Sirca Paints India Limited IPO

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Sirca Paints India Limited IPO

(i) Sirca Paints India Limited was originally incorporated on 19th January 2006 at New Delhi Company was laid down by Mr. Sanjay Agarwal, Mr. Apoorv Agarwal and Mr. Gurjit Singh Bains in the year 2006 with a vision to have a distinct global presence in Paint Industry by providing high quality coatings and technical assistance which leads to as healthy customer relationship. After establishment, Our Company started import of Polyurethane Polish (PU) products from Italy and wall paints & Abrasives from Korea and selling them in India as the first step of Journey.

(ii) Sirca Paints India Limited is the first Company to launch wood filler in India and opened its wholly owned branches in Mumbai and Chennai.

(iii) The Company is in marketing and trading/distributor of paints and allied products after repackaging the same.The Company uses to procure the products majorly from SIRCA SPA ITALY through Import and selling them in India through its Distributors. In addition, the Company also procure the products (Thinner, Abrasives and Buffing Cream) from other suppliers based in India. Except for Thinner and Abrasives which are purchased from domestic suppliers, all other 100% Purchases are made from Outside India and the products which are purchased from domestic suppliers and sold out in India Only.

(iv) The company has shown a tremendous growth in its total revenue, our Total revenue has increased more than doubled in last 5 (five) years. Our total revenue for the Financial Year 2012-13 was Rs. 3402.29 Lacs which is now Rs. 8434.17 Lacs in the Financial Year 2016-17 and has shown an Increment of 147.89 %. Our Profit after tax is also shown a steep rise in last 5 (Five) years from Rs. 50.40 lacs in the Financial year 2012- 13 to Rs. 1370.34 Lacs in the Financial Year 2016-17 an Increment of 2618.93 %.

Investor Presentation

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Objects of the Issue:

Objective of

Sirca Paints India Limited IPO

are: 1. To finance the expenditure of Site/Plant Development and Purchase of Plant and Machinery 2. To part finance incremental working capital requirements of the Company 3. To meet General corporate purposes 4. To meet the expenses of the Issue

Listing Date: May 30 2018

Issue Details:

Open Date: May 16 2018
Close Date: May 22 2018
Total Shares: 4869600
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Lot Size: 800 Shares
Issue Price: ₹ 151-160 Per Equity Share
Listing At: NSE Emerge
Listing Date: May 30 2018

Promoters And Management:

Promoters of Sirca Paints India Limited IPO Company are: (i) Mr. Sanjay Agarwal aged 57 years, is Promoter and Managing Director of our Company. He is Chartered Accountant. He is having more than 20 years of Experience in wood coating Industry. He looks after day-to-day routine operational activities of our Company. With his multifunctional experience, He guides a company in its growth strategies. He has been on the board of Company since Incorporation of the Company i.e. January 2006. (ii) Mr. Apoorv Agarwal: aged 30 years, is Promoter and Managing Director of our Company. He holds the degree in Master in Finance and Marketing from IIPM and Degree of Commerce from the University of Delhi. He is having more thanyears of Experience in the Business of Italian Furniture and Italian wood coating Industry. He looks after day-to-day routine operational activities of our Company. He played an instrumental role towards increment of growth at our Company. He has been on the board of Company since Incorporation of the Company i.e. January 2006. (iii) Mr. Gurjit Singh Bains aged 50 years, is Promoter and Non Executive Director of our Company. He is Master in economics from the University of Venice. He is having more than 20 years of Experience in wood coating and Italian Furniture Industry. His business acumen has yielded the required results and with her tireless support to the company, facilitated the business to reach new heights all through. He has been on the board of Company since Incorporation of the Company i.e. January, 2006.

Company Business:

Key Highlights of the Company going forward (i) The Company has entered into a Distributorship Contract dated 1st January, 2018 with SIRCA SPA ITALY, wherein the Company got the Exclusive Right to promote the sale of PU & Metal Coating under trademark 41 SIRCA in the territory of India, Sri Lanka, Bangladesh and Nepal with a minimum turnover of EURO 4,300,000 (Four Million three hundred thousands) and EURO 4,800,000 (Four million eight hundred thousand) to be achieved in the year 2018 and 2019 respectively. (ii) The Company has entered into a Manufacturing License Agreement dated 16th February, 2018 with SIRCA S.P.A. Italy for manufacturing the following products that the Company is currently distributing under the Product Distribution Agreement. Pursuant to this agreement, the Company is having an Exclusive Right to manufacture the following products in India, under the mark “SIRCA”. - Paints NC - Paints AC - Thinner - Polyurethane Products. (iii) Proposed Production Capacity: Presuming 300 operating days in a year and single Shift (12 Hours)-working basis, the production capacity of the unit is mfg. of 3000000 kgs of PU Thinner and 3600000 kgs of NC Lacquers ,3600000 kgs of Melamine and 2000000 kgs of Polyurethane products per annum initially, which is likely to be increased in the subsequent years. Actual utilization is expected to be 25 % in Ist year, 40 % in IInd year, 60 % in IIIrd year and approx 75% and above in further years.

