What you must know about the SME IPO of Srivasavi Adhesives Tapes

Srivasavi Adhesive Tapes Ltd is a 13 year old company incorporated in the year 2010 and engaged in the business of manufacturing, coating, converting and die cuts of industry specialty self-adhesive tapes. The company has several user industries it caters to. These include automotives, locomotives, aerospace, defence, electrical goods, electronics goods, food, pharmaceuticals and renewable energy sectors. Its product range offers a complete spectrum of such adhesive tapes including adhesive tapes, BOPP tapes, eco-friendly tapes, filament tapes, dual-side tapes, specialty protection tapes, surface protection tapes, masking tapes as well as specialty films and foams.

Srivasavi Adhesive Tapes Ltd caters extensively to the domestic and the export market for adhesive tapes. While the company supplies its tapes across the length and breadth of India, some of its key global markets include Egypt, USA, France, Kuwait, Poland, Qatar, Spain, Italy, Australia, South Africa, Indonesia and the United Arab Emirates. The issue amount will be used largely to fund the working capital needs of the company and also partially for general requirements.

Understanding the NSE-Emerge IPO issue of Srivasavi Adhesive Tapes

Srivasavi Adhesive Tapes IPO worth Rs. 15.50 crore comprises entirely of a fresh issue of the IPO amount. The total SME IPO of Srivasavi Adhesive Tapes Ltd entails the issue of 37.80 lakh shares at a price of Rs41 per share aggregating to Rs15.50 crore. The stock has a face value of Rs10 and bidders can only bid in minimum lot size of 3,000 share each, entailing a minimum investment of Rs123,000 in the IPO. That is also the maximum that a retail investor can apply for in the IPO.

HNI / NII investors can apply for a minimum of 2 lots of 6,000 shares entailing a minimum investment of Rs246,000. In As per the terms of the offer, 50% of the net offer is reserved for the retail investors and the balance 50% for the HNI / NII investors. It is a fixed price issue and Shreni Shares Private Limited will act as the market maker for the SME IPO of Srivasavi Adhesive Tapes Ltd. It is an NSE SME segment (NSE Emerge) IPO and will trade under that segment only. The company has a P/E ratio of 11.77X to begin with at the fixed IPO price of the issue. Post the issue, the promoter holding in the company will get diluted from 99.84% to 73.21%.

The issue opens for subscription on 23rd February 2023 and closes for subscription on 28th February 2023 (both days inclusive). The basis of allotment will be finalized on 03rd March 2023 and the refunds will be initiated on 06th March 2023. In addition, the demat credits are expected to happen on 08th March 2023 and the stock is scheduled to list on 09th March 2023 on the NSE SME segment. This is the segment, in contrast to the mainboard, where IPOs of small and medium enterprises (SMEs) are incubated.

Quick look at the financials of the IPO of Srivasavi Adhesive Tapes

For the fiscal year ended March 2022, Srivasavi Adhesive Tapes Ltd reported net profits of Rs362 lakhs on revenues of 6,392 lakhs implying net margins of 5.66%. Based on the first half data for FY23, it does look like the company could maintain roughly a similar performance in FY23 also. Its total debt at Rs600 lakhs is just about 20% of the sales revenues and about 20% of the total assets too. The ratio of the total debt to the equity net worth stands at a comfortable 1:2.

The issue of Srivasavi Adhesive Tapes Ltd will be lead managed by Shreni Shares Private Limited while the registrar to the issue will be Bigshare Services Private Limited. The company has its headquarters in the city of Bengaluru in the state of Karnataka.