Pyramid Technoplast Limited, an industrial packaging company, has recently announced its Initial Public Offering (IPO). This article provides a comprehensive review of the company’s IPO, business model, financial performance, and other relevant details to help potential investors make informed decisions.
Table of Contents
Pyramid Technoplast IPO Details
| Parameter | Value |
|---|---|
| IPO Date | Aug 18, 2023 - Aug 22, 2023 |
| Face Value | ₹10 per share |
| Price Range | ₹151 to ₹166 per share |
| Lot Size | 90 Shares |
| Total Issue Size | 9,220,000 shares (₹153.05 Cr) |
| Fresh Issue | 5,500,000 shares (₹91.30 Cr) |
| Offer for Sale | 3,720,000 shares (₹61.75 Cr) |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE, NSE |
| Share Holding Pre Issue | 31,284,800 shares |
| Share Holding Post Issue | 36,784,800 shares |
Purpose of Issue
The IPO comprises a Fresh Issue of up to 55,00,000 Equity Shares and an Offer for Sale of up to 37,20,000 Equity Shares by the Selling Shareholder, Credence Financial Consultancy LLP. The proceeds from the Offer for Sale will be received by the Selling Shareholder, with the company not benefiting from this. The proceeds from the Fresh Issue will be utilised for repaying outstanding borrowings, funding working capital requirements, and other general corporate purposes.
Valuation and Offering Details
The Offer Price will be determined based on market demand. The face value of the Equity Shares is ₹10 each, with the Floor Price being 15.10 times the face value and the cap price at 16.60 times the face value.
Business Overview
Industry Overview
Pyramid Technoplast Limited operates in the India Blow Molded Industrial Product Market. The company commissioned a report in July 2023 to understand the industry dynamics in connection with its IPO. The plastic industry, where the company operates, is influenced by various macroeconomic conditions. A robust economy generally leads to higher demand for their products.
Company and Business Model
Pyramid Technoplast Limited specialises in manufacturing polymer-based moulded products, prominently known as Polymer Drums. These drums are predominantly used by sectors like chemical, agrochemical, speciality chemical, and pharmaceutical companies for their packaging needs. The company is one of India’s leading manufacturers of rigid Intermediate Bulk Containers (IBC).
The company’s product range caters to diverse industries, including chemicals, petrochemicals, pharmaceuticals, and food. With a global footprint, Pyramid exports to over 40 countries. Their strategic manufacturing units in Silvassa, Daman, and Panoli, positioned near major ports, facilitate their export operations.
Financial Performance of Pyramid Technoplast Limited
To understand the company’s financial health, let’s delve into the restated financial statements for the fiscal years 2021, 2022, and 2023.
Assets and Liabilities
| Financial Year | Non-current assets (₹ lakhs) | Property, plant, and equipment (₹ lakhs) | Capital work in progress (₹ lakhs) | Right to Use (₹ lakhs) | Total equity and liabilities (₹ lakhs) |
|---|---|---|---|---|---|
| 2021 | 5,029.82 | 2,971.63 | 0.00 | - | 15,345.55 |
| 2022 | 4,853.53 | 5,346.73 | 245.19 | - | 18,375.61 |
| 2023 | 6,142.80 | 3,780.90 | 726.46 | 44.18 | 22,578.14 |
Profit and Loss
| Financial Year | Revenue from operations (₹ lakhs) | Other Income (₹ lakhs) | Total Income (₹ lakhs) | Total Expenses (₹ lakhs) | Total Comprehensive Income (₹ lakhs) |
|---|---|---|---|---|---|
| 2021 | 31,350.19 | 267.44 | 31,617.63 | 29,329.75 | 1,699.24 |
| 2022 | 40,041.57 | 222.58 | 40,264.15 | 36,748.37 | 2,614.61 |
| 2023 | 48,002.51 | 200.22 | 48,202.74 | 43,917.76 | 3,176.07 |
The company’s revenue has shown a Compound Annual Growth Rate (CAGR) of approximately 23.47% over the past three years, indicating strong and consistent growth. The profit margins have also seen a gradual improvement, with 8.89% in 2023, up from 7.24% in 2021.
1. Non-Current Assets Over Years:
Imagine the things a company owns that are not easily turned into cash, like buildings and equipment. Pyramid Technoplast Limited has been collecting more of these things each year. In 2021, they had stuff worth ₹5,029.82 lakhs, which increased to ₹4,853.53 lakhs in 2022, and even more to ₹6,142.80 lakhs in 2023. This suggests they’re growing and getting more valuable things.
2. Expense Ratios for 2023
Think about all the money a company has to spend to run its business, like salaries and bills. In 2023, Pyramid Technoplast Limited spent ₹43,917.76 lakhs to keep everything running. This number can sound big, but it helps to understand how much money they make to cover these costs.
Expense ratios can be calculated by dividing specific expenses by the total revenue. In this case, let’s calculate two important expense ratios for the year 2023:
Operating Expense Ratio = (Total Operating Expenses / Total Revenue) * 100
Net Income Margin = (Net Income / Total Revenue) * 100
Using the provided data for 2023:
Operating Expense Ratio = (₹43,917.76 lakhs / ₹48,002.51 lakhs) * 100 ≈ 91.44%
Net Income Margin = (₹3,176.07 lakhs / ₹48,002.51 lakhs) * 100 ≈ 6.61%
3. Cash Flow Over the Year
Cash flow information is vital to understanding how money is moving in and out of the company, including operating activities, investing activities, and financing activities.
