Market Debut: Solve Plastic Products lists at ₹102 on NSE SME, a 12% premium to IPO price

Shares of Solve Plastic Products made a decent debut on the exchanges today, August 21. The stock listed at ₹102 per share on NSE SME, a premium of 12 percent to its issue price of ₹91.

The ₹11.85 crore initial public offering (IPO) of Solve Plastic Products was open for subscription between August 13-16, 2024. The IPO consisted entirely of a fresh issue of 13.02 lakh shares, priced at ₹91 per share. The minimum lot size for retail investors was 1,200 shares, requiring an investment of ₹1,09,200, while high-net-worth individuals (HNI) needed to invest in at least two lots (2,400 shares), amounting to ₹2,18,400.

The IPO garnered significant demand during its three-day bidding period, with an overall subscription rate of 34.23 times. Investors bid for a total of 4.23 crore shares against the 12.36 lakh shares on offer. The retail investors' category saw the highest demand, with a subscription rate of 46.76 times, followed by the "Others" category, which was subscribed 19.47 times.

The company plans to use the proceeds from the IPO to fund capital expenditures for purchasing additional plant and machinery, meet working capital requirements, cover issue expenses, and for general corporate purposes. Finshore Management Services Limited acted as the book-running lead manager for the IPO, while Integrated Registry Management Services Private Limited served as the registrar. Black Fox Financial was the market maker for the issue.

About the Company

Founded in 1994, Solve Plastic Products Limited specializes in manufacturing uPVC pipes (unplasticized polyvinyl chloride) and rigid PVC electrical conduits, marketed under the brand name "BALCOPIPES." The company operates three manufacturing units in Kerala and one in Tamil Nadu. Its products have received approvals from various authorities, including the Bureau of Indian Standards (BIS), and organizations like the Central Public Works Department (CPWD) of Chennai and Kochi, Military Engineer Services (MES), Integral Coach Factory, Public Works Department (PWD) of Kerala and Tamil Nadu, and Tamil Nadu Housing Board. The company primarily distributes its products in Kerala.

Financially, Solve Plastic Products Limited saw a revenue decline of 24 percent between the financial years ending March 31, 2023, and March 31, 2024. However, its profit after tax (PAT) rose by 18 percent during the same period.

Despite the initial interest, market expert Dilip Davda of Chittorgarh.com recommended avoiding the IPO. He highlighted that the company operates in a highly competitive and fragmented segment, with inconsistent top-line performance in recent periods. Davda also noted that the IPO appears aggressively priced based on the company's FY24 earnings, and with a small equity base post-IPO, it indicates a longer gestation period. He classified the investment as a "High Risk/Low Return" bet, suggesting potential investors may want to skip it.