Analysts bullish on Standard Glass Lining IPO; eye long-term potential

Standard Glass Lining IPO opens for public subscription today. Check details, lot size, price band, GMP, brokerage reviews, key dates, and more

Standard Glass Lining IPO opens today: Brokerages remained bullish on the initial public offering (IPO) of specialised engineering equipment manufacturer, Standard Glass Lining Technology, which opens for public subscription today, January 6, 2025. Market analysts have broadly recommended subscribing to the issue for the long-term perspective. Standard Glass Lining has announced that it has already raised Rs 123.02 crore from anchor investors in the bidding concluded on January 3, 2025.

 

Before delving into brokerage reports, here are the key details of the Standard Glass Lining IPO:

 

Standard Glass Lining IPO details

The Rs 410.05 crore offering of Standard Glass Lining is a book-built issue comprising a fresh issue of 1,50,00,000 shares and an offer for sale of 1,42,89,367 equity shares with a face value of Rs 10 apiece. The company has set a price band of Rs 133-140 per share, with a lot size of 107. Accordingly, investors can bid for a minimum of 107 shares and in multiples thereof. A retail investor will need a minimum of Rs 14,904 to bid for one lot of 107 shares, while to bid for a maximum of 13 lots or 1,391 shares, a retail investor would need Rs 1,94,740.

 

 

Standard Glass Lining IPO grey market premium (GMP)

Meanwhile, the unlisted shares of Standard Glass Lining were commanding a solid premium in the grey market ahead of the public offering. Sources tracking unofficial market activities revealed that the company's shares were trading at Rs 237 apiece, reflecting a grey market premium of Rs 97 or 69.29 per cent over the upper end of the issue price of Rs 140.

 

Standard Glass Lining IPO allotment, listing schedule

The subscription window to bid for the public offering is expected to close on Wednesday, January 8, 2025. Following that, the basis of allotment of Standard Glass Lining IPO will tentatively be finalised on Thursday, January 9, 2025, and shares will be credited to demat accounts on Friday, January 10, 2025.

 

Standard Glass Lining shares are likely to be listed on NSE and BSE on Monday, January 13, 2025.

 

Standard Glass Lining IPO objective

Standard Glass Lining, in its Red Herring Prospectus (RHP), said it will not receive any proceeds from the offer for sale, and each of the selling shareholders will be entitled to its respective portion of the proceeds of the offer for sale. However, the company proposes to utilise the proceeds from the fresh issue for funding capital expenditure requirements towards the purchase of machinery and equipment, and for the repayment or prepayment, in full or in part, of all or a portion of certain outstanding borrowings availed by the company. Additionally, it aims to invest in its wholly-owned material subsidiary, S2 Engineering Industry, for repayment or prepayment, in full or in part, of all or a portion of certain outstanding borrowings availed by S2 Engineering Industry from banks and financial institutions.

 

The company also intends to use proceeds from the fresh issue for investment in S2 Engineering Industry for funding its capital expenditure requirements towards the purchase of machinery and equipment, as well as for funding inorganic growth through strategic investments and/or acquisitions and for general corporate purposes.

 

Standard Glass Lining Registrar, lead manager

KFin Technologies serves as the registrar for the Standard Glass Lining IPO. The book-running lead managers for the public offering include IIFL Securities and Motilal Oswal Investment Advisors.

  Standard Glass Lining IPO review 

Canara Bank Securities - Subscribe for listing & long-term gains

Analysts at Canara Bank Securities have recommended subscribing to the IPO for listing and long-term gains, citing the company's market leadership, extensive client base, and strategic growth initiatives. "SGL boasts a robust order book valued at Rs 450 crore, emphasising automation and operational efficiency. The company aims for a 20 per cent contribution from export revenues in the next fiscal year by leveraging proprietary technology from its Japanese partner AGI, known for high-margin products. SGL’s strategic diversification into maintenance services significantly enhances customer retention, achieving 100 per cent repeat business due to a superior product lifespan of 15 years compared to competitors' 4-5 years," wrote the analysts in a research report.

 

According to the analysts, the company is currently valued at a price-to-earnings (P/E) ratio of 39.77x, which is favorable compared to the industry average of 52.50x. "SGL exhibits a strong return on equity (RoE) of 20.74 per cent, surpassing the sector's average of 16.96 per cent. Anticipated capacity expansion and export-driven growth are projected to further bolster the company’s financial ratios."

 

IndSec - Subscribe

Brokerage firm IndSec, in its report, has assigned a Subscribe rating to the Standard Glass Lining IPO. According to the brokerage, at the upper price band of Rs 140, the IPO is priced at a post-IPO dilutive FY24 P/E of 47.8x, which is a 13 per cent discount to the industry average. The brokerage further highlighted that the company has achieved strong growth with a Rev/EBITDA/APAT CAGR of 50 per cent/53 per cent/52 per cent over FY22-24 and managed to clock an impressive FY24 RoE of 14.3 per cent and RoCE of 17.5 per cent. "The company is well-positioned to benefit from increasing global demand driven by the China+1 strategy and government support through the PLI scheme. The Indian chemical manufacturing industry is projected to grow at a 9 per cent CAGR, reaching Rs 70 billion by FY26, while pharma capital spending is expected to remain at Rs 120-150 billion annually until FY27."

 

SBI Securities - Subscribe for long-term

Analysts at SBI Securities have also recommended subscribing to the issue from a long-term perspective. The company, analysts said, is valued at FY24 P/E and EV/EBITDA multiples of 47.8x/28.6x respectively, based on the upper price band of the post-issue capital. "The growth outlook is robust as the company is likely to grow its revenue between 20-25 per cent in the medium term with geographical and product expansion. The company is targeting 20 per cent of revenue from exports by 2026 versus the present 0.5 per cent." While comparing it with its close peers, the issue, analysts said, is fairly valued with a superior margin profile.

 

Geojit - Subscribe

Brokerage firm Geojit, in its report, said, "SGLTL’s healthy margins, consistent revenue growth, robust growth outlook, a diverse product portfolio with a focus on customisation, and inorganic growth plans support a 'Subscribe' rating for the stock on a medium to long-term basis."

 

At the upper price band of Rs 140, SGLTL is available at a P/E of 38.5x (on FY25 annualized), which, the brokerage said, appears fairly priced compared to peers. "The growing demand for glass-lined equipment in pharmaceuticals and chemicals offers significant growth potential."

 

Standard Glass Lining Technology

Standard Glass Lining Technology (SGLTL) is a Hyderabad-based engineering equipment manufacturer for the pharmaceutical and chemical sectors. Established in 2012, SGLTL offers design, engineering, manufacturing, assembly, installation, and commissioning services. Its product portfolio includes reaction systems, storage, separation & drying systems, and plant engineering services.