Shares of PVC stabiliser manufacturer Platinum Industries made a debut in trade way below analyst estimates and stayed low through the day on March 5. Most experts, however, advised holding the stock for the medium to long term, citing the favourable macro factors, the company's niche, its unique positioning within the industry, and its fair valuation.
The stock listed at a 31.6 percent premium at Rs 225 on the NSE and hit a day's high of Rs 236.25 in rangebound session, with a market capitalisation of Rs 892 crore. This was far short of the projection of 50 percent premium gains over the issue price of Rs 171. The IPO shares had traded in the grey market with a 52-58 percent premium.
"Given its unique positioning within the industry and its early adopter status, investors might be drawn to it for the potential medium- to long-term gains," Amit Goel, co-founder and chief global strategist at Pace 360, said.
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Platinum is a unique player in PVC stabilisers and lubricants space with multiple products. The company is expanding its domestic venture and also setting up a project in Egypt.
The company recorded a healthy financial performance with the net profit rising 109.4 percent on-year to Rs 37.4 crore, driven by strong operating numbers for the year ended March FY23. Revenue from operations during the same period increased by 23 percent to Rs 231.5 crore.
Its EBITDA (earnings before interest, tax, depreciation and amortisation) surged 112.4 percent on-year to Rs 53.9 crore with a margin expansion of 980 bps at 23.3 percent for the year, while for the six-month period ended in September FY24, net profit stood at Rs 22.8 crore on a revenue of Rs 122.8 crore. "The management is confident of maintaining the trends in coming years," Goel said.
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With the backing of fair valuation and supportive macro factors, Parth Shah, research analyst at StoxBox, also advised investors who have been allotted the shares holding them for a medium-to-long-term horizon.
With a wide portfolio of specialty chemicals in the PVC, CPVC, and lubricants segment, the company is the third largest player in PVC stabilisers in terms of sales along with a 13 percent share of the domestic market.
"Recognising the significance of the trend shift, the company has effectively responded by gradually transitioning from lead-based PVC stabilisers to calcium zinc-based and calcium organic-based stabilisers which has allowed it to align with the current market demands and adhere to evolving safety and environmental norms," Parth said.
Aimed at consistently expanding its product portfolio by introducing products to cater to multiple end-use applications, along with the plans for global expansion, the company is all set to benefit from the medium to long-term perspective, he believes.
Platinum Industries raised Rs 235.32 crore through its public issue. It will spend Rs 67.72 crore out of the net fresh issue proceeds for setting up a manufacturing facility for PVC stabilisers by subsidiary Platinum Stabilizers Egypt LLC, and Rs 71.26 crore for setting up another unit at Palghar, Maharashtra.
Further, Rs 30 crore will be used for working capital requirements of the company, and the rest will be spent on general corporate purposes.
Among experts, only Prashanth Tapse, senior vice-president and research analyst at Mehta Equities, recommended investors, who received shares in allotment, to book profits over and above the listing expectations, though he finds the company strong on the long-term perspective. "And those who failed to get allotments can wait and watch for better opportunities."
Platinum operates in the speciality chemicals industry and its products are used PVC pipes, PVC profiles, PVC fittings, electrical wires and cables, SPC floor tiles, Rigid PVC foam boards, and packaging materials.
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