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  • Jun 27, 2023 - The IPO Markets Are Buzzing Once Again. Here Are 4 Companies to Track Now...

The IPO Markets Are Buzzing Once Again. Here Are 4 Companies to Track Now...

Jun 27, 2023

The IPO Markets Are Buzzing Once Again. Here Are 4 Companies to Track Now

The second half of the year has brought a resurgence of the IPO (initial public offering) frenzy, and this time it is the SME (small and medium enterprises) IPOs that are leading the charge.

The SME IPO segment is currently experiencing a bustling surge of activity as small and medium enterprises seize the opportunity to tap into the public markets.

Last week, we wrote to you four SME IPOs that were opening up for subscriptions. This week brings even more excitement as four more SME IPOs are set to hit the market.

Collectively, these companies have set their sights on raising over Rs 1.1 billion (bn) through their public offerings.

Here are the four SME IPOs opening up for subscription this week.

#1 Synoptics Technologies

First on the list is Synoptics Technologies, with an issue size of Rs 540.3 million (m).

Synoptics Technologies is an IT services company offering solutions in the areas of IT Infrastructure like connectivity to the branches, supply, implementation, and support of the network equipment needed to run the IT setup.

The company designs solutions for customers who need to put their applications on the cloud.

As per the company's Draft Red Herring Prospectus (DRHP), in the financial years 2020-22, the company achieved a revenue compound annual growth rate (CAGR) of 32.1%, while net profit grew by 33.4% over the same period.

The increasing spending in the IT space helped the company's earnings growth.

The net proceeds from the public offer will be used for repayment of certain borrowings to meet working capital requirements, investment in strategic acquisitions, and other general corporate purposes.

Here are the key details of the IPO.

Issue period: 30 June 2023 to 5 July 2023

Type of Issue: Book built issue of 1.4 m shares

Face value: Rs 10 per equity share

Price band: Rs 237 per share

Lot size: 600 shares

Application limit: Maximum one lot worth Rs 142,200

Tentative IPO allotment date: 10 July 2023

Tentative listing date: 13 July 2023

#2 Tridhya Tech

Second on the list is Tridhya Tech, with an issue size of Rs 264.1 m.

Tridhya Tech is involved in full-service software development which includes all IT services and resources.

The company is engaged in full-service software development, which includes all IT services and resources. It provides turnkey consultancy services to various industries like e-commerce, real estate, transport, logistics, and others.

The company has a strong presence in the international market, including the UK, US, and Switzerland.

On a CAGR basis, from 2020-2022, the company's sales and profit have increased by 45.9% and 137.3%, respectively.

This growth was driven by the rise in demand for collaborative applications and application platforms.

Tridhya plans to utilise the proceeds of the issue for repayment of unsecured and secured loans. Also, a portion of the proceeds will be used for general corporate purposes.

Here are the key details of the IPO.

Issue period: 30 June 2023 to 5 July 2023

Type of Issue: Book built issue of 6.2 m shares

Face value: Rs 10 per equity share

Price band: Rs 35-42 per share

Lot size: 3,000 shares

Application limit: Maximum one lot worth Rs 126,000

Tentative IPO allotment date: 10 July 2023

Tentative listing date: 13 July 2023

#3 Pentagon Rubber

Third on the list is Pentagon Rubber, with an issue size of 161.7 m. The IPO commenced its subscription today.

Pentagon Rubber is the leading engineering component player offering a wide range of rubber conveyor belts, transmission belts, rubber sheets, and elevator belts.

Pentagon Rubber has one of India's longest conveyor belting presses, with a production capacity of 21 mtr in a single stroke. This technology allows the company to produce conveyor rubber belting up to 3,150 KN/m, making it one of the top manufacturers in India.

As per the company's DRHP, in the financial years 2020-22, the company achieved a revenue compound annual growth rate (CAGR) of 21.9%, while net profit grew by 9.6% over the same period.

The strong domestic demand and brand recognition have helped the company's growth.

