Standard Glass Lining IPO Day 1 Live: Subscribed 5.68 Times, Check GMP, Price Band, Key Dates, and More Details

Standard Glass Lining Technology (SGLT), a leading supplier of critical process equipment for the pharmaceutical and chemical industries, is set to raise ₹210 crore through a fresh issue of shares. The company plans to use the funds for purchasing machinery and equipment, as well as to reduce existing debt.

The share price has been set within a range of ₹133 to ₹140 per share. Investors can bid in lots of 107 shares, with the option to apply for additional multiples of this lot.

As of now, the Grey Market Premium (GMP) for the IPO stands at ₹93, indicating a strong 69% premium over the issue price. The IPO has already seen robust demand, with subscriptions exceeding the total offering by 5.68 times.

Growth Strategies:

- Expansion into New Industries: SGLT aims to diversify into new sectors, including oil and gas, aerospace, edible oils, flavours and fragrances, and paint and coatings. By leveraging its in-house manufacturing facilities, the company plans to offer customised products to cater to the specific needs of these industries.

- Manufacturing Facility Expansion: A portion of the proceeds will be used to fund the expansion of existing facilities, particularly the S2 Unit 5 in Hyderabad. This will involve acquiring new machinery such as welding machines, cranes, and laser cutting equipment. This expansion will not only improve capacity but also reduce delivery times, enabling the company to fulfill more orders.

- International Market Expansion: SGLT intends to broaden its presence in international markets by leveraging its extensive portfolio of products. This global expansion will diversify its customer base and increase profitability by commanding higher prices in international markets.

- Acquisitions: SGLT has already made strategic acquisitions, including agreements with Asahi Glassplant Inc. and GL Hakko, and purchases of M/s Higenic Flora Polymers, M/s Yashasve Glass Lining Industries, and C.P.K Engineers Pvt. Ltd. The company plans to continue acquiring businesses that complement its existing operations or offer entry into new sectors and geographies, boosting revenue and improving operational efficiency.

IPO Details:

The IPO, which began on January 6, 2025, will remain open for subscription until January 8, 2025. In the first hours of the IPO, it was fully subscribed, reflecting a 5.5 times oversubscription on its opening day. The proceeds from the fresh issue will help fund the company’s expansion and reduce debt, alongside supporting acquisitions and general corporate purposes.

The valuation for the IPO is set at a price-to-earnings (P/E) multiple of approximately 38.5, which is lower than the P/E multiples of peers such as GMM Pfaudler and HLE Glasscoat, which stand at 66 and 63, respectively. Despite the lower P/E, analysts are optimistic, assigning a "Subscribe" rating to the IPO due to the company's strong growth prospects, including its involvement in the booming pharmaceutical and chemical sectors.

Financial Highlights:

In FY24, SGLT reported revenue of ₹544 crore, reflecting a 9% year-on-year growth. The profit after tax (PAT) also increased by 13% to ₹60 crore. For the six months ending in September 2024, the company reported revenues of ₹307 crore and PAT of ₹36 crore.

Despite challenges like raw material sourcing risks and dependence on the pharmaceutical industry, which accounts for a large portion of its revenue, SGLT is well-positioned to capitalise on the demand for glass-lined equipment in various industries.

Risk Factors:

- Raw Material Sourcing: The company depends on a limited number of suppliers for key materials, which can expose it to cost increases and disruptions.

- Geographical Concentration: All manufacturing facilities are based in Hyderabad, making the company susceptible to regional economic or political risks.

- Pharmaceutical Industry Dependency: A significant portion of the company’s revenue comes from the pharmaceutical sector, making it vulnerable to fluctuations in industry trends.

Investors are advised to evaluate these factors when considering their participation in the IPO. The allotment will be finalised on January 9, 2025, with the listing scheduled for January 13, 2025.