Is Stallion India IPO Good or Bad - Detailed Review

Stallion India IPO is kicking off its initial public offering which will be open from January 16, 2025, to January 20, 2025. While considering applying for this IPO, certain questions may arise in your mind, including whether the Stallion India IPO is good or bad, whether it is worth investing in this IPO, and so on. 

This article offers a comprehensive Stallion India IPO review, covering its business operations and fundamental analysis to help you make an informed investment choice

Stallion India Fluorochemicals IPO Review

Stallion, a Mumbai-based company with over two decades of expertise, is a leading player in the refrigerant and industrial gases industry, specializing in Fluorochemicals like HC, HFCs, and HFOs.

Over the years, Stallion India demonstrated steady financial growth, driven by rising demand and operational efficiency. Despite slight declines in ROE and ROCE due to reinvestments, the company shows improved profitability with a significant rise in PAT and enhanced margins. 

However, Stallion India Fluorochemicals' revenue is largely tied to refrigerant gas sales in limited geographies, making it sensitive to market fluctuations. Additionally, its reliance on imports from China and a few key suppliers, along with the lack of long-term supply contracts, exposes the company to potential cost escalations and supply chain disruptions, posing challenges to its growth trajectory.

Despite operating on a smaller scale compared to its peers, Stallion India demonstrates competitive efficiency with a strong RONW of 12.54%. While its lower EPS and revenue highlight room for growth, the company's solid shareholder returns underscore its potential to thrive in a competitive and evolving market.

Company Overview of Stallion India Fluorochemicals IPO

Incorporated on September 5, 2002, Stallion is a Mumbai-based company led by its Chairman & Managing Director, Shazad Sheriar Rustomji, who is also a promoter of the company.

With over two decades of experience in the refrigerant and industrial gases industry, Stallion has established itself as a prominent player in the market, specializing in the debulking, blending, and processing of gases. Their product range includes pre-filled cans and small cylinders or containers, catering to a wide variety of industrial needs.

The company focuses on gases broadly classified as Fluorochemicals, which are primarily used as refrigerants. These gases are categorized into Hydrocarbons (HC), Hydrofluorocarbons (HFCs), and Hydrofluoroolefins (HFOs).

To support their operations, Stallion runs four state-of-the-art facilities located in Khalapur (Maharashtra), Ghiloth (Rajasthan), Manesar (Haryana), and Panvel (Maharashtra). These facilities are equipped to store gases in controlled environments, adhering to the highest safety standards, which underscores the company’s commitment to quality and compliance.

Their products are distributed across India, with Maharashtra and Delhi emerging as key markets. Over recent years, these two states have contributed significantly to the company’s revenue, accounting for 74.41% of total revenue for the period ending September 30, 2024, and 69.82% and 63.92% for Fiscal 2024 and Fiscal 2023, respectively.

Industry Overview of Stallion India Fluorochemicals IPO

The Indian Fluorochemicals and Specialty Gases market is projected to grow at a CAGR of 16-18% between 2024 and 2029, reaching $675-725 million.

This growth is driven by rising demand from sectors like electronics, healthcare, and manufacturing. Fluorochemicals and specialty gases are crucial for applications like PCBs, semiconductor manufacturing, and medical processes.

Additionally, the "Make in India" initiative is boosting domestic production and foreign investment, especially in electronics. Growth is further supported by infrastructure projects and technological advancements. 

Source: Stallion India IPO RHP

Financial Overview of Stallion India IPO

Stallion India Fluorochemicals has shown overall good financial growth across key metrics. Revenue from operations reached Rs.233.23 Crore in FY 2024, driven by a consistent rise in demand for gases and related products. 

EBITDA improved to Rs. 26.70 crores in FY 2024 from Rs. 15.59 crores in FY 2023, reflecting operational efficiency and cost optimization efforts. Further, EBITDA margins improved to 11.30% in FY 2024 from 6.90% in FY 2023 due to better operational efficiency. 

Additionally, the Profit After Tax (PAT) grew significantly to Rs. 14.78 crores in FY 2024 compared to Rs. 9.75 crores in FY 2023, while the PAT margin also improved to 6.26% in FY 2024 from 4.31% in FY 2023, supported by a reduction in overall expenditure. 

However, ROE and ROCE have declined significantly compared to FY 2022, with ROE dropping from 34.64% to 12.54% and ROCE falling from 49.22% to 13.96% in FY 2024. This decline is primarily due to reinvestments and higher capital deployment for expanding operations and scaling production facilities.