The IPO proceeds will be used to meet the working capital requirements, general corporate purpose and issue expenses. The additional working capital will help in the expansion of its business activities.

The company is already expanding its production capacity with the help of internal accruals and borrowings.

The expanded capacity by December 2023 will be 6,00,000 metres or up to 2.5 times the existing capacity of 2,40,000 metres.

Here are the key details of the IPO.

Issue period: 26 June 2023 to 30 June 2023

Type of Issue: Book built issue of 2.3 m shares

Face value: Rs 10 per equity share

Price band: Rs 65-70 per share

Lot size: 2,000 shares

Application limit: Maximum one lot worth Rs 140,000

Tentative IPO allotment date: 5 July 2023

Tentative listing date: 10 July 2023

#4 Global Pet Industries

Last on the list is Global Pet Industries, with an issue size of 132.3 m.

Global Pet Industries is engaged in manufacturing automatic and semi-automatic pet machines and spare components and accessories of such machines.

Internationally, it supplies products in 19 countries, including UAE, the US, and Nepal.

On a CAGR basis, from 2020-22, the company's sales and profit have increased by 11.8% and 8.1%, respectively, driven by steady market demand.

The net proceeds from the issue will be used for funding capital expenditure on the construction of the factory building and for general corporate purposes.

Here are the key details of the IPO.

Issue period: 29 June 2023 to 3 July 2023

Type of Issue: Book built issue of 2.7 m shares

Face value: Rs 10 per equity share

Price band: Rs 49 per share

Lot size: 3,000 shares

Application limit: Maximum one lot worth Rs 147,000

Tentative IPO allotment date: 6 July 2023

Tentative listing date: 11 July 2023

Conclusion

Investing in IPOs can be enticing, especially when it comes to SME IPOs. These IPOs provide access to high-growth potential companies in their early stages, which have the potential to generate significant wealth.

SME IPOs often operate in niche markets, exhibit innovative business models, or offer unique products/services, creating opportunities for attractive returns on investment.

Additionally, including SME IPOs in an investment portfolio can enhance diversification by spreading risk across different sectors and industries.

However, it's important to consider the risks associated with SME IPOs, such as liquidity constraints, limited historical data, and potentially higher volatility.

Thorough research, careful evaluation, and consideration of individual risk tolerance are crucial before investing in SME IPOs.

For more information on IPOs, check out the list of upcoming IPO's.

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

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FAQs

Which are the best performing IPO stocks in India right now?

As per Equitymaster's Stock Screener, these are the best performing IPO stocks right now -


These companies have been ranked as per the gains they have delivered to investors since listing.

Remember, it's not easy to identify future multibagger stocks, but if you do it carefully and with due diligence, you can find high growth companies which can turn out to become future multibaggers.

How should you go about investing in the best performing IPO stocks in India right now?

The best performing IPOs have already delivered outsized returns. So there is a good chance these stocks might be overpriced.

Before you invest your hard-earned money, make sure you check out the valuations first. Studying the business is equally important. One should only invest in fundamentally strong stocks with bright prospects.

What is GMP?

GMP stands for grey market premium. It is the amount, over and above the issue price, that traders are willing to pay or ask for to trade IPO shares. The GMP can tell you how an IPO will perform on its listing day.

If you are applying for an IPO, take a look to see what could happen on listing day. But remember GMP shouldn't be the only factor influencing your decision on whether or not to hold or exit the stock.

If you are an investor, then we would say take the GMP with a pinch of salt. A factor as volatile as GMP can't be a deciding factor.

Therefore, you should never apply for an IPO just because it commands a good GMP. You should apply for an IPO because you believe in the company's earning potential. Hence more weightage should be given to the fundamentals of the company.

What is an IPO Price Band?

IPO Price Band is the price range within which investors can bid for the shares. The minimum price is called the floor price and the maximum price is called the cap price.

In case the company revises the price band, the offer period gets extended for at least three additional working days.

Any revision in the price band and the revised offer period, if applicable, is shared by notification to the stock exchanges by issuing a press release and on the websites of the book running lead managers.

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