Quality Foil (India) IPO envisages to raise ₹4.52 crore at a fixed price of ₹60 with a lot size of 2000 equities shares. Quality Foils (India) Limited is engaged in the manufacturing and exporting of Cold Rolled Stainless Steel Strips/Coils and Stainless Steel Flexible Hoses/pipes. It will list on the listed on the Emerge Platform of National Stock Exchange of India Limited, NSE SME platform.
- Quality Foils (India) Limited are a pioneer and established integrated, leading manufacturer of Cold Rolled Stainless Steel Precision Strips and Coils for the last 27 years having an ISO 9001:2000 certification from TUV SUD South Asia and located at Hisar (Haryana) India, with marketing offices in Delhi, Mumbai and further representations in Europe.
- Quality Foils (India) has two products in its manufacturing unit:
- Product 1: Cold Rolled Stainless Steel Coils/Strips.
- Product 2: Stainless Steel Flexible Hose Pipes.
- It is fully equipped to meet the need of specific widths anywhere between 20 mm to 710 mm and thickness 0.10 mm to 4.00 mm.
- Apart from being a major supplier of raw materials to the SS Tube / Pipes manufacturing industry it also caters to the requirements of industries manufacturing SS Flexible Hoses, Automobile component, Tower Packing for Refineries, Utensils, Cutlery, Kitchenware/ Sinks, Decorative applications, etc.
- Under brand name “Quality”, it supplies Products i.e. Cold Rolled Stainless Steel Coils/Strips in for manufacture of SS Tube/Pipe, Utensils, Cutlery, Kitchen Sinks, Stainless Steel Flexible Hoses and Automobile components and Flexible Hose pipes to major applications such as high temp & medium pressure for Hydraulic Oil, Hot Water, Steam & Gas applications, chemical resistant, exhaust systems of steel, power, petrochemical, sugar, automobile and many other heavy engineering sectors.
- It has an annual installed capacity of 12,000 MT.
Quality Foils (India) IPO: Financials
Salient Points
- The company aims to utilize IPO proceeds to fund capital expenditure requirements towards purchase of machinery, to meet the working capital requirements of the company, general corporate purpose, and meet issue expenses.
- The company has a state-of-art plant comprising of hi-tech, sophisticated manufacturing and testing facilities, backed by a team of professional engineers and technically skilled workforce dedicated to quality commitment and product innovation.
- Initially in past financial years it had entered a supplier’s agreement with Jindal Stainless Hisar Limited, Hisar (“Jindal”) for purchase of at least 95.00% of its raw material consumed. Now both parties have done away with this agreement.
- It is one of the growing brands in Cold Rolled stainless steel Coils/Strips & Flexible Hose Pipes having presence in both Cold Rolled Coils and Hose Pipes segment.
- It manufacturing operations require continuous supply of electricity.
- The company is also exporting Products from year 2005 and as on January 09, 2023 it has exported to more than seven countries including Germany, UK, Philippines, Sri Lanka, Turkey, Poland and Bogota Colombia. However exports as a percentage of revenues are in single digits.
- Business is working capital intensive and hence, trade receivables form a substantial part of the current assets and net worth.
- Due to nature of business profit margins are low but have shown some improvement over the years.
- Social media reports indicate a low GMP of about Rs. 18 on the issue price.
- Has availed loans and credit limits from ICICI Bank.
- PE ratio is 10.5x (fy22 earnings) and 4.2x (fy23 annualized). Looks reasonable.
- P/BV is 0.64 based on the post-IPO NAV.
- I intend to apply in Quality Foils (India) IPO. It is a very small issue and thus will be heavily oversubscribed.
- SME IPO are more volatile and I generally exit on the listing day, many times in pre open session.
- The lead manager Khambatta Securities Limited has managed few issues so far.
- Please do your own diligence as SME IPOs are more volatile and risky than mainboard IPOs and need more funds.
- Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.