Shanti Spintex Limited IPO - Complete Overview

Founded in 2010, this company started by trading fabrics and later ventured into manufacturing and selling denim fabrics. In 2016, they set up a weaving unit in Ahmedabad with 96 air-jet looms, capable of producing 1,92,72,000 metres of denim annually.

The weaving process involves interlacing two sets of yarns to create fabrics. Their air-jet looms use compressed air to insert weft yarn into warp yarn, forming raw denim fabrics. They produce various denim types, including stretch denim and lightweight denim, with diverse designs and shades.

Their production facility handles different yarns like cotton, viscose, and polyester, sourced from the domestic market. They also procure grey fabrics, outsource yarn dyeing and fabric finishing to third parties, and sell the finished products to customers.

 

Shanti Spintex Limited IPO Overview

Shanti Spintex Limited IPO date is slated to be open for subscription from December 19, 2023, to December 21, 2023. This BSE SME IPO follows a Book Built Issue IPO.

Shanti Spintex Limited IPO price is fixed at Rs. 66 to Rs. 70 per share. The upcoming BSE SME IPO will be listed on December 27, 2023.

The total issue size of this IPO amounts to Rs.31.25 CR. Within this total issue, 50% is issued for QIB investors, 35% is issued to retail investors, and 15% is issued to other investors.

 

 

Shanti Spintex Limited IPO timetable (Tentative):

Events	Date
IPO Opening Date	19 December 2023
IPO Closing Date	21 December 2023
IPO Allotment Date	22 December 2023
Refund initiation	26 December 2023
IPO Listing Date	27 December 2023

 

Shanti Spintex Limited IPO Details

IPO opening & closing date	19 December to 21 December 2023
Face value	Rs. 10 per share
Issue Price	Rs. 66 to Rs. 70 per share
Lot Size	2000  Shares
Price of 1 lot	Rs. 1,40,000
Total Issue Size	4,464,000 shares (aggregating up to Rs. 31.25 CR)
Offer for sale	1,776,000 shares of Rs. 10 (aggregating up to Rs. 12.43 CR)
Fresh issue	2,688,000 shares (aggregating up to Rs. 18.82 CR)
Listing at	BSE SME
Issue Type	Book Built Issue IPO
Registrar	Kfin Technologies Limited

 

Shanti Spintex Limited IPO Lot Details

Application	Lot	Shares
Minimum Lot Investment (Retail)	1 lot	2000
Maximum Lot Investment (Retail)	1 lot	2000
Minimum Lot Investment (HNI)	2 lot	4000

 

Shanti Spintex Limited IPO Reservation

QIB Shares Offered	50%
Retail Shares Offered	35%
Other Shares Offered	15%

 

Company Financial

(Amount in Lakhs)

Period	Sep 30  FY 23	Mar 31  FY 23	Mar 31  FY 22
Total Assets	17,457.31	17,588.33	13,631.33
Total Revenue	16,237.63	37,071.27	25,526.51
PAT	523.75	1,012.81	486.59
Net worth	6,122.31	5,603.93	4,622.73
Reserve & Surplus	4,702.31	4,893.93	3,912.73
Total Borrowings	3,474.45	4,177.66	4,868.64

 Revenue  Distribution Category-Wise

In FY 23 (as of Sep 30), Shanti Spintex's revenue distribution featured denim fabrics at 31.77%, finishing of grey fabrics at 39.21%, and yarn at 27.63%, with minimal contributions from windmills and other activities, totaling 100%.        

( % age) 

Particulars	Sep 30 FY 23	Mar 31  FY 23	Mar 31  FY 22
Denim fabrics	31.77%	34.44%	36.35%
Finishing of Grey Fabrics*	39.21%	49.53%	26.33%
Yarn	27.63%	15.50%	37.28%
Windmill	01.30%	0.52%	-
Others (scrap, job work)	00.09%	0.01%	0.03%
Total	100%	100%	100%

 

 

Revenue By operations

In FY 23 (as of Sep 30), Shanti Spintex Limited reported Rs. 16,232.01 Lakhs in revenue from operations, contributing to a total revenue of Rs. 37,033.22 Lakhs. (amount in Lakhs)

Particulars	Sep 30 FY 23	Mar 31  FY 23	Mar 31  FY 22
Revenue from operations	16232.01	37033.22	25490.94
Other Operating Income	5.61	38.05	35.57
Total Revenue from operations	16237.63	37071.27	25526.51

The objective of the Issue

The company intends to use the net proceeds for the following objectives.

