Shri Techtex Limited IPO

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i. Shri Techtex is engaged in the business of manufacturing of Polypropylene (PP) Non-Woven Fabric. The practical use of non-woven fabric is more ecological for certain applications, especially in fields and industries where disposable or single use products are important, such as organic farming, hospitals, health care, nursing homes, home furnishing, vehicle upholstery seat fabrication, Mattress & furniture covering, ecological packaging, industrial and consumer goods. They manufacture PP non-woven fabric in variety of sizes and density.

ii. Their manufacturing facility is situated at Simaj of Dholka Taluka in Ahmedabad District of Gujarat. The manufacturing facility is well connected with near about transport hubs. Their manufacturing facility is spread across 41548 sq. meters. The manufacturing facility is installed with manufacturing capacity of 3600 MT PP non-woven fabric per annum.

iii. Till date, in the existing manufacturing vertical, they have been catering majorly to offshore customers. In last 3 years they have derived their revenue from exports from countries namely USA, Taiwan, Canada, Denmark and China. However, recently, they have started focusing more on domestic market for products manufactured by us.

iv. The company is planning for business expansion by adding new business lines viz. Manufacturing of Hot melt Coating Lamination and PP Multifilament Yarn. The company expect both machineries to be ready for commercial production by April 2024 having installed capacity of 3360 tons and 1200 tons per annum respectively.

v. They are engaged in the business of manufacturing of PP Non-woven fabrics. They manufacture fabric with different sizes, and density depending upon the client’s requirement. Their products have variety of applications in multiple industries such as Geotextile, Horticulture, Furniture, Construction and Healthcare etc.

vi. Based on its application, their product portfolio can be majorly classified in following categories.

1. Non-Woven Geotextile
2. Non-Woven Synthetic Roofing Underlayment
3. Insulation Non-woven Fabric
4. Furniture Industry
5. Horticulture Industry 6. Healthcare Industry

Competitive Strengths

i. Experienced Promoters and Management Team
ii. Prime Location of the Manufacturing Facility and installed Capacity
iii. Infrastructure and Integrated capabilities to deliver quality Products

Objects of the Shri Techtex Limited IPO:

The company intends to utilize the net proceeds from the issue towards the funding of the following objects: i. Construction of Factory Shed, ii. Commissioning of Solar Plant, iii. Purchase of Machineries, iv. To meet working capital requirements, v. General corporate purpose, and to meet public issue expenses.
DRHP of Shri Techtex Limited IPO
RHP of Shri Techtex Limited IPO

Shri Techtex Limited IPO Details:

Open Date: Jul 26 2023
Close Date: Jul 28 2023
Total Shares: 7,400,000
Issue Type: Book Built Issue IPO
Issue Size: 45.14 Cr.
Lot Size: 2000 Shares
Issue Price: ₹ 54-61 Per Equity Share
Listing At: NSE Emerge
Listing Date: Aug 07 2023

Promoters And Management:

i. Mrs. Shradha Hanskumar Agarwal 44 years is Chairman and Managing Director and also the Promoter of the Company. She holds the Degree of Bachelor of Commerce (B.com) from the Osmania University. She was appointed as an Executive Director of the company since incorporation. Thereafter her designation was change to chairman and managing director of the company w.e.f. January 03, 2023. She has an experience of more than 15 years in the field of Technical Textile. She has been instrumental in taking major policy decision of the Company. She is playing vital role in formulating business strategies and effective implementation of the same. She is responsible for the expansion and overall management of the business of the Company. Her Vision to do business with ethics & to keep up with latest developments ii. Mr. Hanskumar Ramakant Agarwal, aged 46 years, is the Executive Director and also the Promoter of the Company. He has completed higher secondary education from Gujarat Secondary and Higher Secondary Education Board in year 1994. He was appointed as an additional executive director of the company w.e.f. October 31, 2022. Thereafter he was regularized as an executive director the company w.e.f. November 21, 2022. He has an Experience of more than 25 years in the field of Technical Textile. He is responsible to play a significant role in the Production, Human Resource, and Sales Department as well as day to day business operations of the company. iii. Mr. Vikas Srikishan Agarwal, aged 47 years is the Non-Executive Director of the Company. He holds degree in Bachelor of Commerce. He was appointment as First Director of the company on Incorporation. Thereafter He was director ship status was changed to Non-Executive Director for a period of 5 years w.e.f. January 03, 2023 liable to retire by rotation. He is having experience of 5 years in the technical textile industry.