Source: Stallion India IPO RHP

Strengths and Risks of Stallion India IPO

Let’s dive into the strengths and weaknesses to assess if Stallion India IPO is good or bad for investors

Strengths:

• They sell their products under the brand name "Stallion." With over two decades in the industry and promoters bringing 30+ years of experience, the company has built strong market recognition in the refrigerant gases sector, setting itself apart from competitors.

• Their competitive edge lies in operational efficiency, timely deliveries, and strict quality control. These strengths have helped build strong industry relationships, driving significant growth in their operations.

• Their long-term relationships with customers reflect trust, reliability, and a proven track record of delivering value, leading to repeat business, referrals, and new growth opportunities.

Risks:

• Their revenue primarily comes from the sale of Refrigerant Gases and is restricted to certain geographies. Any decline in demand or market changes could impact their sales, earnings, and cash flow growth.
  

• They do not have long-term supply contracts with raw material suppliers, and therefore they are subject to the risk of increases in the costs of raw materials.
  

• They primarily import raw materials for their operations from China. Any restrictions on these imports could affect their business and operational results.
  

• Their top 10 and top 2 suppliers accounted for the majority of purchases during the period ended September 30, 2024, and in Fiscal 2024, 2023, and 2022. Any delay or shortage from these suppliers could impact their operations.

Strategies of Stallion India IPO

Stallion India has a strategic vision to diversify their product portfolio by introducing new offerings aligned with their current operations. The proposed HFO debulking and HFO/HFC blending facility at Mambattu reflects this commitment to diversification.

Leveraging their extensive experience, they continue to leverage their expertise in complex chemicals and engineering to expand their product lineup. They focus on introducing value-added products that complement their core offerings and diversifying into new categories of gases.

With rising demand driven by initiatives like "Make in India" and growth in sectors such as Semiconductors, Electronics, Defence Manufacturing, and Pharma Equipment, they are focusing on expanding their lineup with environmentally friendly gases like HFOs and specialty gases.

Stallion India IPO Vs Peers

Let’s conduct a peer comparison to assess whether it’s worth investing in Stallion India IPO

Stallion India Fluorochemicals operates on a smaller scale, with sales of Rs. 236.23 crores, compared to industry leaders like SRF Limited, which reports Rs. 10,906.09 crores. Its EPS of Rs. 2.54 falls behind peers such as Navin Fluorine, which stands at Rs. 47.44. However, its RONW of 12.54% is competitive, surpassing Navin Fluorine at 10.22% and Gujarat Fluorochemicals at 7.07%. 

Despite its smaller revenue and profit base, Stallion demonstrates strong efficiency in generating shareholder returns, highlighting its potential for growth in a competitive market.

Objectives of Stallion India IPO

• Fund incremental working capital requirements.

• Capital expenditure for Semiconductor & Specialty Gas facility in Khalapur, Maharashtra.

• Capital expenditure for Refrigerant facility in Mambattu, Andhra Pradesh.

• General corporate purposes.

Stallion India IPO Details

IPO Date

Stallion India IPO is open to subscription from January 16, 2025, to January 20, 2025. The shares will be allocated to investors on January 21, 2025, and the company will be listed in the NSE and BSE on January 23, 2025.

IPO Issue Price

Stallion India IPO is offering its shares in the price band of Rs. 85 to Rs. 90 per share. This means you would require an investment of Rs.14,850 per lot (165 shares) if you are bidding for the IPO at the upper price band.

IPO Size

The Stallion India IPO is offering a total of 2,21,61,396 shares, amounting to Rs. 199.45 Crores. This includes an offer for sale of 43,02,656 shares, totaling Rs. 38.72 crores, and a fresh issue of 1,78,58,740  shares, totaling Rs. 160.73 Crores.

IPO Allotment Status

The shares from the Stallion India IPO will be allotted to its investors on January 21, 2025. 

Click here to check the Stallion India IPO allotment status.

IPO Application Link

Open a demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.

Apply for Stallion India IPO

Conclusion

Stallion India has established itself as a key player in the refrigerant and industrial gases industry, with steady financial growth and competitive efficiency. Despite challenges like limited geographic revenue focus and supply chain risks, the company’s strong RONW and improving profitability reflect its resilience. However, it is recommended that investors conduct thorough research before making an investment decision.