peer GroupPidilite Industries Limited 22.26 114.78 81.28 7293.00 114.78
FINANCIALS (RESTATED CONSOLIDATED)
Particulars (Rs. In Lakh) FY 2021 FY 2020 FY 2019Equity Share Capital 1,300.00 1,300.00 1,300.00Other Equity (34.12) (1,051.56) 166.23Net Worth 1,265.88 248.44 1,466.23Total Borrowings 3,138.52 3,405.98 2,358.33Revenue from Operations 11,816.16 9,547.93 8,741.75EBITDA 1,768.67 691.95 870.09Profit Before Tax 1,323.02 (536.06) 405.91Net Profit for the year 1,005.96 (467.05) 400.07
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