TLDR;
This YouTube video by Sunday Investing discusses upcoming IPOs, focusing on SME IPOs and one mainboard IPO. The speakers provide detailed analysis and their personal views on whether to apply for these IPOs, primarily for listing gains. They emphasize doing your own due diligence and not taking their advice at face value.
- Five companies are covered: Shyam Dhani Industries, EPW India Limited, Bai Kakaji Polymers, Dhara Rail Projects (all SMEs), and Gujarat Kidney (Mainboard).
- The speakers discuss financials, business models, risks, and potential for listing gains.
- They highlight the importance of lead manager reputation and anchor lists in SME IPOs.
Opening Remarks [0:00]
The video is about primary market chatter by Sunday Investing, focusing on IPOs for the fourth week of December. They'll be discussing five companies: Shyam Dhani Masala, EPW India, Bai Kakaji, Dhara Rail, and Gujarat Kidney. Some companies won't be covered due to time constraints, not because they're bad. They remind viewers they are not SEBI registered analysts, so do your own research and consult a financial advisor. They also mention that detailed analysis of companies are posted on their YouTube channel.
Shyam Dhani Industries (SME) [2:20]
Shyam Dhani Industries, incorporated in 1995, is an ISO-certified manufacturer, exporter, and supplier of spices. They process 163 varieties under the brand name "Sham Spices." The IPO size is ₹38.5 crores, entirely a fresh issue. The financials show a revenue of ₹125 crores in FI25. The lead manager is Olani Consultants. Sachin explains that the company was family-run and is now venturing into the public market. They procure raw materials from farmers, process them into consumer packets (5g to 25kg), and market them under the Sham brand. They sell ground spices, blends, and some grocery items. Their facility is in Jaipur and mostly automated. They have over 400 distributors across North India and are expanding internationally, targeting the Middle East, Dubai, USA, and UK.
The production facility is utilized at 33-35% in FI25. They have an in-house lab for quality testing and claim to use IPM technology (integrated pest management), though it contributes negligibly to revenues (1-2%). Financials: FI23 revenue was ₹68 crores with ₹3.5 crores PAT, FI24 was ₹108 crores with ₹6 crores PAT, and FI25 was ₹125 crores with a similar PAT margin of 6-6.5%. In H1 of the current year, they've done ₹64 crores in revenue with improved PAT margins. They plan to expand pan-India and use IPO proceeds to lower power costs with solar systems. Risks include minimal exports (1.5-2% of revenue), significant debt (₹35-36 crores post-IPO), and a large number of SKUs (300-350+). Related party transactions were high (26-27%) but have decreased to 9-10% before the IPO. A significant portion (72-75%) of their trademarks are facing objections. IPO usage includes ₹1.6 crores for new machinery, ₹10 crores for debt repayment, ₹6.5 crores for branding and marketing (including onboarding a celebrity), ₹14 crores for working capital, and ₹60-70 lakhs for a rooftop solar plant.
Valuations are around 13-14 times FI26 earnings. Madhur Sugandh Masala, a similar company, trades at 12-13 times earnings. The lead manager, Holani, has a good record, which often translates to good listing performance. The anchor list includes SIDBI and Holani themselves. The speaker believes the spices segment is competitive and regional, making it difficult to build a nationwide brand. The IPO valuations aren't very low, but the lead manager's reputation is a positive factor. He would personally apply for listing gains. Another speaker agrees, noting the frenzy expected for the issue but expresses long-term concerns due to the competitive nature of the segment.
EPW India Limited (SME) [12:12]
EPW India, incorporated in 2021, procures, refurbishes, and sells laptops, desktops, and Chromebooks. The IPO size is ₹32 crores, entirely a fresh issue, with a market cap of ₹111 crores. FI25 revenue is ₹53 crores and PAT is ₹4.33 crores. The lead manager is Get Advisor. The company was originally incorporated in 2008 as Exclusive PC World in Hyderabad, selling new laptops and desktops. It transitioned to refurbishment and recycling of IT equipment, starting this specific company in 2021. They focus on desktops, laptops, workstations, servers, LCDs, all-in-one PCs, and accessories. They are an authorized refurbisher in Telangana.
