IPO listed on 23 Jan'25
Stallion India Fluorochemicals Ltd
Minimum Investment
₹ 14,850 / 165 shares
Grey market premium
₹ 35 (39% premium)
Issue price
₹ 90
Listing price
₹ 120
Listing gains
30 (33%)
Listing on
Jan 23, 2025
Our Verdict:
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- Stallion India Fluorochemicals Ltd (SIFL) holds a strong position in the fluorochemicals market, with a 10% market share. Its focused business strategy and ongoing capital expenditure plans provide significant potential for earnings growth in the coming years.
- With increasing demand fuelled by initiatives like "Make in India" and growth in key sectors such as Semiconductors, Electronics, Defence Manufacturing, and Pharma Equipment, they are prioritizing the expansion of their portfolio with environmentally friendly solutions like Hydro Fluoro-Olefins (HFOs) and specialty gases.
- With a P/E multiple of 35 based on FY24 earnings, the IPO seems reasonably priced. Additionally, the grey market premium (GMP) for the IPO suggests a strong debut on the stock exchanges.
- SIFL is well-positioned to benefit from industry tailwinds and business expansion opportunities. However, its future growth hinges on how effectively it utilizes the IPO proceeds and executes its expansion plans. Considering all these aspects, investors may consider subscribing to the IPO, keeping in mind that the company's ability to deliver on these fronts will be crucial to its long-term performance.
About the company
Founded in
5 Sep'02
Managing director
Shazad Sheriar Rustomji
- SIFL specializes in the sale of refrigerant and industrial gases, along with related products. Its core operations include debulking, blending, processing these gases, and providing pre-filled cans and small cylinders or containers.
- SIFL operates four facilities across Maharashtra, Rajasthan, and Haryana. Its products are utilized in a variety of industries, including air conditioning and refrigeration, fire safety, semiconductor manufacturing, automobile production, pharmaceuticals, medical applications, glass bottle manufacturing, aerosols, and spray foam.
STRENGTHS
- Strong Financial Growth: SIFL has showcased impressive financial performance in FY24, with a 3% increase in operational revenue, a 71% rise in EBITDA, and a 52% growth in net profit compared to FY23.
- Improving Profitability Margins: SIFL has significantly improved its EBITDA margin from 6.9% in FY23 to 11.3% in FY24, and further to 18.04% in H1FY25. Similarly, the net profit margin rose from 4.31% in FY23 to 6.26% in FY24, reaching 11.7% in H1FY25.
- Healthy Return Ratios: Despite its relatively smaller scale of business operations, SIFL boasts a Return on Equity (RoE) of 12.54% and a Return on Capital Employed (RoCE) of 13.96% in FY24, placing it among the best in the industry.
RISK FACTORS
- Client Concentration: SIFL faces significant client concentration risk, with a large portion of its revenue depending on a few key clients. As of September 30, 2024, the top ten customers contributed 77% of total revenue.
- Legal Risks: SIFL and Sanmei have a history of contracts for gas supplies. Sanmei, through its legal representative, has demanded Rs 9.49 crore. Any legal or regulatory proceedings, if initiated, could result in adverse outcomes that may impact the firm’s reputation, financial health, and cash flow.
- Cash Flow Challenges: SIFL has reported negative cash flow from operating activities in H1FY25, FY24, and FY23. Persistent negative cash flows may hinder operational efficiency and financial stability.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 199.45 crore
Fresh Issue
₹ 160.73 crore
OFS
₹ 38.72 crore
Price range
₹ 85 - 90
Lot size
165 shares
Issue Objective
The net proceeds from the fresh issue will be utilised for the following purposes:
- To fund the company’s incremental working capital requirements;
- To finance capital expenditures for the semiconductor and specialty gas debulking and blending facility in Maharashtra;
- To finance capital expenditures for the refrigerant debulking and blending facility in Andhra Pradesh; and
- General corporate purposes.
Dates
Bidding open
16 Jan'25
Bidding close
20 Jan'25
Allotment date
21 Jan'25
Refund date
22 Jan'25
Listing
23 Jan'25
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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.