Platinum Industries Ltd IPO | News | Overview | Verdict

IPO listed on 5 Mar'24

Platinum Industries Ltd

Minimum Investment

₹ 14,877 / 87 shares

Grey market premium

₹ 100 (58% premium)

Issue price

₹ 171

Listing price

₹ 225

Listing gains

54 (32%)

Listing on

Mar 5, 2024

Our Verdict:

Platinum Industries Ltd is a prominent player in the PVC stabilizers industry, holding the position as the third largest company with ~13% market share. It distinguishes itself by achieving the highest Revenue and Profit Compound Annual Growth Rate (CAGR) among its peers from FY20 to FY23, in addition to a significant improvement in its profitability margins.
From a valuation perspective, the IPO seems to be fairly priced with a Price-to-Earnings (P/E) ratio of 20.5x, based on the projected FY24 earnings against its post-IPO equity capital. Additionally, the grey market premium (GMP) for the IPO suggests a premium listing on the bourses.
Taking these elements into account, it is recommended for investors to consider subscribing to this offering from a medium-to-long term perspective.

About the company

Founded in

19 Aug'16

Managing director

Krishna Dushyant Rana

Platinum Industries Ltd (PIL) operates as a diversified entity, primarily focused on the production of stabilizers. Its portfolio encompasses a range of products, including PVC (polyvinyl chloride) stabilizers, CPVC (chlorinated polyvinyl chloride) additives, and lubricants. These products are utilized in various applications such as PVC pipes, profiles, fittings, electrical wires and cables, SPC (stone plastic composite) floor tiles, rigid PVC foam boards, and packaging materials.
PIL currently manages a single manufacturing site located in Palghar, Maharashtra. Additionally, through its subsidiary, Platinum Stabilizers Egypt LLC, the company is planning to establish a manufacturing presence in Egypt dedicated to PVC stabilizers. It is also setting up another manufacturing site in Palghar.

STRENGTHS

Market Leadership: PIL holds a strong position in the PVC stabilizers market, ranking as the third largest entity with ~13% market share in FY23. It stands out for having the highest Revenue and Profit Compound Annual Growth Rate (CAGR) among its competitors from FY20 to FY23.
Impressive Financial Growth: PIL has demonstrated outstanding financial performance, with a CAGR of 61% in Revenue from Operations between FY21 and FY23, alongside a commendable 167% growth in EBITDA and 179% growth in Net Profit.
Enhanced Profitability Margins: PIL has consistently improved its operating margin, rising from 8.47% in FY21 to 23.27% in FY23, and further to 26.36% by September 2023. The Net Profit margin also saw substantial improvement, from 5.39% in FY21 to 16.24% in FY23, and up to 18.59% by September 2023.
Robust Return Ratios: PIL boasts impressive return ratios, with a Return on Equity (ROE) of 90.02% and a Return on Capital Employed (ROCE) of 56.85% for FY23.

RISK FACTORS

Revenue Concentration: PIL generates a significant majority of its revenue, about 82%, from its top five clients, with the top 10 clients contributing over 91% of total revenue in the six-month period ending September 2023. The firm has not secured long-term contracts with these clients, and any disruption in these relationships could negatively impact the business and operational outcomes.
Deteriorating Return Ratios: Despite achieving commendable return ratios, there has been a noticeable downward trend over the past three years. The Return on Equity, in particular, has seen a reduction from 138.63% in FY23 to 90.02% in FY21, and it further decreased to 31.39% in the six-month period ending September 2023.
Low Capacity Utilization: PIL's operations are confined to a single manufacturing site in Palghar (Maharashtra), with low capacity utilization rates for its products as of March 2023: 27.70% for Lead Based Stabilizers, 25.64% for Non-Lead based Stabilizers, 12.48% for CPVC Additives, and 21.49% for Lubricants. The underuse of production capabilities and the failure to fully capitalize on expanded capacities may negatively impact the firm’s business prospects and financial performance.
Cash Flow Concerns: PIL has faced negative cash flows from its operating, investing, and financing activities over the past three fiscal years. Persistent negative cash flows in the future could adversely affect its results of operations and financial condition.

Financials

All Values are in Cr.

Issue details

Issue type

Mainstream

Issue size

₹ 235.32 crore

Fresh Issue

₹ 235.32 crore

OFS

₹ -

Price range

₹ 162 - 171

Lot size

87 shares

Issue Objective

The net proceeds from the issue are intended to be utilised towards:

Investing in Platinum Stabilizers Egypt LLC (subsidiary) to finance capital expenditures for a new PVC Stabilizers facility in Egypt;
Funding a similar new facility in Maharashtra;
Meeting the working capital requirements of the company; and
General corporate purposes.

Dates

Bidding open

27 Feb'24

Bidding close

29 Feb'24

Allotment date

1 Mar'24

Refund date

4 Mar'24

Listing

5 Mar'24

IPO Reservations

Qualified institutional buyers

<50%

Non-institutional investors

>15%

Retail individual investors

>35%

Read the Offer Document

This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.

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