• To meet Working Capital requirements

•  General Corporate Purposes.

 

Promoters and Management of Shanti Spintex Limited IPO

1. Bharat Bhushan Omprakash Agarwal

2. Rikin Bharatbhushan Agarwal

Pre-issue Promoter Shareholding	87.49%
Post-issue Promoter Shareholding	73.57%

 

Shanti Spintex Limited IPO Lead Managers

•  Hem Securities Limited

 

Peers of Shanti Spintex Limited IPO

Shanti Spintex Limited demonstrates competitive financials with a P/E ratio of 9.82, outperforming peers. It also boasts a higher EPS, indicating favourable earnings per share compared to its industry counterparts.

Name of the company	Face value (Rs. per share)	RoNw	P/ E	EPS (Basic) (Rs.)
Shanti Spintex Limited	10	18.07	9.82	7.13
Jindal Worldwide Ltd	1	17.80	56.03	5.77
R&B Denims Limited	2	19.48	17.35	2.21
Manomay Tex India Limited	10	11.17	15.77	8.72
United Polyfab Gujarat Ltd	10	8.60	36.19	2.56

 

Evaluation

The IPO is priced in the range of Rs 66 to 70 per share.

Evaluation of P/E Ratio

- Considering the FY23 EPS of Rs 7.13 from the last year, the resulting P/E ratio is 9.82x.

Comparative Analysis with Listed Peers

- Jindal Worldwide Ltd has a P/E ratio of 56.03x (the highest).

- Manomay Tex India Limited has a P/E ratio of 15.77x (the lowest).

- The industry's average P/E is 31.34x.

Consequently, the IPO Price at a P/E of  9.82x and comparing it from average industry P/E of 31.34x it will be considered undervalued.

 

Dividend Policy

The company hasn't paid dividends in past fiscal years. Whether we can pay them in the future depends on factors like profits, past dividend trends, capital needs, legal restrictions, and other relevant considerations evaluated by our Board.

 

IPO's Strengths

1. Diverse Manufacturing Capability: The company can produce a wide range of denim fabrics in-house, showcasing versatility in designs and weaving techniques.

2. Wide Product Portfolio: With offerings like power stretch denim, knit denim, and lightweight options, the company competes effectively with a diverse product range.

3. Experienced Leadership: The management team, led by industry veterans, brings over four decades of experience, providing a strong foundation for the company.

4. Strategic Focus: The company aims to expand domestically, meet quality standards consistently, maintain strong relationships, and strive for cost efficiency.

5. Strong Relationships: Cordial ties with suppliers, customers, and employees contribute significantly to the company's growth and stability.

 

IPO's Weaknesses

1. Intense Competition: Swift responses from competitors and the emergence of new players may lead to sales decline, price reductions, and reduced margins.

2. Marketing Dependency: Effectiveness of marketing initiatives is crucial for maintaining sales; ineffective strategies may hinder competitiveness.

3. Operational Risks: Incidents like fraud, theft, or employee negligence may adversely affect operations and financial conditions. While insurance is in place, potential losses could impact results and financial condition.  

4. Inability to Offset Raw Material Cost Increases: Failure to adjust product prices in response to raw material cost increases may impact margins and financial conditions.

5. Potential Regulatory Penalties: The company is subject to tax and labour laws, and any future penalties or demands from statutory authorities may impact the financial position.

 

IPO GMP Today

The Last GMP of Shanti Spintex Limited IPO was Rs.15.

 

Conclusion

The company, with a diversified manufacturing capability and a wide product portfolio, aims to raise Rs. 31.25 CR through this Book Built Issue IPO. The IPO is priced in the range of Rs. 66 to Rs. 70 per share, and investors can participate in lots of 2000 shares. While the IPO brings forth strengths such as a diverse product range, experienced leadership, and strategic focus, it also faces challenges like intense competition, marketing dependency, and operational risks. The valuation analysis suggests that the IPO may be considered overvalued or undervalued based on the P/E ratio.

 

 

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

 

To Read the Prospectus of the Company Click Here to Download the DRHP.

 

 

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