Kumar Arch Tech plans to raise Rs 740 crore via IPO, files draft papers with SEBI

Kumar Arch Tech IPO

PVC blend-based building material products maker Kumar Arch Tech has filed preliminary papers with capital markets regulator SEBI as it plans to approach the primary market to mop up Rs 740 crore via initial public offering.

The IPO is a combination of fresh issuance of shares worth Rs 240 crore, and an offer-for-sale of shares amounted to Rs 500 crore by promoters, as per the draft papers filed on September 27.

The Rajasthan-based company that operates the ECHON brand may also raise Rs 48 crore in pre-IPO placement before launching the IPO. It will reduce the fresh issue size if the said pre-IPO placement is completed.

Kumar Arch Tech claimed to be the largest manufacturer of PVC2 blend-based building material products in India, enjoying 18 percent market share as of March 2024, as well as the largest player in terms of capacity with a production capacity of 27,600 MTPA.

It is expanding the annual capacity by establishing a facility in Udaipur with a proposed installed capacity of 90,000 MTPA and has acquired a strategically located facility in Virginia, USA.

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The building material products it makes includes boards or sheets, mouldings, wall and ceiling panels, which are used by the residential, commercial and industrial sectors for construction and renovation. The company accounted for 28 percent of PVC blend-based building material products exported from India to the US markets in the fiscal 2024.

Kumar Arch Tech, which competes with listed peers like Century Plyboards, Greenply Industries, and Astral will spend Rs 182 crore out of the net fresh issue funds for the greenfield project to manufacture PVC-based products by its subsidiary, Taylias Industry, and the remaining amount for general corporate purposes.

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The company has reported a healthy bottomline due to strong operating margins with a fall in input cost and other expenses, but topline was almost stagnant. Profit in the fiscal 2024 grew by 76 percent to Rs 110.8 crore and revenue increased by 0.15 percent to Rs 407.9 crore compared to previous year. EBITDA for the year ended March 2024 surged by 68.5 percent to Rs 139.2 crore with margin expanding by 1,380 bps to 34.1 percent compared to the fiscal 2023.

Motilal Oswal Investment Advisors and Equirus Capital are acting as the merchant bankers to the issue.