Financials of Shri Techtex Limited IPO:

A. Balance Sheet
Particular (In Lakhs) Mar-20 Mar-21 Mar-22 Mar-23
Equity Share Capital 225 225 225 1,755
Reserves 588 1,854 1,876 1,257
Borrowings 488 1,499 2,452 3,189
Trade Payables 174 408 565 456
Other Liabilities 292 667 165 730
Total Liabilities 954 2,573 3,181 4,375
Net Block 1,015 1,188 3,652 3,843
Capital Work in Progress 104 1,224 0.5 94
Investments 0 4 5 7
Other Assets 80 82 84 37
Total NC Assets 1,199 2,498 3,741 3,980
Receivables 202 1,119 1,001 1,171
Inventory 202 165 435 1,165
Cash & Bank 43 69 40 95
Other Assets 121 802 65 975
Face value 10 10 10 10
B. Profit & Loss Statement
Particular (In Lakhs) Mar-20 Mar-21 Mar-22 Mar-23
Sales 1,608 3,947 5,118 5,692
Raw Material Cost 0.5 943 2,924 3,027
Purchases of Stock In Trade 0 0 0 1,140
Change in Inventory 0 -49 -48 -561
Employee Cost 207 272 52 86
Other Expenses 629 973 964 749
Other Income 18 75 65 115
EBITDA 789 1,882 1,291 1,366
EBITDA Margin 49.05% 47.68% 25.22% 23.99%
Depreciation 107 114 111 124
Interest 72 88 117 81
Profit before tax 609 1,679 1,063 1,161
Tax 162 413 237 251
Net profit 447 1,266 827 911
NPM (%) 27.50% 31.47% 15.95% 15.68%
C. Cash Flow Statement
Particular (In Lakhs) Mar-20 Mar-21 Mar-22 Mar-23
Cash From Operating Activity
Profit From Operation 776 1862 1285 1327
Receivable -88 -917 118 -170
Inventory -168 38 -270 -730
Payable -227 477 557 -42
Loans And Advances -74 -681 737 -906
Working Capital Changes -558 -1084 1141 -1847
Direct Taxes -162 -423 -251 -240
Net Cash Inflow from Operating Activity 57 355 2175 -760
Cash from Investing Activity
Fixed assets purchased -43 -1408 -2086 -409
Investments purchased 0 -4 -0.3 -0.6
Investment sold 4 0 0 0
Other investing items 8 19 738 89
Net cash inflow from investing activities -30 -1393 -1348 -320
Cash from Financing Activity
Proceeds from borrowings 0 890 540 584
Repayment of borrowings -134 0 0 0
Intrest paid fin -72 -88 -117 -81
Other financing items 207 263 -1279 631
Net Cash Flow 27 26 -29 55
 

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Shri Techtex Limited 56 9 3.65 16.7 61 152
Garware Technical Fabrics Limited 1306 172 84.50 36.6 3090 6297
Shubham Polyspin Limited 45 1 0.68 30.2 20.7 25
* All the data is as per FY23.

Recommendation on Shri Techtex Limited IPO:

Review and Recommendation of Shri Techtex Limited SME IPO by IZ team is 6/10

A) Business Model:

Shri Techtex primarily operates in the manufacturing sector, focusing on the production of Polypropylene (PP) Non-Woven Fabric. Their core business revolves around:

1. Manufacturing and Distribution: They produce PP non-woven fabric tailored to various sizes and densities based on clients' needs.

