Is Standard Glass Lining Technology IPO Good or Bad - Detailed Review

Standard Glass Lining Technology is kicking off its initial public offering which will be open from January 06, 2025, to January 08, 2025. While considering applying for this IPO, certain questions may arise in your mind, including whether the Standard Glass Lining IPO is good or bad, whether it is worth investing in this IPO, and so on. 

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

Standard Glass Lining Technology IPO Review

Standard Glass Lining Technology Limited, is a key player in the manufacturing of specialized engineering equipment in India. It positions itself strongly with in-house capabilities from design to installation. The company has a significant presence in the pharmaceutical and chemical industries. 

However, the company faces some inherent risks, such as reliance on a few key customers and suppliers, which could impact its operational stability and financial performance. Also its heavy reliance on the domestic market increases its risk of being affected by local economic changes and regulatory shifts.

This IPO aims to finance the purchase of machinery, reduce debt, and drive strategic expansions, reflecting a proactive strategy to support growth and strengthen its market presence. It may attract investors seeking opportunities in India's thriving pharmaceutical and chemical industries, even with the associated risks and competitive pressures.

This Standard Glass Lining Technology IPO review is supported by the overview we have provided below; please go through it to learn more.

Company Overview of Standard Glass Lining Technology IPO

Incorporated in September 2012, Standard Glass Lining Technology manufactures engineering equipment for India's pharmaceutical and chemical sectors.

Based on revenue in FY 2024 they are among the top five manufacturers of specialized engineering equipment in India. They offer end-to-end in-house services, including designing, engineering, manufacturing, assembly, installation, and commissioning.

They also provide turnkey solutions by setting up standard operating procedures for pharmaceutical and chemical manufacturers.

Their portfolio includes the essential equipment like:

(i) Reaction Systems,

(ii) Storage, Separation, and Drying Systems

(iii) Plant, Engineering, and Services, which also cover various ancillary components.

Based on their revenue in FY 2024 they are also among India’s top three manufacturers of specialized engineering equipment made from glass-lined, stainless steel, and nickel alloy. Additionally, they rank among the top three suppliers of polytetrafluoroethylene (PTFE) lined pipelines and fittings in India by revenue for the same period. Over the past three completed fiscal years, they have been the fastest-growing company in their industry in terms of revenue.

They work with customers from various industries, including pharmaceuticals, chemicals, paints, biotechnology, and food and beverages. Their 30 out of the top 80 clients are listed in the NSE 500 index as of June 30, 2024. 

Some well-known customers of Standard Glass Lining Technology are:

• Apitoria Pharma Private Limited

• Aurobindo Pharma Limited

• CCL Food and Beverages Private Limited

• Cohance Lifesciences Limited

• Cadila Pharmaceutical Limited

This wide customer base shows their strong reputation across different sectors.

They operate eight manufacturing facilities covering over 400,000 sq. ft. in Hyderabad, and Telangana, India’s “Pharma Hub,” which contributed 40% of the country’s bulk drug production in Fiscal 2024.

Industry Overview of Standard Glass Lining Technology IPO 

India's healthcare market is projected to grow at a CAGR of 8% to 10% annually from FY 2022-23 to FY 2025-26. In FY2023, India supplied about 40% of the U.S. generic drug demand and 25% of all drugs needed in the UK, underscoring its key role in the global pharmaceutical industry.

In 2022, India led with the highest number of FDA-approved API manufacturing plants, accounting for 28% of the global share, almost double that of the U.S. and China, showcasing its strong capability in serving regulated markets.

India's pharmaceutical industry is a major player in affordable generic drugs, with the most numbers of USFDA manufacturing facilities worldwide. It supplies over 50% of global vaccines and includes 3,000 drug companies and 10,500 manufacturing units.

