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Stallion India IPO opens tomorrow: 10 key points to know from RHP before you subscribe to ₹199 crore issue
Stallion India Fluorochemicals IPO: Stallion India’s initial public offering (IPO) is scheduled to kick off for subscription on Thursday, January 16, and will remain open until Monday, January 20. The company aims to raise ₹199.45 crore through the offering, which comprises a fresh issue of 1.79 crore shares, aggregating ₹160.73 crore and an offer for sale (OFS) of 0.43 crore shares, aggregating ₹38.72 crore.
Stallion India IPO price band has been set at ₹85 to ₹90 per share. Of the total offering, 50% is reserved for Qualified Institutional Buyers (QIBs), 35% for Non-Institutional Investors (NIIs), and 15% for Retail Investors.
Sarthi Capital Advisors is the book-running lead manager of Stallion India IPO, while Bigshare Services is the registrar for the issue.
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Retail investors can apply for a minimum of 165 shares in one lot and in multiples thereafter. At the upper end of the IPO price band ( ₹90), retail investors are required to make a minimum investment of ₹14,850 per lot.
Let us take a look at some of the key points mentioned in Laxmi Dental’s RHP:
1. About Company
The company is in the business of selling refrigerant gases, industrial gases, and related products. Its primary business involves debulking, blending, and processing refrigerant and industrial gases, as well as selling pre-filled cans. It sells its products under the brand name “Stallion.”
The company generates the majority of its revenue from the refrigerant segment, which accounts for over 85% of the total revenue as of the end of the September quarter (Q2FY25).
2. Diversified Customer Base
The company’s gases find application in various industries and segments such as air conditioners & refrigerators, fire fighting, semiconductor manufacturing, automobile manufacturing, pharmaceuticals and medicals, semiconductors, glass bottle manufacturing, aerosols, and spray foam.
With over two decades of extensive experience in large-scale fluorochemical debulking, bottling, and distribution, the company specialises in refrigerant gases by blending two or more gases to create new formulations.
3. Market Opportunity
The market for fluorochemicals and specialty gases has been growing and is further forecasted to grow at a CAGR of 10.3%, from USD 10,963 million in 2024 to USD 16,223 million in 2028. The growth is mainly backed by the growing population and rapid urbanisation. By application, the automotive industry is the leading user segment for fluorochemicals.
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The market for fluorochemicals and specialty gases is vast; however, 61% of the market is dominated by five players.
4. Manufacturing Units
The company has four facilities, located in Khalapur, Raigad (Maharashtra); Ghiloth, Alwar (Rajasthan); Manesar, Gurugram (Haryana); and Panvel, Raigad (Maharashtra).
The Khalapur facility accounts for 63% of the company’s total revenue as of the end of Q2 FY25.
5. Peer Comparison
The company operates in a highly competitive landscape and competes with existing players, including SRF Limited, Gujarat Fluorochemicals Limited, and Navin Fluorine International Limited.
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Notably, some of these competitors are larger than the company in terms of scale, financial resources, manufacturing capabilities, research and development, and other resources. This translates into their having more extensive product portfolios, larger sales teams, intellectual property assets, and broader market appeal spanning multiple divisions.
6. Financial Performance
In the six months ending September 30, 2023, and for fiscal years 2023, 2022, and 2021, the company reported total revenue of ₹9,351.37 lakhs, ₹23,519.93 lakhs, ₹18,634.07 lakhs, and ₹11,941.52 lakhs, respectively. The total revenue has grown at a CAGR of 40.34% from fiscal 2021 to 2023.
EBITDA for the same period is reported at ₹898.54 lakhs, ₹2,588.66 lakhs, ₹3,300.85 lakhs, and ₹1,525.85 lakhs, with EBITDA margins of 9.61%, 11.01%, 17.71%, and 12.78%, respectively, for the mentioned periods.
The PAT for the six-month period ending September 2023 is ₹543.74 lakhs. The profit for fiscal year 2023 stood at ₹1,624.40 lakhs, reflecting a decrease from the figure of ₹2,110.97 lakhs reported in the previous year, impacted by a sharp rise in overall expenses.
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Additionally, the realisation from gases has fallen significantly due to a drop in prices. The company opted to maintain sales volume amidst a cyclical downtrend in gas prices, sacrificing a portion of profit to fortify its financial performance.
7. Top 10 Customers Account for Majority of Revenue
The combined revenue contribution from the company’s top ten customers, considered on a standalone basis for the six months ending September 30, 2023, and for the fiscal years 2023, 2022, and 2021, stood at 89.28%, 74.77%, 72.88%, and 72.11%, respectively.
8. Key Risks
Dependency on Refrigerant Gas Sales and Geographic Restrictions: The company’s revenue from operations depends significantly on the sale of refrigerant gases, which is restricted to certain geographies.
Increase in Raw Material Costs: Increases in the cost of raw materials as a percentage of its revenue from operations could have a material adverse effect on its results of operations and financial condition. Such increases may put pressure on our margins, potentially affecting profitability.
Reliance on Top Suppliers: The company’s top 10 and top 2 suppliers contributed the majority of its purchases during the six months ended September 30, 2023, and for the financial years 2022-23, 2021-22, and 2020-21. Any delays or shortages from one or more of these suppliers may adversely affect the company operations, leading to potential supply chain disruptions.
9. Objective of the Issue
The company proposes to utilise the net proceeds from the fresh issue towards funding incremental working capital requirements, funding capital expenditure for our semiconductor & specialty gas debulking and blending facility (“Khalapur, Maharashtra”), funding capital expenditure for our refrigerant debulking and blending facility (“Mambattu, Andhra Pradesh”), and for general corporate purposes.
10. Allotment and Listing Details
The allotment of shares for the Stallion India Fluorochemicals IPO is expected to be finalised on Tuesday, January 21, 2025. The tentative listing on both the BSE and NSE is scheduled for Thursday, January 23, 2025.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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