The business model is B2B and B2C, with 60-65% of revenue from refurbishment and 35-40% from recycling (dead/beyond repair equipment). They have a team of 30 engineers who bulk procure lots from major IT players in Hyderabad. They refurbish 60% and recycle the rest. B2B clients include schools, non-profits, and government institutions. They have six stores in Telangana for B2C sales, with 40% of their business from retail customers. Online presence is minimal. Revenue is concentrated in Telangana (70%), with 30% from other states. They primarily deal with laptops and desktops, not mobiles.
The business is moving towards organization due to government initiatives like Extended Producer Responsibility (EPR). Before the IPO, they acquired Renovate Recyclers in 2024, increasing capacity to 4,000 metric tons for refurbishment. The IPO aims to raise ₹32 crores, with ₹6 crores for debt repayment, ₹20 crores for working capital, and ₹6 crores for expansion. Key factors to watch are capacity and working capital. The speaker feels this is an underdog company that could perform well after initial muted trading. Financials: FI25 revenue was ₹53 crores and PAT was ₹4.3 crores. They are coming at around 15 times earnings. Compared to G&G, a larger company in the same space, EPW has left some space on the table in terms of valuation. The speaker would be applying to this issue in a limited capacity, expecting easy allotment. They have also interviewed the promoter, and the video will be released soon.
Bai Kakaji Polymers (SME) [21:03]
Bai Kakaji Polymers, established in 2013, manufactures and trades plastic and polymer-based products, including plastic granules, caps, and enclosures for packaged drinking water, carbonated beverages, juices, and dairy products. The IPO is ₹105 crores, entirely a fresh issue, with a market cap of ₹400 crores. FI25 financials show ₹332 crores in revenue and ₹18.5 crores in PAT. The lead manager is Hem Securities. The company is based in Latur, Maharashtra, and also produces shrink and adhesive films. Their products include PET preforms, plastic caps, and closures. They have four units in Latur, Maharashtra, with a total area of 33,000 square meters. Revenue breakdown: PET polymers contribute 65%, plastic closures 26%, shrink films 7%, and others 1-2%.
Capacity utilization is around 80-85%. The IPO aims to raise ₹105 crores, with ₹64 crores for debt repayment, ₹13 crores for capex on a new solar power plant, ₹9.8 crores for additional plant and machinery, and ₹18 crores for general corporate purposes. Financials: FI23 revenue was ₹272 crores with ₹4.2 crores PAT, FI24 was ₹295 crores with ₹9.4 crores PAT, and FI25 was ₹326 crores with ₹18.4 crores PAT. Q1 revenue was ₹162 crores with ₹12.8 crores PAT. Margins have improved from 10% in FI25 to 15% in H1. The company is valued at a market cap of ₹400 crores, coming at 21.6 times FI25 earnings and 14-15 times TTM earnings. There is no seasonality in the business. Debt repayment, solar power, and increased utilization should contribute to savings.
Technopack is a peer, trading at 10x PE. Almost 75% of revenues come from Maharashtra and Gujarat, with Karnataka contributing another 15%. Other income increased from ₹1 crore in FI24 to ₹5 crores in FI25 and ₹5.5 crores in H1. Cash flows haven't been consistent. The business is described as evergreen and a steady compounder, with 8-10% growth. The speaker is neutral on the company, not excited about the sector, and will likely skip the IPO. Another speaker hasn't read the company but might apply for short-term gains due to easy allotment, influenced by the lead manager's reputation.
Dhara Rail Projects (SME) [29:16]
Dhara Rail Projects, incorporated in 2010, is an ISO-certified company providing services like AMC (annual maintenance contract) and repairing services for railway rolling stock systems. The IPO is ₹50 crores, entirely a fresh issue, with a market cap of ₹190 crores. FI25 financials show ₹48 crores in revenue and ₹6.5 crores in PAT. The lead manager is Hem Securities. The company acquired Dhara Industries and transitioned to supplying services to railway projects. They provide AMC contracts, repair and maintenance services for train equipment (AC, lighting, power car), and HVAC services, contributing to around 50% of revenues and the order book. They also supply electrical components (bulbs, lighting, fans, AC structures), control panels, generators, and wiring, forming the other 50% of revenues and order books.
