TLDR;
Alright, so this is a discussion about the upcoming IPOs for the week of April 3rd. The panel reviews five mainboard companies: Patel Retail, Mangal Electrical, Shree Ji Shipping, GEM Aromatics, and Vikram Solar. They talk about the company details, financials, risks, and potential upsides, and then share their own application strategies.
- Patel Retail: Concerns about inventory management and growth.
- Mangal Electrical: Valuations seem a bit high for a lamination player.
- Shree Ji Shipping: Falling revenues are a concern, but promoters have a good reputation.
- GEM Aromatics: Small size and FMCG proxy make it attractive.
- Vikram Solar: High risk, high reward due to expansion plans and litigation issues.
Opening Remarks [0:00]
The host welcomes everyone to the IPO discussion. They apologize for the mid-week episode due to travel. They clarify that this is not investment advice, but rather their personal IPO strategies, which are subject to change. They emphasize doing your own research and consulting a financial advisor. The agenda includes reviews of five mainboard companies: Patel Retail, Mangal Electrical, Shree Ji Shipping, GEM Aromatics, and Vikram Solar.
Patel Retail (Mainboard) [2:38]
Patel Retail is a regional supermarket chain operating mainly in tier-three cities, especially in the Mumbai region. They have 43 stores averaging 4,000 sq ft each, offering a wide range of products, including their own brands. While revenues were ₹1,000 crore in FY23, they dropped to ₹817 crore in FY24 due to sugar export bans, and marginally increased to ₹826 crore in FY25. The average revenue per store is stagnant at around ₹8.9 crore, and inventory turnover is poor compared to peers like DMart and Vishal Mega Mart. The IPO aims to raise ₹242 crore, with ₹216 crore as a fresh issue and the rest as OFS. Concerns include ongoing trademark litigations, poor inventory management, and unhedged forex exposure.
Mangal Electrical (Mainboard) [13:17]
Mangal Electrical manufactures transformer components and low to medium voltage transformers. They have five production facilities with certifications allowing them to compete for orders with less competition. The company's business is 70% transformer components, 25% transformer distribution, and 5% EPC. They have a ₹290 crore order book. The IPO is a ₹400 crore fresh issue, with funds allocated for debt repayment, working capital, and capex to increase transformer component capacity. While the P&L looks good with 20-25% year-on-year growth, balance sheet and cash flows have worsened in FY25. Valuations are a concern, with the IPO priced at 32 times trailing earnings, which is considered high for a transformer lamination player.
Shree Ji Shipping (Mainboard) [29:27]
Shree Ji Shipping is a shipping and logistics company focusing on dry bulk cargo handling in non-major ports, primarily along the west coast of India. They operate a fleet of 83 vessels. The IPO is a ₹410 crore fresh issue, with plans to use ₹250 crore to buy a Supramax dry bulk carrier for vertical integration. While the company has a good reputation and operates in a growing industry, revenue has declined year-on-year from ₹827 crore in FY23 to ₹610 crore in FY25 due to the loss of a couple of customers each year. The PAT, however, has increased. Valuations are tricky to assess due to the lack of listed peers, with the IPO priced at 29x trailing earnings.
GEM Aromatics (Mainboard) [44:27]
GEM Aromatics manufactures specialty ingredients like essential oils and aroma chemicals. They have a long history and a wide customer base, serving industries like oral care, cosmetics, and pharmaceuticals. The company holds dominant positions in products like DMO, clove oil, and eucalyptus oil. The IPO is a small ₹451 crore issue, with ₹175 crore as a fresh issue and the rest as OFS. The company has shown limited growth in the last three years due to capacity utilization. Positives include a strong anchor book and the potential for forward integration. Concerns include a promoter group member being a willful defaulter and ongoing Supreme Court litigation.
Vikram Solar (Mainboard) [1:00:33]
Vikram Solar is a solar PV module manufacturer with a capacity of 4.5 GW. The IPO is a ₹2,100 crore issue, with ₹1,500 crore as a fresh issue. The company plans to expand its capacity significantly in the coming years, including cell manufacturing and battery energy storage solutions. While the company has a large order book, there are concerns about high raw material imports from China and several ongoing litigations against the company, directors, and promoters. The company's revenue is ₹3,500 crore and PAT is ₹140 crore.
Closing Remarks [1:21:21]
The panel shares their application strategies. The host will apply for Vikram Solar, GEM Aromatics, and Patel Retail. Other panelists share similar strategies, with a focus on Vikram Solar and GEM Aromatics. They acknowledge the choppy market conditions and advise caution. They also mention that the retail portion is 35%.