What you must know about Essen Specialty Films IPO

Essen Speciality Films Ltd, is an SME IPO on the NSE which is opening for subscription on 23rd June 2023. The company, Essen Speciality Films  Ltd, was incorporated in the year 2002. It manufactures and exports specialized plastic products predominantly in the home furnishing and the home improvement segments. Its main customers are the multinational retail outlets like IKEA, Wal-Mart, Kmart, Kohl, Kroger, and Bed, Bath & Beyond. Its products are varied and it offers bath area accessories, artificial plants and flowers, storage, and organization units as well as utility products.

The products manufactured by Essen Speciality Films  Ltd have a diverse customer base across a gamut of industry groups. They comprise of departmental stores, discount stores, retailers, hypermarkets, home improvement stores etc. It also supplies directly to select global importers and exporters. It currently services clients in more than 24 geographies which include China, UK, Saudi Arabia, US, Qatar, Germany, Italy, Canada, New Zealand, Spain, Belgium, Austria, Mexico and many more. It has the recognition of a two-star export house by the government of India and also has several accolades to its credit.

Key terms of the SME IPO of Essen Speciality Films  Ltd

Here are some of the highlights of the Essen Speciality Films IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 23rd June 2023 and closes for subscription on 27th June 2023; both days inclusive.
   
• The company has a face value of ₹10 per share and the issue will be a book built IPO. The price band for the book built IPO has been fixed at ₹101 to ₹107 per share. The IPO will comprise of a fresh issue portion and an offer for sale (OFS) portion.
   
• As part of the fresh issue portion, Essen Speciality Films  Ltd will issue 46,99,200 shares, which at the upper price band of ₹107 per share will aggregate to a total fund raising via fresh issue of ₹50.28 crore.
   
• As part of the offer for sale (OFS) portion, Essen Speciality Films  Ltd will issue 15,00,000 shares, which at the upper price band of ₹107 per share will aggregate to a total fund raising via OFS of ₹16.05 crore.
   
• Therefore, the total issue size of the IPO of Essen Speciality Films  Ltd will entail the issue of 61,99,200 shares, which at the upper price band of ₹107 per share will aggregate to a total IPO size of ₹66.33 crore.
   
• The minimum lot size for the IPO investment will be 1,200 shares. Thus, retail investors can invest a minimum of ₹128,400 (1,200 x ₹107 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO.
   
• HNI / NII investors can invest a minimum of 2 lots comprising of 2,400 shares and having a minimum lot value of ₹256,800. There is no upper limit on what the HNI / NII investors can apply for.
   
• Like every SME IPO, this issue also has a marketing making portion with a market maker portion allocation of 310,800 shares. SMC Global Securities will act as the market maker to the issue providing two-way quotes to ensure liquidity on the counter.
   
• The company has been promoted by Pallav Doshi, Khushboo Doshi and Karishma Doshi. The promoter stake in the company stands currently at 100%. Post the IPO, being a fresh issue of shares, the promoter stake will be get diluted proportionately.

While GYR Capital Advisors Ltd will also be the lead manager to the issue, Bigshare Services Private Limited will be the registrar to the issue. The reservation of shares for the different category of shareholders in the IPO is as under.

Key dates to be aware of in the Essen Speciality Films  Ltd IPO (SME)

The SME IPO of Essen Speciality Films  Ltd IPO opens on Friday, June 23rd, 2023 and closes on Tuesday June 27th, 2023. The Essen Speciality Films  Ltd IPO bid date is from June 23rd, 2023 10.00 AM to June 27th, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is the 27th of June 2023.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account.

Financial highlights of Essen Speciality Films  Ltd

The table below captures the key financials of Essen Speciality Films  Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

The profit margins have been averaging around 10% plus on a net basis, which should be seen as a positive. The company has an established model with a matured market and a highly lucrative export market to boot. However, investors must remember that this is a traditionally export dependent business and global dynamics can play a big role.

The weighted average EPS of the last 3 years comes to around ₹6.21, so at the upper band of ₹107, the P/E ratio works out to around 17 times earnings. This is at par to above competition and may not leave much scope for appreciation of price post listing. Investors must factor this into their calculations.