Standard Glass Lining Technology IPO Analysis 2025: Should You Subscribe?
Get a detailed overview of Standard Glass Lining Technology IPO, including GMP, Subscription Status, Financial Analysis, Risk Factors and Expert Verdict.
Standard Glass Lining Technology Ltd (SGLTL) launched its initial public offering (IPO) on January 06, 2025, with bidding set to close on January 08, 2025. The IPO, carrying a grey market premium (GMP) of 69%, received a solid response on the first day.
However, investors should get a clear understanding of both potential rewards and risks before subscribing. This IPO analysis provides a comprehensive review to help make an informed decision.
Standard Glass Lining Technology IPO Details
- Issue Details: Mainstream
- Issue Size: Rs 410.05 crore
- Fresh Issue: Rs 210 crore
- OFS: Rs 200.05 crore
- Price Band: Rs 133 – Rs 140
- Lot size: 107 shares
- Listing Date: January 13, 2025
Standard Glass Lining Technology IPO Subscription Status
The SGLTL IPO kicked off with a strong response, recording an overall subscription of 13.55 times as of 5 p.m. on the opening day. Non-institutional investors led the surge, oversubscribing their allotted shares by an impressive 26.12 times. Retail investors also showed strong interest with a 14.86 times subscription, while qualified institutional buyers (QIBs) registered a 1.8 times subscription rate.
Overview of Standard Glass Lining Technology Ltd
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.
Standard Glass Lining Technology Key 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.
Standard Glass Lining Technology 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.
Conclusion: Should You Subscribe to Standard Glass Lining Technology IPO?
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 favourable industry dynamics, investors may consider subscribing to the IPO.
For a deep dive into other IPOs, explore: IPO Corner on Liquide