They secure contracts through tenders from the GeM portal and IRS portal. They have transitioned from pre-bid arrangements with suppliers to sole bidding, improving margins. They have an order book of around ₹1403 crores, including AMC contracts and short-term contracts for electrical components. They focus on railway services and don't plan to enter metro projects or manufacturing of railway components. Financials: FI23 revenue was ₹26 crores with 4-4.5% PAT, FI24 was ₹33 crores with 9% PAT, and FI25 was ₹45 crores with 13% PAT. In H1, they've done ₹28 crores with a PAT of around 22% and an EBITDA of 33-34%. Margins have improved due to direct contracts and employing manpower on their payroll.
They can now bid for higher-value tenders (₹20 crores+). The working capital cycle is stretched (6-6.5 months) but expected to improve with direct contracts. IPO usage includes ₹30 crores for working capital and ₹7-7.5 crores for repayment of borrowings. The IPO pricing is around 29-30 times FI25 earnings and 15-16 times FI26 earnings. There are no listed peers specifically for the service component. The lead manager, Hem Securities, has a good reputation. The speaker thinks the lead manager is a plus, but the dependence on tenders and railways is a risk. There's no peer to compare the company to. He hasn't decided yet whether to apply.
Gujurat Kidney (Mainboard) [37:58]
Gujarat Kidney and Super Specialty Hospital, incorporated in 2019, provides multi-specialty healthcare services across Gujarat. It operates seven multi-specialty hospitals and four day care centers with a total bed capacity of 490 beds. The IPO is ₹251 crores, entirely a fresh issue, with a market cap of ₹900 crores. FI25 revenue is ₹140 crores and PAT is ₹5.5 crores. The lead manager is Corporate Capital Services. The company is a regional healthcare provider operating in central Gujarat. They have seven hospitals, including four day care centers. They have an aggregate bed capacity of 490 beds, with 340 operational.
The hospitals were initially individual entities (sole proprietorships, LLPs, separate corporate entities) that have been consolidated. The IPO aims to raise ₹251 crores, with ₹77 crores for acquiring Parekh Hospital, ₹30 crores for starting a new 50-bed hospital in Vadodara, ₹12.4 crores for payment of already acquired healthcare hospital shareholding, ₹6.8 crores for acquiring additional shareholding in existing entities, ₹10 crores for buying robotics equipment, and ₹100 crores for inorganic acquisitions and general corporate purposes. A significant portion (40%) of the IPO is for general corporate purposes and inorganic acquisitions, which the speaker finds concerning.
Financials are complex due to the consolidation of different entities. FI23 revenue was ₹86 crores, FI24 was ₹104.6 crores, and FI25 was ₹140 crores. PAT was ₹2.3 crores, ₹5.5 crores, and ₹5.5 crores, respectively. Q1 revenue was ₹31 crores with ₹8.6 crores PAT. Margins have significantly increased in Q1. The company is valued at a market cap of ₹900 crores, making it expensive at 100x PE on FI25 earnings. The speaker finds the financials dressed up and unsustainable. He questions how the entity can grow when existing utilization is low. He also notes dependence on government schemes and a single geography. The track record is limited, and the margins are inconsistent.
The speaker believes the company is overvalued and will avoid the IPO. He doesn't expect a good listing. The lead manager is new, and the anchor list is ordinary. He recommends avoiding the IPO in the short, medium, and long term. Another speaker agrees, stating he will also be skipping the issue.
Closing Remarks [48:32]
In summary, they will be avoiding the Gujarat Kidney mainboard IPO. For the SME IPOs, they will apply to Shyam Dhani Masala and EPW India. They will review the anchor list and demand for Dhara Rail and Bai Kakaji before deciding. They will also read more about other companies like Naman Tech, Dipali Publishers, and Apollo Techno. They encourage viewers to follow the Sunday Investing channel for more updates. They mention that next week's IPOs should be light, with bigger mainboard IPOs expected in the second week of January. They also mention a ₹100-105 crore SME IPO opening in early January.