2. Diverse Applications: Their products serve a wide array of industries including Geotextile, Horticulture, Furniture, Construction, and Healthcare.

3. Geographical Presence: Historically, they have been more export-oriented with key markets in the USA, Taiwan, Canada, Denmark, and China. Recently, the company has shifted its attention to cater to the domestic market.

4. Expansion Plans: Shri Techtex is evolving by planning to introduce new business lines – Hot melt Coating Lamination and PP Multifilament Yarn.

B) Strengths:

1. Experienced Promoters and Management Team: This is an asset in any industry. Experienced leadership can guide the company through various challenges and exploit market opportunities effectively. Prime Location of the Manufacturing Facility: Being in a well-connected location close to transport hubs ensures smoother logistics and can lead to cost and time savings.

2. Substantial Installed Capacity: Their existing infrastructure can produce 3600 MT PP non-woven fabric annually, and with the expansion, they'll add more capacity for new product lines.

3. Diverse Application of Products: Serving multiple industries from Geotextile to Healthcare ensures a diversified revenue stream and reduced dependency on a single sector.

4. Historical Export Focus: Their track record of exporting to several countries indicates global recognition, quality assurance, and potential to tap international markets.

C) Weaknesses:

1. Historical Dependence on Offshore Customers: If there are global economic downturns or trade barriers, their revenue might be significantly affected. 2. Late Entry into Domestic Market: Given that they have recently started focusing on the domestic market, they might face stiff competition from existing domestic players and might need time to establish a strong foothold. 3. Over-reliance on PP Non-Woven Fabric: Although they are diversifying, their primary product is still PP non-woven fabric. A drastic technological change or market shift away from this product can affect their revenue. 4. Potential Implementation Challenges: Their expansion plans into new business lines could face unforeseen challenges, delays, or market acceptance issues

D) Risks in the Business:

The Group Company/entity are involved in similar line of Business that is being carried out by the IPO Company. Also the IPO Company has entered into various transactions with the Group Companies, companies and will continue to do in future. Lot of related party transactions are not usually good for investors.

E) Financials and Valuation:

1. Revenue has grown with a decent pace from 16 Cr in Fy20 to 60 Cr in Fy23. 2. Business has healthy EBITDA margins of 25%  in Fy23. 3. PAT has gone down from 12 Cr in Fy21 to 9 Cr in Fy23. This is not a good sign for any business. 4. In Fy23, the cash generated from operations is negative. This is due to increase in the inventory and loan and advances given to some related party and other suppliers. 5. The IPO is priced at P/E of 17x which looks decently priced.

Lead Manager of Shri Techtex Limited IPO:

  1. Beeline Broking Limited

Registrar of Shri Techtex Limited IPO:

  1. Link Intime India Private Limited

Company Address:

Shri Techtex Limited Harmony, 2nd Floor,15/A, Shree Vidhyanagar Co.Op. Hsg. Soc. Ltd. Opp. Nabard, Nr. Usmanpura Garden Ahmedabad - 380014 Phone: +91 78741 32777 Email: cs@shritechtex.co.in Website: https://shritechtex.com/

Discussion on Shri Techtex Limited IPO:

2 Comments

    If we get an allotment of sme ipo
    Is it easier to sell in the market means are there buyers

    Reply

    Anchor Investors in Techtec SME IPO ( 12.81 Cr Ka maal Uthaya hai

    1 Rajasthan Global Securities Private Limited = 6,54,000
    2 Neomile Growth Fund – Series I = 1,64,000
    3 VPK Global Ventures Fund – Scheme I= 1,64,000
    4 NAV Capital VCC – NAV Capital Emerging Star I= 8,20,000
    5 LRSD Securities Pvt Ltd = 2,98,000

    Reply

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