Standard Glass Lining IPO analysis

Standard Glass Lining IPO (initial public offering) will open for subscription on January 6, 2025, and close on January 8, 2025. Below is a breakdown of the engineering equipment manufacturer's strengths, weaknesses and growth prospects to help investors make an informed decision. Standard Glass Lining IPO in a nutshell Quality: Between FY22 and FY24, Standard Glass Lining reported an average three-year ROE and ROCE of around 41 and 37 per cent, respectively. Growth: During FY22-24, its revenue and profit after tax grew 50 and 52 per cent annually, respectively. Valuation: At the upper price band of Rs 140, the stock is valued at a P/E and P/B ratio of around 48 and 4.3 times, respectively. Overview: Standard Glass Lining, which primarily makes equipment for the pharmaceutical sector, is expected to benefit from the industry's rapid growth. The pharma and chemical industries are expected to grow 9 to 11 per cent annually till 2028. India remains among the largest drug manufacturers globally, next to only China and Italy by volumes. However, stiff competition from established players remains a challenge for the company. About Standard Glass Lining Standard Glass Lining is an engineering equipment manufacturer that serves the pharmaceutical (82 per cent of revenue), chemical (13 per cent of revenue), and food & beverage industries. Its product portfolio includes heat transfer systems, storage tanks, pipes and fittings, glass lined solutions, vacuum pumps etc. It had a nearly 17 per cent market share in India's glass lined equipment market as of FY24. Glass lining technology is used in industries for its corrosion resistance and durability. The company has eight manufacturing facilities in Hyderabad. Its customer base included 347 companies as of September 2024. Strengths of Standard Glass Lining Solid client base: The company counts giants like Aurobindo Pharma, Granules India, Natco Pharma, Piramal Pharma and Suven Pharmaceuticals among its clients. 13 of its top 20 customers have stayed with the company for over three years. On average, it derived close to 58 per cent of its revenue from repeat orders in the last three financial years. Industry-leading numbers: Standard Glass Lining tops its peers GMM Pfaudler, HLE Glascoat, Thermax and Praj Industries on annual revenue growth, EBITDA margin, ROE and ROCE for FY22-24. Weaknesses of Standard Glass Lining High working capital days: The company had high working capital days of 151 as of FY24 as its receivables days stretched over three months. It's reliant on short-term borrowings to meet its working capital needs. Sectoral concentration: The company derives most of its revenue from clients in the pharma sector, which exposes it to concentration risk. Standard Glass Lining IPO details Total IPO size (Rs cr) 410 Offer for sale (Rs cr) 200 Fresh issue (Rs cr) 210 Price band (Rs) 133 - 140 Subscription dates January 6-8, 2025 Purpose of issue To fund capital expenditure, repay debt, and invest in its subsidiary Post-IPO M-cap (Rs cr) 2,793 Net worth (Rs cr) 653 Promoter holding (%) 60.7 Price-to-earnings ratio (P/E) 47.8 Price-to-book ratio (P/B) 4.3 Financial history Key