Piotex Industries IPO: Review, Valuation, Date & GMP

Piotex Industries IPO -Complete Overview

PIOTEX Industries Limited is a professional textile company with its headquarters in Pune (MS), India. It sells its products exclusively to the spinning and weaving industries in Maharashtra. Incorporated in 2019, Piotex Industries Limited manufactures and trades cotton bales, yarn, and fabrics. A light asset model is the company's philosophy.
The company operates on an asset-lite model successfully. The weaving and spinning industries rely heavily on Piotex Industries for cotton bales and cotton yarns. The company distributes its products in Maharashtra, Madhya Pradesh, and Gujarat.
The first-generation entrepreneurs who founded Piotex Industries, located in Pune, are Abhay Shriram, Asalkar, and Yogesh Omprakash Nimodiya. To ensure quality output for its clients, the industry uses cutting-edge technology and processing techniques. In FY 2023-24, Piotex Industries Limited reported revenue of Rs. 118.45 crores and profit of Rs. 3 crores, compared to revenue of Rs. 86 crores and profit of Rs. 2.88 crores in FY 2022-23. At the end of March 2024, there were 18 employees working for the company.

The company has two main business areas:

• In the textile centers of Maharashtra, namely Malegaon, Ichalkaranji, and Bhiwandi, the company manufactures and trades cotton bales, synthetic fibers, cotton yarns, and fabrics. Also, the company supplies cotton yarn to Burhanpur and Ahmedabad. Babasaheb Deshmukh Industries Private Limited has entered into an exclusive distribution agreement with the company for its end product, cotton yarn.
  
  
• This arrangement involves the company supplying the yarn to the contract workers and the weaving mill, which weaves the fabric at a contractually agreed price, and returns the finished product. A finished product, fabric, is then sold to customers.

Address: Piotex Industries Limited F/II Block,
Plot No. 16/2, M.I.D.C., Pimpri Pune - 411018.

Phone: +91-9156744401

Email: office@piotex.in

Website: https://piotex.in/

 

Piotex Industries IPO Overview

The company is coming out with its maiden IPO of 1539600 equity shares of Rs. 10 each at a fixed price of Rs. 94 per share to mobilize Rs. 14.47 cr. Subscriptions will open on May 10, 2024, and close on May 14, 2024. Applications must be made for a minimum of 1200 shares and in multiples thereof thereafter. Shares will be listed on BSE SME after allotment. The issue represents 30.17% of the company's post-IPO paid-up capital. A total of Rs. 1.25 crore is being spent by the company.for this IPO process, and from the net proceeds of the IPO, it will utilize Rs. 10.51 cr. for working capital, and Rs. 2.71 cr. for general corporate purposes.

Beeline Capital Advisors Pvt. is solely responsible for lead managing the issue. Ltd., and Cameo Corporate Services Ltd. is the registrar of the issue. Beeline Group's Spread X Securities Pvt. Ltd. is the market maker for the company.

The company issued its initial equity capital at par and issued additional equity shares at Rs. 300 per share in July 2023, along with bonus shares in the ratio of 31 for 2. Shares acquired by the promoters cost on average Rs. 5.26 each.

Post-IPO, the company's paid-up equity capital is Rs. 3.56 crore. The amount will be increased to Rs. 5.10 crore. On the basis of the upper IPO price band, the company is looking for a market cap of Rs. 47.97 crore.
 

Company Financial

In the financial year ending with March 31, 2024, Piotex Industries Limited saw its revenue rise by 37.23% and its profit after tax (PAT) rise by 4.17%.

Period Ended	31 Mar 2024	31 Mar 2023	31 Mar 2022
Assets	3,610.59	1,757.68	1,385.47
Revenue	11,893.88	8,667.21	8,046.39
Profit After Tax	300.80	288.75	74.29
Net Worth	897.18	440.07	151.32
Reserves and Surplus	582.47	425.07	136.32
Total Borrowing	445.94	372.30	528.58
Amount inRs. Lakhs

 

Key Performance Indicators

Key Financial Performance	June 30, 2023	March 31, 2023	March 31, 2022
Revenue from Operations (1)	3,573.51	8,600.58	8,022.18
EBITDA (2)	137.30	415.78	114.45
EBITDA Margin (3)	3.84%	4.83%	1.43%
PAT	91.48	288.75	74.29
PAT Margin (4)	2.56%	3.36%	0.93%

 

The Objective of the Issue

Working capital is the main objective of Piotex Industries Limited.

1. Funding the Working Capital Requirement: From the Net Proceeds of the Issue, the company intends to allocate INR 10.51 crores to meet its working capital needs, supplemented by borrowings as needed. 

2. General Corporate Purposes: To achieve general corporate objectives, the company will balance funds, including meeting operating expenses and initial development costs for projects other than the identified ones, as well as strengthening business development and marketing capabilities. 

 

Peers of Piotex Industries

Piotex Industries Limited IPO Peer Comparison

There are no listed companies in India or abroad developing products like those developed by Piotex Industries Limited. As a result, the accounting ratios of the company cannot be compared with those of the industry.

 

Evaluation  and Margins

Period	FY 2022	FY 2023	FY 2024
EPS	3	11.67	8.48
PE ratio	–	–	11.08
RONW (%)	49.09	65.61	33.53
NAV	100.88	293.38	25.17
ROCE (%)	50.5	59.34	33.2
EBITDA (%)	1.43	4.83	3.22
Debt/Equity	3.49	0.41	0.5

 

 

 

IPO's Strengths

• Towards US$190 billion by 2025-26, India's textile and apparel industry is projected to grow at 10% CAGR. With significant cotton production and expanding exports, this industry is poised for significant growth. 
  