The Indian pharmaceutical industry is ranked 3rd globally in terms of volume and 14th in terms of value and contributes 1.72% of the country’s GDP. Hyderabad, in Telangana, is recognized as India's "Pharma Hub." In FY 2024, it produced 40% of India's bulk drugs and handled 50% of the bulk drug exports, earning the title of 'Bulk Drug Capital of India.'

India exports pharmaceuticals to over 200 countries, with major markets including the U.S., UK, Brazil, Netherlands, and Russia. The U.S. is the largest buyer, taking 31% of exports in FY 2022-23. 

The biggest export products are drug formulations and biologicals, which account for 72.5% of exports, followed by bulk drugs and drug intermediates. From FY 2022-23 to FY 2023-24, India's pharma exports grew by 9.7%, from US$ 25.39 billion to US$ 27.85 billion.

India's pharmaceutical market is one of the fastest-growing globally, expanding from INR 1,317.5 billion (USD 19.0 billion) in FY19 to an expected INR 2,928.3 billion (USD 35.6 billion) by FY28. Contributing nearly 1.72% to India's GDP, the market has grown at a rate of 9.0% CAGR annually over the past five years and is projected to grow at 9.5% annually for the next five years.

India's chemical industry was valued at INR 18,040 billion in FY 2022-23 and is expected to grow at an annual rate of 9-12%, reaching INR 27,060 billion by FY 2026-27. According to IBEF, the sector could expand to INR 82,000 billion by 2040. It currently contributes about 6.6% to the country's GDP and represents 15-17% of the value of India's manufacturing sector.

Source: RHP of the company

Financial Overview of Standard Glass Lining Technology IPO 

According to the Red Herring Prospectus (RHP), the company reported a revenue of Rs. 543.66 crores in FY 2024, marking a significant growth compared to Rs. 497.58 crores in FY 2023 and Rs. 240.18 crores in FY 2022. This growth was primarily driven by an increase in the quantity of products sold, which was facilitated by expanded production capacities.

The EBITDA for FY 2024 stood at Rs.100.91 crores, showing a significant growth compared to Rs.88.25 crores in FY 2023 and Rs.41.77 crores in FY 2022. The EBITDA margins also improved slightly, standing at 18.36% in FY 2024 compared to 17.65% in FY 2023 and 17.30% in FY 2022. This growth indicates that the company is not only earning more revenue but is also managing its costs effectively.

Profit After Tax (PAT) was reported at Rs. 60.01 crore in FY 2024, slightly higher than Rs. 53.42 crore in FY 2023 and Rs. 25.14 crore in FY 2022. Also, the PAT margin saw a slight improvement to 10.92% for FY 2024 as compared to FY 2023 which is 10.68%, and 10.41% in FY 2022. This growth in profit and margin could be attributed to higher operational revenue and efficiency, enhancing net profitability.

In FY 2024, the Return on Equity (ROE) is 20.74% declined from 47.56% in FY 2023, and 54.89% in FY 2022. Similarly, the Return on Capital Employed (ROCE) for FY 2024 was reported at 25.49% which declined from 43.43% in FY23, and 42.03% in FY22. The decline in these ratios was mainly attributed to the increase in the company’s equity on which the company has failed to generate returns as it has done in the prior years.

In FY 2024, the debt-to-equity ratio was 0.32 declining from 0.53 in FY 2023, and 1.01 in FY 2022. The reason for this decrease is due to a reduction in borrowings and a substantial increase in equity from Rs.68.95 crores in FY 2022 to Rs.407.34 crores in FY 2024.

Strengths and Risks of Standard Glass Lining IPO

Let’s dive into the strengths and weaknesses to assess if Standard Glass Lining IPO is good or bad for investors

Strengths:

• They rank among the top five in India for manufacturing specialized equipment for the pharmaceutical and chemical sectors, handling everything from design to installation in-house as of 2024.

• As of 2024, Standard Glass Lining Technology is among the top three companies in India that manufacture specialized engineering equipment made from glass-lined, stainless steel, and nickel alloy.

