Shree Tirupati Balajee IPO opens today; GMP zooms 30%; Should you bid?

Shree Tirupati Balajee IPO: The initial public offering (IPO) of Shree Tirupati Balajee, an agro-trading company, opens for public subscription today. Through the IPO, Shree Tirupati Balajee aims to raise Rs 169.65 crore by offering a fresh issue of 14,750,000 shares and an offer for sale of 5,690,000 shares, each with a face value of Rs 10 apiece.

The public issue of Shree Tirupati Balajee is available at a price band of Rs 78-83 per share, with a lot size of 180 shares. Accordingly, investors can bid for a minimum of 180 shares and in multiples thereof. The minimum amount required by a retail investor to apply for the Shree Tirupati Balajee IPO is Rs 14,940 for one lot of 180 shares.

 

Meanwhile, the unlisted shares of Shree Tirupati Balajee are commanding a strong premium in the grey market on the first day of the IPO, reflecting favorable market sentiment. According to sources tracking grey market activities, Shree Tirupati Balajee shares were trading at a premium of Rs 25, or 30.12 per cent, at the upper end of the issue price. A positive grey market premium often indicates favorable market sentiment for the public issue, as well as potential listing gains.

The company intends to use the net proceeds from the IPO for repayment and/or prepayment, in part or in full, of certain outstanding borrowings. Additionally, Shree Tirupati Balajee will use the remaining proceeds for investments in its subsidiaries HPPL, STBFL, and JPPL for repayment and/or prepayment of outstanding borrowings, as well as for working capital requirements and general corporate purposes.

The three-day subscription window for Shree Tirupati Balajee IPO ends on Monday, September 9, 2024. Following the closure of the subscription window, the basis of allotment is likely to take place on Tuesday, September 10, 2024, while the company's shares will be credited to demat accounts on Wednesday, September 11, 2024.

Shree Tirupati Balajee shares are slated to make their debut on the bourses on Thursday, September 12, 2024, by listing on both BSE and NSE.

Shree Tirupati Balajee IPO review

Should you subscribe to the Shree Tirupati Balajee IPO?

Anand Rathi Research Team – Subscribe

Analysts at Anand Rathi remain bullish on the public issue of Shree Tirupati Balajee and recommend bidding for the IPO. According to the brokerage, at the upper price band, the company is valued at a P/E of 18.7x with a market cap of Rs 677 crore post-issue, and a return on net worth of 20.8 per cent. On the valuation front, the brokerage believes the company is fairly priced. "Thus, we recommend a 'Subscribe' rating for the IPO," said the brokerage in its report.

Swastika Investmart – May Subscribe for the long-term

The brokerage, in its report, said that investors may subscribe to the Shree Tirupati Balajee IPO for long-term prospects. According to Swastika Investmart, the IPO is fairly priced. However, a high debt-equity ratio, corporate guarantees, and negative cash flow pose risks.

"Given the company's market leadership and potential for debt reduction, long-term investors may consider subscribing to the IPO. However, careful evaluation of the debt and cash flow risks is essential," said the brokerage in its report.

Master Capital Services - Subscribe for medium to long-term

Analysts at Master Capital Services have recommended that investors invest in the public issue of Shree Tirupati Balajee for a medium to long-term perspective. According to the brokerage, growing demand over the years, especially from the chemicals, construction, and food agriculture sectors, has helped the FIBC sector reach healthy capacity utilisation levels, resulting in players going for capacity expansion. Further, the FIBC industry grew at a CAGR of 1.8 per cent during 2020-2023, owing to continuous innovations and process improvements across the value chain and steady traction due to continuous improvement in product quality.
 

The brokerage in its report further highlighted that the company plans to take advantage of this situation by focusing on its core competencies along with optimum utiliaation of its capacity. The company also intends to develop a new product line following market trends, using its vast product portfolio, and enhancing its technological capabilities to create a global and domestic presence.  "Investors looking to invest can invest in the IPO for the medium to long term," said Master Capital Services in its report.

About Shree Tirupati Balajee

Shree Tirupati Balajee Agro Trading Company is engaged in the business of manufacturing and selling Flexible Intermediate Bulk Containers (FIBCs), i.e., large flexible bags, and other industrial packaging products such as woven sacks, woven fabric, narrow fabric, and tapes in domestic and overseas markets. The company provides bulk packaging solutions for clients in industries such as chemicals, agrochemicals, food, mining, waste disposal, agriculture, lubricants, and edible oil by supplying customised FIBC products for transportation and packaging needs.