HP Adhesives IPO: How good is it?

In our story, HP Adhesives IPO: Information analysis, we have shared the key details of the IPO, along with important information about the company. Here we will answer some questions about HP Adhesives and evaluate it on parameters like management, financials, valuations, etc. IPO questions The company/business 1) Are the company's earnings before tax more than Rs 50 crore in the last 12 months? No. The company's earnings before tax during the last 12 months was only Rs 13.5 crore. 2) Will the company be able to scale up its business? Yes. The company has planned to utilise the proceeds for capacity expansion and expand its distribution network, which would enable it to scale up its business. 3) Does the company have recognisable brands truly valued by its customers? Yes. The company has a recognisable brand in the organised adhesive space. But we would like to mention that the company directly competes with Pidilite, which has a 65 per cent market share in the adhesive and sealant industry. 4) Does the company have high repeat customer usage? No. Since the company operates in a highly competitive retail environment, it is not possible for it to have consistent repeat customers. 5) Does the company have a credible moat? No. Even though the company has a recognisable brand in the segment, it does not offer anything unique. 6) Is the company sufficiently robust to major regulatory or geopolitical risks? No. The company has exposure to international markets, with exports contributing 17 per cent to its FY21 revenue. On the other hand, it imported 17 per cent of raw materials during the same period. Since raw-material prices depend on the prices of crude oil, any major change in these prices would affect the company's profitability. 7) Is the business of the company im