Shree Tirupati Balajee Agro IPO analysis

Shree Tirupati Balajee Agro IPO (initial public offering) will open for subscription on September 5, 2024 and close on September 9, 2024. Here's a breakdown of the packaging products manufacturer's strengths, weaknesses, and growth prospects to help investors make an informed decision. Shree Tirupati Balajee Agro IPO in a nutshell Quality : Its three-year average ROE and ROCE were 18 per cent and 13 per cent, respectively, during FY22-24. Growth : The company's revenue and profit after tax grew 10 per cent and 69 per cent per annum, respectively, during FY22-24. Valuation : Post the IPO, the company will trade at a P/E and P/B ratio of 23.1 and 2.3 times, respectively. Overview : The company primarily offers flexible intermediate bulk containers that are giant, durable bags. They are a popular choice for safely transporting large amounts of material across industries. Their demand is expected to remain firm, which will benefit Shree Tirupati Balajee. The growing acceptance of Indian products in the global markets will also aid the company's export segment. Though, its revenue from exports has been reducing in favour of the domestic business. Nonetheless, the industry, as a whole, has low-entry barriers and intense competition, which pose risk to the company's growth. About Shree Tirupati Balajee Agro Trading Incorporated in 2001, Shree Tirupati Balajee Agro Trading is a packaging solutions provider that primarily manufactures flexible intermediate bulk containers (FIBCs), commonly known as bulk bags. Its other products include woven sacks, woven fabric, and narrow fabric. The company's packaging bags are used across various industries such as chemicals, waste disposal, agriculture and food products. FBIC, and woven and narrow fabric segments together made up around 73 per cent of its FY24 revenue. Meanwhile, nearly 49 per cent of its total FY24 revenue came from exports. Strengths of Shree Tirupati Balajee Client retention: The company's top five and top 10 customers, which accounted for 32 and 46 per cent of its FY24 revenue, respectively, have been associated with it for more than 15 years. Solid port connectivity: Its manufacturing facilities are located near major Indian ports such as Nhava Sheva, Kandla Port, Hazira Port, and Mundra Port, which allows it to efficiently manage its overseas supplies with lower costs. Weaknesses of Shree Tirupati Balajee High working capital requirements: The company has high working capital requirements as inventories and receivables, together, made up 67 per cent of its total assets in FY24. Moreover, it had median inventory days of 235 during FY20-24, which is the highest of its peers. High competition in FIBC: The top 10 companies in the Indian FIBC industry made up nearly 44 per cent of the industry revenue in FY23. This suggests a few players have a strong hold on the market, which is marred by steep competition. Shree Tirupati Balajee Agro IPO details Total IPO size (Rs cr) 170 Offer for sale (Rs cr) 47 Fresh issue (Rs cr) 122 Price band (Rs) 78-83 Subscription dates September 5-9, 2024 Purpose of issue To repay borrowings and fund working capital requirements Post-IPO M-cap (Rs cr) 677 Net worth (Rs cr)