Standard Glass Lining Technology Ltd IPO | News | Overview | Verdict

IPO listed on 13 Jan'25

Standard Glass Lining Technology Ltd

Minimum Investment

₹ 14,980 / 107 shares

Grey market premium

₹ 50 (36% premium)

Issue price

₹ 140

Listing price

₹ 172

Listing gains

32 (23%)

Listing on

Jan 13, 2025

Our Verdict:

Standard Glass Lining Technology Ltd (SGLTL) has demonstrated remarkable CAGR growth in sales, EBITDA, and PAT during FY22-24, supported by industry-leading profit margins. Additionally, the firm’s solid return metrics highlight effective financial management and operational efficiency.
The Indian Glass Lined Equipment Market, worth approximately Rs 11.5 billion in FY24, is expected to grow at a 10.1% CAGR to Rs 18.6 billion by FY29. Globally, the market, valued at $21 billion in CY23, is projected to reach $34 billion by CY28, fueled by the expanding pharmaceutical and chemical sectors. With a ~17% market share in India's glass lined equipment segment (FY24), second only to GMM Pfaudler and HLE Glascoat, SGLTL is well-positioned to leverage these growth opportunities.
At a P/E multiple of 40x based on FY24 earnings, the IPO appears reasonably priced. Moreover, the grey market premium indicates a strong debut on the stock exchanges.
Given SGLTL’s robust growth trajectory, healthy margins, diverse product offerings and favorable industry dynamics, investors may consider subscribing to the IPO.

About the company

Founded in

6 Sep'12

Managing director

Nageswara Rao Kandula

SGLTL is one of India’s top five specialized engineering equipment manufacturers for the pharmaceutical and chemical sectors, offering in-house capabilities across the entire value chain. Its portfolio includes key equipment for manufacturing pharmaceutical and chemical products, categorized into Reaction Systems, Storage, Separation, and Drying Systems (SSD Systems), and Plant, Engineering, and Services, including ancillary components.
SGLTL operates 8 manufacturing facilities in Hyderabad, Telangana, spanning over 400,000 sq. ft., contributing to 40% of India's total bulk drug production. With a monthly production capacity of 150-200 glass-lined vessels, it ranks among India’s top three glass-lined equipment manufacturers by revenue in FY24.

STRENGTHS

Remarkable Growth Trajectory: SGLTL has demonstrated exceptional financial growth, achieving compounded annual growth rates (CAGRs) of 50% in operational revenue, 55% in EBITDA, and 54% in net profit between FY22 and FY24.
Industry-Leading Profitability Margins: SGLTL leads the industry with superior profitability metrics, reporting an EBITDA margin of 18.3% and a PAT margin of 10.92% in FY24.
Impressive Return Ratios: SGLTL boasts robust return ratios, including a Return on Equity of 20.74%, a Return on Capital Employed of 25.49%, and a Return on Assets of 11.85%, outperforming its listed peers.
Diversified Customer Base: SGLTL serves 347 customers, including 30 of approximately 80 pharmaceutical and chemical companies listed in the NSE 500 index as of June 30, 2024. Key clients include Aurobindo Pharma, Cadila Pharmaceuticals, Laurus Labs, Granules India, Natco Pharma, and Piramal Pharma, among others.
Strong Client Relationships: SGLTL maintains long-term relationships with its marquee clients, including partnerships exceeding three years with 13 of its top 20 customers. Additionally, more than 80% of its top 20 customers placed repeat orders in each of the last three fiscal years and H1FY25.

RISK FACTORS

Client Concentration: SGLTL faces a high level of client concentration risk, with a significant portion of its revenue reliant on a few key clients. As of September 30, 2024, the top ten customers accounted for 51% of total revenue.
Cash Flow Challenges: SGLTL has reported negative cash flow from operating activities for the six months ended September 2024 and FY24. Continued negative cash flows could adversely affect the firm’s operational efficiency and financial stability.
Contingent Liabilities: SGLTL has contingent liabilities, capital commitments, and guarantees amounting to Rs 49.59 crore as of September 30, 2024. If these liabilities materialize, they may impact the firm’s operational results, financial condition, and cash flows.

Financials

All Values are in Cr.

Issue details

Issue type

Mainstream

Issue size

₹ 410.05 crore

Fresh Issue

₹ 210 crore

OFS

₹ 200.05 crore

Price range

₹ 133 - 140

Lot size

107 shares

Issue Objective

SGLTL intends to use the net proceeds from the fresh issue for:

Capital expenditure, including purchasing machinery and equipment;
Repayment or prepayment of certain borrowings of the company and its subsidiary;
Investment in subsidiary for its capital expenditure needs;
Strategic investments, acquisitions, and inorganic growth; and
General corporate purposes.

Dates

Bidding open

6 Jan'25

Bidding close

8 Jan'25

Allotment date

9 Jan'25

Refund date

10 Jan'25

Listing

13 Jan'25

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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