Shakun Polymers IPO Review

---

Shakun Polymers Limited Basic Details

Let’s have a quick view of the Shakun Polymers IPO data points before we talk about the company and this IPO at length:

 

Shakun Polymers Limited Background

Shakun Polymers, founded in the year 1991, is engaged in the compounding for the wire and cable market and is one of the leading players in India.

They manufacture speciality compounds which have utility in a wide range of services under the wire and cable industry like power cables (both LT & HT), building wires, telecommunication, etc. The company manufactures around 80 product grades and cater to wire and cable manufacturers located in more than 25 countries.

The speciality compounds manufactured by the company can be categorised into Thermoplastic and Cross-Linkable HFFR Compounds and semiconducting compounds for different applications and for power cables respectively, and specialized PVC compounds.

Some of the domestic clients of the company include Polycab Wires Private Limited, Birla Cables Limited, RR Kabel Limited etc. Some of the international clients of the company include Dubai Cable Company (Private) Limited, Nuhas Oman LLC, Alfanar Cables etc.

The company has 3 manufacturing units which have an aggregate installed capacity of over 25,000 MTPA.

Shakun Polymers IPO is going to hit the share market in the next few days and will be listed on BSE & NSE. In this detailed review, we will talk about multiple aspects such as company background, financial health, risks and strengths related to this IPO.

Hopefully, by the end of this review, you will be able to take a call on whether to go ahead with this investment or not.

Shakun Polymers IPO Data Points

Shakun Polymers IPO will open on (undisclosed) and close for subscription on (undisclosed).

The IPO size will be of (undisclosed) lakh Equity shares and the face value shares will be ₹10 each share. The price band has been set at ₹(undisclosed) – ₹(undisclosed) per equity share. The offer price includes a premium of ₹(undisclosed) and is (undisclosed) times the face value of the equity shares.

The IPO size is expected to be up to ₹(undisclosed) lakhs.

The offer consists of a fresh issue of up to (undisclosed) lakh equity shares aggregating up to ₹75 crores and an offer for sale of up to 18,00,000 equity shares, aggregating up to ₹(undisclosed) crores by selling shareholders.

The market lot size is of (undisclosed) equity shares and the shares will be listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Pursuant to a resolution passed on April 2, 2018, the offer has been authorised by the Board of Directors and pursuant to a special resolution of the shareholders at the Extraordinary General Meeting held on April 2, 2018, the fresh issue has been approved by them.

Shakun Polymers Limited Financial Performance

Total revenues of the company have been increasing over the last few years.

 

The revenues increased from ₹160.4 crores in the financial year ended March 31, 2014, to ₹280.99 crores in the financial year ended March 31, 2017.  The return on net worth of the company for the years ended March 31, 2017, March 31, 2016, and March 31, 2015, is 22.43%, 29.24% and 19.25% respectively.

For the nine months ended December 31, 2017, RONW (Return on Net Worth) is 15.34%. The net asset value per equity value as at March 31, 2017, and as on December 31, 2017, are ₹206.17 and ₹240.49 respectively.

Shakun Polymers IPO Objectives

The Shakun Polymers IPO consists of two parts:

The proceeds from the offer for sale of up to 18 lakh equity shares will be given to the selling shareholders. Any proceeds from the offer for sale will not be received by the company for its operations.

The main objectives of fresh issue of equity shares are as follows:

• For setting up a new manufacturing unit of HFFR compounds
• For meeting expenses related to the general corporate operations.

Other than the above-mentioned objectives, the company will also benefit in terms of enhanced corporate image, brand name and increased visibility through Shakun Polymers IPO.

Shakun Polymers IPO Events

Let’s have a look at the specific dates related to this Shakun Polymers IPO so that you are aware of the different events in case you are looking to invest in it:

 

 

Shakun Polymers IPO Recommendation

Now, let us discuss some of the key strengths and risks related to the business of the company.

One of the major strengths of the company is its total installed capacity of over 25,000 MTPA which caters to a huge diversity of clients in telecommunication & fibre optic cables, instrumentation cables, power cables, etc.

The company shares good relationships with its customers because of many reasons like the ability to customise their products according to the requirements of the customers etc.

The company’s financial health seems to be quite good and stable from the fact that they have been making consistent profits over the last 5 years and have been paying dividends to their equity shareholders.

The 3-year CAGR of the company from its operational revenues is 19.16% (from fiscal 2015 to fiscal 2017). Also, the strategies for future growth and expansion seem promising.

Now, let us take a look at the risks involved with the business of the company.

The company is dependent on a few customers only. If there is a reduction in orders from them, it may adversely affect the revenues and profitability of the company.

The company operates in a sector where there is a fierce competition from domestic as well as international players.

If the products of the company do not meet specific quality standards set by their clients, their revenues and overall financial health may deteriorate.

Around 80%-90% of the raw materials required by the company is imported through different countries due to which the business is exposed to exchange rate related risks and risk of fluctuation in prices of their raw materials.

The company and its promoters, etc. are involved in certain legal proceedings pending at various stages and any adverse ruling in them may pose a risk to the overall profitability of the company.

Any delays in the timely procurement of raw materials may adversely affect the delivery schedules of their customers which may hamper the financial health of Shakun Polymers.

The company requires certain approvals, permits, licenses, etc. in order to operate smoothly. Any delay or failure in obtaining them may have a negative impact on the functioning of the company.

The company is dependent on exports for a significant amount of their revenues. Any adverse changes in the policies related to import and export or a slump in global markets may adversely affect the profits of the company.

---

After analysing the aspects of the company, it can be said that investors may choose to subscribe to the Shakun Polymers IPO.

---

In case you are looking to invest in the Shakun Polymers IPO or stock market investments in general, let us assist you in taking the next steps forward.

Just fill in some basic details in the form below and a callback will be arranged for you:

 

Shakun Polymers Limited Management Information

Currently, there are 6 Directors on the Board of Shakun Polymers Limited. Deepak Kanabar is an Independent Director and Chairman of the company. He is a Commerce graduate from Narsee Monjee College of Commerce & Economics and holds a law degree from the  University of Bombay.

He is also a Chartered Accountant and has an experience of more than 3 decades in the field of taxation consultancy and services.

Shakun Polymers IPO Advisors Information

Vivro Financial Services Private Limited is acting as Book Running Lead Manager to the issue. DSK Legal, Advocates & Solicitors is acting as legal advisor for the offer. Link Intime India Private Limited is acting as the Registrar for the Shakun Polymers IPO.