• They are among the few companies in India offering complete, customized engineering solutions for the pharmaceutical and chemical sectors, with an extensive range of over 65 products as of March 31, 2024.

• They have been able to establish strong, lasting relationships with some of the top clients in the pharmaceutical and chemical industries. By 2024, their customer base had grown to 443 companies.

Risks:

• Even with growth in customers company still relies on a few key customers, and losing any of them or seeing a drop in their purchases could seriously harm their financial health and operations.

• They rely on a few suppliers for essential raw materials, such as stainless steel. Losing any of these suppliers could disrupt their manufacturing, delay product deliveries, and ultimately impact overall business performance.

• A large portion of their revenue comes from clients in the pharmaceutical and chemical industries. A downturn in these sectors could lead to reduced demand for their products.

• Over 99.60% of their revenue from 2022 to 2024 came from India, making them highly exposed to local economic, social, political, and industry-specific risks in the pharmaceutical and chemical sectors.

Strategies of Standard Glass Lining IPO

• They will continue to expand their product portfolio to serve customers in various segments and regions, taking advantage of industry opportunities. Their plan is to enhance their current products and add new ones that promise greater growth and profitability.

• To meet the increasing demand from their current customers and to accommodate new ones, they plan to expand their manufacturing capacities for existing products. Currently, they operate eight manufacturing facilities.

• They have entered into an exclusive agreement to supply and sell their manufactured glass-lined equipment, along with related parts, accessories, and components, across specified territories worldwide. These territories include North America (excluding Cuba), South America, Europe (excluding Belarus and Russia), and certain countries in Asia and Africa.

Standard Glass Lining Technology Vs Peers

Standard Glass Lining Technology has the lowest revenue and EPS among its peers, indicating a smaller scale of operations compared to companies like GMM Pfaudler Ltd, Thermax Ltd, and Praj Industries. However, its RONW is competitive, suggesting efficient use of equity. The company's NAV per share is also the lowest, highlighting a smaller asset base relative to its competitors.

Objectives of Standard Glass Lining IPO

• Fund the purchase of machinery and equipment for the company.

• Repay or prepay outstanding borrowings of the company and its wholly owned subsidiary, S2 Engineering Industry Private Limited.

• Invest in S2 Engineering Industry Private Limited for its capital expenditure needs, including machinery and equipment.

• Support strategic investments and acquisitions to drive growth.

• Address various business needs and objectives.

Standard Glass Lining Technology IPO Details

IPO Date

Standard Glass Lining IPO is open to subscription from January 06, 2025, to January 08, 2025. The shares will be allocated to investors on January 09, 2025, and the company will be listed in the NSE and BSE on January 13, 2025.

IPO Issue Price

The company is offering its shares in the price band of Rs.133 to Rs.140 per share. This means you would require an investment of Rs.14,980 per lot (107 shares) if you are bidding for the IPO at the upper price band.

IPO Size

The company is offering a total of 2,92,89,367 shares, amounting to Rs. 410.05 Crores. This includes an offer for sale of 1,42,89,367 shares, totaling Rs. 200.05 crores, and a fresh issue of 1,50,00,000 shares, totaling Rs. 210 Crores.

IPO GMP

Investors often check the Grey Market Premium (GMP) for market sentiment and listing price hints. However, GMP doesn’t reflect financial strength, so a financial analysis is crucial before investing.

Click here to check Standard Glass Lining IPO GMP

IPO Allotment Status

The shares will be allotted to investors on January 09, 2025. Click here to check the Standard Glass Lining 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 Standard Glass Lining Technology IPO

Conclusion

The IPO of Standard Glass Lining Technology offers potential investors an opportunity to engage with a fast-growing company in India's robust pharmaceutical and chemical equipment sector. Despite being smaller in scale compared to its peers, the company demonstrates strong operational efficiency with a competitive return on net worth. However, it is recommended that investors conduct thorough research before making an investment decision.