4. Breakdown of Expenses Over the Year:
Total expenses for Pyramid Technoplast Limited in 2023 were ₹43,917.76 lakhs. These expenses likely include various categories such as cost of goods sold, operating expenses, interest expenses, and taxes. A detailed breakdown would provide a clearer understanding of where the company’s expenses are allocated.
5. Revenue, Expenses, and Profits Over the Years:
Let’s talk about how much money Pyramid Technoplast Limited made and how much they spent:
- In 2021, they made ₹31,350.19 lakhs from their business, but after covering their costs (like salaries, bills, and more), they had a leftover profit of ₹1,699.24 lakhs.
- In 2022, they did even better. They made ₹40,041.57 lakhs and, after paying their expenses, had a profit of ₹2,614.61 lakhs.
- In 2023, their business grew a lot. They earned ₹48,002.51 lakhs, and even though their expenses were higher at ₹43,917.76 lakhs, they still had a good profit of ₹3,176.07 lakhs.
This pattern shows that Pyramid Technoplast Limited is growing its business and becoming more profitable over time.
Pyramid Technoplast IPO GMP
The GMP of Pyramid Technoplast is around 11% which is not very attractive. This is around Rs. 20 of premium over the issue price. We might not see any considerable listing gains looking at the current GMP.
India Blow Molded Plastics Market Overview
The India Blow Molded Plastics Market is anticipated to witness stable growth by 2023. This growth is attributed to the increasing adoption of molded plastics in the automotive industry for the production of lightweight automotive parts. Blow molded plastic parts are not only lighter than metal but also offer excellent stiffness.
What will boost the industry even further?
Innovations in molding technologies are expected to further boost the market growth in India over the next five years. The newer production processes are not only more energy-efficient but also environmentally friendly and time-saving. The Indian government is actively supporting the molding of plastics for recycling and is also promoting the use of molded bioplastics.
What drives the demand for Blow Mould Plastics?
A significant driver for the market is the high demand for PET (Polyethylene Terephthalate) in the packaging of food and beverages, as it is deemed safe for food. This demand is expected further to propel the market’s growth during the forecast period. Based on the polymer type, the PET segment is leading the market and is anticipated to maintain its dominance in the upcoming years. This is because regulatory bodies approve PET for food and beverage packaging, which is the most widely recycled plastic.
Uses of Blow Molded plastics in the Automotive Industry
When it comes to applications, the automotive segment is leading the market due to the extensive use of Blow Molded Plastics for producing lightweight automotive parts and components.
Global Blow Molded Plastics Market Overview
The global blow molded plastics market size was estimated to be USD 80.47 billion in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 5.3% from 2023 to 2030.
The market is driven by a shift in trends toward replacing traditional materials like glass and metal. There’s also an increase in investments in the construction industry, which uses blow molded plastics for various applications such as concrete forms, panels, barricades, and traffic markers.
Industries like construction, packaging, and automotive are the primary sectors propelling the demand for blow molded plastic products and services. In the U.S., the demand for blow-molded plastics is majorly generated by the expanding automotive industry, especially due to the popularity of electric vehicles and the rise in construction activities.
Regional Insights on Blow Molded Plastics
Asia Pacific was the leading regional blow molded plastics market and accounted for over 38% of the total market revenue in 2022. Countries like China, India, Indonesia, and Malaysia are expected to drive the demand for blow-molded plastics in the Asia Pacific region due to increasing infrastructure spending and growing automobile demand.
Key Companies
Some of the prominent players in the global blow molded plastics market include Magna International, Inc., INTERNATIONAL AUTOMOTIVE COMPONENTS GROUP, S.L. (IAC Group), Berry Global, Inc., Pet All Manufacturing, Inc., Inpress Plastics Ltd., Dow Inc., and many others.
Future Outlook of Blow Moulded plastic Industry
The future of the blow molded plastics industry, especially in India, is expected to be influenced by technological advancements, environmental concerns, and shifts in consumer preferences. Companies like Pyramid Technoplast Limited are expected to benefit from this growing demand. As industries continue to innovate and adopt sustainable practices, the demand for blow molded products is likely to grow, especially in sectors like automotive, construction, and packaging.
Risk of investing in Pyramid Technoplast Limited
Pyramid Technoplast Limited faces risks associated with fluctuating raw material prices. The company currently does not hedge against these fluctuations. A significant shortage or disruption in raw material supply could escalate production costs. Moreover, the company’s performance is closely tied to the economic conditions of its markets. Factors like interest rates, government policies, or other macroeconomic developments could impact their business.
Conclusion - Should you apply for Pyramid Technoplast IPO?
Pyramid Technoplast Limited has showcased consistent growth over the past three years. While the company seems well-positioned in the market with a strong business model, and strategic manufacturing units, a low GMP indicates less investor interest. Also, profit margins are very nominal. I would personally not apply for this IPO as I am not expecting any listing gains. Also, I am not very excited about this business. That’s it for today folks!