  
• India's textile industry sees promising growth prospects as global pandemic-related needs for personal protective equipment (PPE) drive demand for technical textiles-sustainability efforts and rising disposable income also drive growth, with a projected US$ 209 billion market by 2029. 
  
  
• Approximately 60 million people survive on cotton produced by India, the world's biggest cotton producer. During 2021-22, the Central and Southern zones contributed significantly to the industry's production of 31.2 million bales. 

 

IPO's Weaknesses

There are many risks associated with Piotex Industries Limited, including reliance on third-party manufacturers, equipment breakdowns, vendor reliance, intense competition in the textile industry, and price fluctuations and cotton supply shortages. 

• A contract manufacturer is the only source of production for the company and there are risks, such as vendor dependency and equipment breakdowns. The failure to secure alternate vendors may hamper growth and negatively affect the company. 

• Especially in cotton yarn and cotton knitted fabrics, they face significant competition in the Indian textile industry. The business may be negatively affected by price reductions, sales declines, and lower profit margins as a result. 

• Due to weather and other factors, the price of domestically sourced cotton fluctuates significantly. Cotton prices may be rising, compounded by potential supply shortages and quality problems, adversely affecting their operations and finances. 

Towards US$190 billion by 2025-26, India's textile and apparel industry is projected to grow at 10% CAGR. With significant cotton production and expanding exports, this industry is poised for significant growth. 

India's textile industry sees promising growth prospects as global pandemic-related needs for personal protective equipment (PPE) drive demand for technical textiles-sustainability efforts and rising disposable income also drive growth, with a projected US$ 209 billion market by 2029. 

Approximately 60 million people survive on cotton produced by India, the world's biggest cotton producer. During 2021-22, the Central and Southern zones contributed significantly to the industry's production of 31.2 million bales. 

 

IPO GMP Today

The Latest GMP for Piotex Industries Limited IPO is Rs.30.

 

Piotex Industries IPO Details

IPO Date	May 10, 2024 to May 14, 2024
Listing Date	[.]
Face Value	₹10 per share
Price	₹94 per share
Lot Size	1200 Shares
Total Issue Size	1,539,600 shares (aggregating up toRs.14.47 Cr)
Fresh Issue	1,539,600 shares (aggregating up toRs.14.47 Cr)
Issue Type	Fixed Price Issue IPO
Listing At	BSE SME
Share holding pre issue	3,564,000
Share holding post issue	5,103,600
Market Maker portion	78,000 shares

Piotex Industries IPO Reservation

Piotex Industries IPO offers 1,539,600 shares. 730,800 (47.47%) to NII, 730,800 (47.47%) to RII.

Investor Category	Shares Offered
Anchor Investor Shares Offered	-
Market Maker Shares Offered	78,000 (5.07%)
Other Shares Offered	730,800 (47.47%)
Retail Shares Offered	730,800 (47.47%)
Total Shares Offered	1,539,600 (100%)

 

 

Piotex Industries IPO Timeline (Tentative Schedule)

Piotex Industries IPO opens on May 10, 2024, and closes on May 14, 2024.

IPO Open Date	Friday, May 10, 2024
IPO Close Date	Tuesday, May 14, 2024
Basis of Allotment	Wednesday, May 15, 2024
Initiation of Refunds	Thursday, May 16, 2024
Credit of Shares to Demat	Thursday, May 16, 2024
Listing Date	Friday, May 17, 2024
Cut-off time for UPI mandate confirmation	5 PM on May 14, 2024

 

Piotex Industries IPO Lot Size

The minimum number of shares an investor can bid on is 1200, with multiples of 1200 available. Following is a table outlining the minimum and maximum investment amounts by retail investors and HNIs.

Application	Lots	Shares	Amount
Retail (Min)	1	1200	₹112,800
Retail (Max)	1	1200	₹112,800
HNI (Min)	2	2,400	₹225,600

Piotex Industries IPO Promoter Holding

The company's promoters are Mr. Abhay Shriram Asalkar and Mr. Yogesh Omprakash Nimodiya.

Share Holding Pre Issue	100.00%
Share Holding Post Issue	69.83%

 

 

Promoters and Management of Piotex Industries IPO 

• Mr. Abhay Shriram Asalkar, and
• Mr. Yogesh Omprakash Nimodiya

 

Piotex Industries Lead Managers

• Beeline capital advisors private limited: Lead Manager
• Cameo Corporate services limited: Registrar.

 

 

 

Dividend Policy

There have been no dividends declared since the company was incorporated. According to the company's financial performance and future prospects, it will adopt a conservative dividend policy. 

 

Conclusion

There is a high degree of competition and fragmentation in the market that the company operates in. Third-party contract manufacturing raises major concerns. The sudden rise in its bottom line from FY23 onwards appears to be a window dressing to raise its valuation. An issue like this can be characterized as a "High Risk/Low Return" bet. The small post-IPO equity base indicates a longer gestation period for migration. A well-informed/cash surplus investor may park moderate funds for the medium term.

 

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

 

To Read the Prospectus of the Company Click Here to Download the DRHP.

 

 

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