Capital Structure:

(i) Authorized Share Capital (2,00,00,000 shares at FV@10) 20 Cr
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue (1,34,00,000 Shares at FV@10) 13.40 Cr
(iii) Present Issue (  48,69,600 Shares at FV@10) 4.87 Cr
(iv) Reservation for Market Maker  ( 2,44,000 Shares at FV@10) 24.4 Lacs
(v) Net Issue to Public (48,69,600-2,44,000=  46,25,600 Shares) 4.625 Cr
(vi) QIB quota-22,98,400 49.7%
(vii)  HNI Quota not less than 6,99,200 15.11%
(viii) Retail Quota not less than 16,28,000 35.19%
(ix) Paid Up Share Capital after the issue 18.27 Cr

Company Financials:

 1. Balance Sheet Snippet[ Financials as of Sept 2017]
       (i) Shareholders’ Fund[Equity] Value 4348.65 Lacs
      (ii) Asset 7423.46 Lacs
      (iii) Liability 3074.81 Lacs
      (iv) Debt/Equity[<1 ideal] .70(resonable)
      (v)  Net Worth[Asset- Liability] 4348.65 Lacs
     (vi) Current Ratio[ideally>1.5] 2.04
     (vii)  RONW[PAT/Net Worth] or ROE 22.17%
     (viii) Book Value or NAV[adjusting bonus] 35.64
     (ix) P/B  [<5 ideal] 4.6
2.  Profit n Loss Snippet (i) The Reveune of the company in last 5 years ( FY13 to FY17) is 34.02 Cr, 54.08 Cr, 69.7 Cr, 72.66 Cr and 84.34 Cr respectively. The Company is growing at a CAGR of 25.48%[Excellent] (ii) The PAT of the company in last 5 years ( FY13 to FY17) is 50.40 Lacs, 1.97 Cr, 6.17 Cr, 7.27 Cr and 13.70 Cr respectively. The Company is growing at a CAGR of 128.79%[Excellent]. (iii) The EBITDA Margins of the company for FY13( 5.78%), FY14(6.71%), FY15(14.50%) ,FY16(16.7%) and  FY17(26%) . The Company's EBITDA margins in last 5 years has shown tremendous growth and have gone 5x . (iv) P/B(post issue)=  2.14( at cutoff price of 160) (v) Annualized EPS(post issue)=  10.55 (vi)  Annualized P/E(post issue)=15 at the cutoff price of 160.
3. Cash Flow Statement(all figures in lacs)
Particulars FY17 FY16 FY15 FY14 FY13
(i) Net Cash Generated from Operation 1071.71 455.44 654.5 235.42 152.14
(ii) Net Cash Generated from Investment -538.23 -111.33 -26.96 -59.02 -196.86
(iii) Net Cash Generated from Financing Activity -693.26 -123.21 -61.38 394.95 -208.18
(iv) Total[ (i)+(ii)+(iii) ] -159.78 220.9 566.16 571.35 -252.9
(v) Cash and Cash Equivalents at the Beginning of the Year 1493.28 1272.58 706.43 135.06 387.97
(vi) Cash and Cash Equivalents at the end of the Year 1333.5 1493.48 1272.59 706.41 135.07

Comparison With Peers:

Sr.No Name of the Company FV EPS PE RONW(%)
1 Sirca Paints India Limited 10 10.55 15 22.17%
2 Kansai Nerolac Paints Ltd 1 9.39 40.25 17.87%
3 Asian Paints Ltd 1 18.8 58.04 27.94%

Recommendation:

Review and Recommendation of

Sirca Paints India Limited IPO

from our side is: Rating: 7/10. 1-5: Fair 5-7: Good 7-10: Excellent .

Company Address:

Sirca Paints India Limited 50, Badli Industrial Area, Phase -2, Delhi-110042 Phone No. + 91-11-42083083, 47533213 Email: admin@sircapaints.com Website: www.sircapaints.com

Bid Details as on 21-May-2018 17:00:00 IST

Category No.of shares offered No. of shares bid
928,000 -
699,200 818,400
1,628,000 4,331,200
1,370,400 1,370,400
244,000 244,000
4,869,600 6,764,000
QIBs Subscription 0.00X
HNI Subscription 1.17X
Retail Subscription 2.66X
Total Subscription 1.58X

    Issue size for QIB portion is of 37 crore, out of which Anchor portion is 22.15 and non Anchor is 14.85, rest 40.91 is for HNI, Market Maker and retail.

    Looks a decent issue. The company’s EBITDA margins have shown tremendous growth. The company is virtually debt free.

    Thanks for the information.

    I found contradictory review on another site.

    I need guidance about this IPO as as per the review on this site its a clear go-to issue and as per the other review that i shared, it’s a no-no.

      Sirca Paints is a marketing and trading/distributor of paints and allied products after repackaging the same.The Company uses to procure the products majorly from SIRCA SPA ITALY through Import and selling them in India through its Distributors. Company has shown tremendous performance in terms of Revenue, PAT and EBITDA Margins in last 5 years. Just imagine how much Margins can be improved , once they start manufacturing all the products in India. As per Company, they have entered into a Manufacturing License Agreement dated 16th February, 2018 with SIRCA S.P.A. Italy for manufacturing the products that the Company is currently distributing under the Product Distribution Agreement. Once this manufacturing Units starts then there dependency on Variation of US dollar against the rupee will no longer be a factor affecting their bottom-line. If you are not sure applying in this IPO, then you should wait and observe the company performance once this manufacturing units start delivering and then buy it from secondary market.

    Anchor Investor in Sirca Paints consist of Mauryan who has bought 7,20,000 Shares, Next Orbit Ventures Fund who has bought 3,37,600 Shares and Reliance Equity Opportunities AIF Scheme I who has bought 3,12,800 Shares. So total 13,70,400 No. of equity Shares are allotted under Anchor Category.