Is Shree Tirupati Balajee IPO Good or Bad - Detailed Analysis

Shree Tirupati Balajee Agro Trading Company Limited is kicking off its initial public offering which will be open from September 9, 2024, to September 10, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether Shree Tirupati Balajee IPO is good or bad, whether it is worth to invest in Shree Tirupati Balajee IPO, and so on. In this article, we will cover a few details about Shree Tirupati Balajee IPO to better analyze its IPO.

Shree Tirupati Balajee IPO - Company Overview

Incorporated in October 2001, Shree Tirupati Balajee is a company engaged in the business of manufacturing and selling Flexible Intermediate Bulk Containers (FIBCs) i.e. large flexible bags and other industrial packaging products such as woven sacks, woven fabric, and narrow fabric, tapes.

The company provides customized products and caters to the bulk packaging requirements of clients across multiple industries, including chemicals, agrochemicals, food, mining, waste management, agriculture, lubricants, and edible oil.

The company operates through subsidiaries such as Honourable Packaging Private Limited (HPPL), Shree Tirupati Balajee FIBC Limited (STBFL), and Jagannath Plastics Private Limited (JPPL).

The company runs five manufacturing units, with Units I and II certified under ISO 9001:2015 and ISO 14001:2018. Unit III holds certifications including ISO 9001:2015, ISO 45001:2018, ISO 14001:2015, ISO 14064-1:2018, and the SEDEX SMETA four-pillar. These certifications cover the production of Flexible Intermediate Bulk Containers (FIBC), Woven Sacks, and Fabrics made from PP (Polypropylene) and HDPE (High-Density Polyethylene).

Shree Tirupati Balajee IPO - Financial Overview

If we take a look at the financials of Shree Tirupati Balajee, we can see that the company’s total revenue has shown an increase from Rs. 444.18 crores in FY22 to Rs. 539.66 crores in FY24. 

During the same duration, the company has also increased its profits from Rs.13.66 crores to Rs.36.07 crores. Along with the profits and revenues, the company has also increased its EBITDA and PAT margins, which is an indication that the company is improving its cost efficiency.

As of FY24, the company has reported a ROE of 20.84% which suggests that the company has delivered a good return on the capital invested by its shareholders. On the other hand, the ROCE reported the same duration was 16.29% which is comparatively low and can be majorly to the company’s increase in debt compared to the previous financial year.

Shree Tirupati Balajee IPO - Revenue Breakup

Product-wise Revenue Breakup

The above table shows the Total Revenue mentioned in Rs. crores

From the above table, we can see that the FIBC segment is the major revenue contributor to the company accounting for 51.47% of the total revenue in FY24. However, the FIBC segment along with the woven sacks and Tape segment has witnessed a decline compared to FY23. 

On a positive note, the Woven Fabrics & Narrow Fabric segment has witnessed a tremendous increase in its revenue accounting for 21.32% of the total revenue in FY24. This segment along with the combination of other incomes has been the main factor that led to the year-on-year increase in the revenue of the company.

However, one should note that income generated from other sources is not a part of the main operations of the company and these incomes can be exceptional incomes.

Geography-wise Revenue Breakup

The above table shows the Total Revenue mentioned in Rs. crores (except for figures)

From the above table, you can see that, until FY23, the company generated a major portion of its revenues from exports. However, in FY24 the company generated a slightly higher revenue domestically compared to its exports. This has resulted in an equilibrium its domestic and Export sales.

Shree Tirupati Balajee IPO - Industry Overview 

Flexible Intermediate Bulk Containers (FIBCs) offer a convenient way of storing and transporting food products as they are lightweight, easy to handle, and can be stacked to save space. Currently, India is one of the major exporters of food products and the country uses food-grade FIBCs to transport food products to overseas markets.

Over the past 10 years, the FIBC market in India has grown by almost 38% with the industry being valued at 926 million dollars in 2023 while growing at a CAGR of 6.7% from 2020-2023. Furthermore, the consumption in the FIBC industry is expected to reach 69 million units by the end of 2024. This consumption has been growing at a CAGR of 5% during FY20-FY23 fueled by the increasing consumption from the chemicals & petrochemicals, food & agriculture, construction & mining sectors.

In the global market, the consumption of FIBC was valued at 4,856 million dollars in 2023. Under this the total market for Type A Bulk Bags stood at 43, followed by Type B Bulk Bags, Type C Bulk Bags, and Type D Bulk Bags, which accounted for 37%, 14%, and 7% respectively.

The growth in the global market is attributed to the rising need to reduce the weight of bulk packaging, the thriving food and pharmaceutical industries, and the expanding manufacturing and construction sectors in developing regions. Furthermore, the growing environmental concerns and rising demand for lightweight, biodegradable bulk packaging materials, particularly in the pharmaceutical sector are also promoting the growth in the FIBC market.

Shree Tirupati Balajee IPO - Peer Comparison

The table is the comparison of Shree Tirupati Balajee Agro Trading with the listed industry peers as of FY24.:

The above financial information is derived from the company’s Restated Consolidated Financial Information for the year ended March 31, 2024.

From the table above, we can see that Shree Tirupati Balajee Agro stands out as the largest company among its peers in terms of revenue as of FY24. Furthermore, the company has the highest EPS of 5.74 and a RoNW which indicates that the company is the most efficient in terms of capital utilization among the list. 

Shree Tirupati Balajee IPO Details

Shree Tirupati Balajee IPO Date

The IPO of Shree Tirupati Balajee is open to subscription from September 5, 2024, to September 9, 2024. The shares will be allocated to investors on September 10, 2024, and the company will be listed in the NSE and BSE on September 12, 2024

Shree Tirupati Balajee IPO Issue Price

Shree Tirupati Balajee is offering its shares in the price band of Rs.78 to Rs.83 apiece. This means you would require an investment of Rs.14,940 per lot (180 shares) if you are bidding for the IPO at the upper price band.

Shree Tirupati Balajee IPO Size

The company is offering a total of 20,440,000 shares, amounting to Rs.169.65 Crores. Out of these, 14,750,000 shares worth Rs.122.43 Crores are offered through a fresh issue, and 5,690,000 shares worth Rs.47.23 Crores are offered through an offer for sale.

Shree Tirupati Balajee IPO GMP

As of 04 September 2024, at 07:25 PM, Shree Tirupati Balajee IPO traded at a premium of 30.12%. It traded at Rs.108, giving it a premium of Rs.25 over its higher cap of Rs 83 per share.

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Is Shree Tirupati Balajee IPO a Good or Bad Investment? Final Thoughts

The Shree Tirupati Balajee IPO presents a promising opportunity, backed by the company’s steady growth, improved profitability, and strong market presence in the industrial packaging sector. Its diverse product portfolio and widespread customer base across multiple industries offer stability, while operational efficiencies have further strengthened its position. However, the company faces rising debt levels and competition, which could impact future performance.

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