SIRCA Paints IPO Review (NSE SME)

SIRCA Paints India Limited

SIRCA Paints IPO (SIRCA Paints India Limited IPO)  consists of 48,69,600 Equity Shares of Rs 10 each in a price band Rs 151 – 160 per equity share to raise ~ INR 78 crore. The shares will be listed on Emerge platform of NSE.

SIRCA Paints IPO: Details

Issue Period 16-May-2018 to 22-May-2018
Issue Size Uupto 48,69,600 Equity Shares (includes 2,44,000 market maker ,13,70,400 anchor)
Price Band Rs 151 to Rs 160
Face Value Rs 10
Market Lot 800 equity shares and in multiples thereof
Book Running Lead Managers Navigant Corporate Advisors Limited
Name of the Registrar Karvy Computershare Private Limited

About SIRCA Paints India Limited

  • SIRCA Paints India Limited was originally incorporated at New Delhi as “Sircolor Wood Coatings Private Limited” in 2006.
  • The Name of the Company was changed to “Sirca Paints India Private Limited” on 3rd May, 2017 and further  changed to “Sirca Paints India Limited” on17th January, 2018.
  • Initially Company started import of Polyurethane Polish (PU) products from Italy and wall paints & Abrasives from Korea and selling them in India.
  • First Company to launch wood filler in India.
  • Company is in marketing and trading/distributor of paints and allied products after repackaging the same. It procures the products majorly from SIRCA SPA ITALY through Import and sells them in India through its Distributors. In additional, it also procures the products (Thinner, Abresives and Buffing Cream) from other suppliers based in India.
SIRCA Paints India Limited : Financials
INR Lacs
Particulars 31.12.2017 31.03.17 31.03.16 31.03.15 31.03.14
Revenue from Operations 6395.28 8,251.01 7,054.57 6,525.45 5,552.35
PBDITA 2274.67 2,206.09 1,175.54 1,011.56 363.29
Profit bef Tax 2218.26 2,155.58 1,113.63 946.07 300.95
Net Profit 1459.95 1,370.34 727.62 617.88 197.11
Share Capital 1230 10 10 10 10
Reserve & Surplus 3614.43 3,402.86 2,032.52 1,304.90 688.05
Net Worth 4,844.43 3,412.86 2,042.52 1,314.90 698.05
RONW % 30.14% 40.15% 35.62% 46.99% 28.24%
NAV 39.31      
Face Value 10
Post Issue Equity 1827
IPO Price 160
Price/Book Value 4.07
EPS Post IPO(ann) 10.65
PE – (ann) 15.02
CAGR Sales 3 Yrs 14.12%
CAGR PAT 3 Yrs 90.86%
Market Cap 29232.00 Lacs
Market cap / Sales 3.54
Issue Objectives
  • Upgradation and modernisation of existing manufacturing facility
  • Funding the working capital requirements of the Company
  • General Corporate Purpose

SIRCA Paints IPO: Pros

  • Engaged in business of manufacturing, production , formulate, develop, derive, discover, prepare , promote, pack or otherwise deal in all varieties of melamine paints, metallic paints, distempers, primers ,oxides, resins, adhesive, varnishes, thinners etc. Company is further engaged in buy , sell, import, export
    and otherwise deal in all kind of wood coatings 
  • SIRCA Paints India Limited has trusted business partners – long and trusted business relations with Indoline Industries, JSL Lifestyle,Alsorg Interiors India Pvt. Ltd., Spacewood, Magpie etc. 
  • Provides high quality Coatings to be used in domestic and industrial use. Companies unique selling proposition – offering quality of water and solvent based products for wood and metal care and protection.
  • Also provides technical assistance to its customers 
  • Company has an established brand and image. 
  • Company has exhbited good growth in profitability.
  • Company has agreements with renowned brands: The company has also signed an Exclusive Distributorship Agreement with Sirca SPA Italy for selling their product in India, Sri Lanka, Bangladesh and Nepal.
  • SIRCA Paints India Limited has planned the expansion by way of manufacturing of Paints NC;  Paints  AC;  Thinner;  Polyurethane Products by setting up a manufacturing Unit pursuant to Manufacturing License Agreement dated 16th February, 2018 entered with SIRCA S.P.A. Italy in District Sonepat, Haryana.

SIRCA Paints India IPO: Cons
  • Company is using the Logo belonging to M/s SIRCA SPA. 
  • Operations are subject to foreign currency exchange rate fluctuations.
  • Company does not have any long-term contracts with its clients and suppliers.
SIRCA Paints India Limited IPO: Assessment 

  • Industry expecting to grow at a CAGR of 12% in next 5 years
  • After the  IPO, Promoters stake in the company  shall stand at 52.41 %.
  • On the fully diluted post IPO equity shares capital of Rs. 18.27 crore, the stock is being offered at a PE of  around 15 based on annualized 9 month  FY 17-18 earnings. If this rate of profitability can be maintained, the valuations are reasonable. 
  • The Anchor portion of the SIRCA Paints IPO was subscribed by three investors “Mauryan First, Next Orbit Ventures and Reliance Equity Opportunities AIF Scheme 1 ” and was for 13,70,400 shares or over 28 per cent of 48,69,600 equity shares offered through IPO. 
  • Record of lead manager “Navigant Corporate Advisors Ltd.” is mixed. 
  • I intend to apply in SIRCA Paints IPO as the issue is at a reasonable price and Paint sectors has shown consistent growth. With switch over from 100% trading to setting up a manufacturing as well, the company’s performance may undergo a change and competition from established players cannot be ruled out. One also needs to keep a watch on subscription levels which should pick up on the final day.
  • This is  a NSE SME issue that shall be listed on NSE Emerge SME platform and compared to issues that list on BSE/NSE, such issues carry more risk.
Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk. 

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