Shree Tirupati Balajee Agro Trading Company Limited has successfully raised ₹50.89 crore from anchor investors just days before its Initial Public Offering (IPO) goes live for public subscription. The company, which specializes in industrial packaging products, garnered this significant sum by allotting 61,32,000 equity shares at ₹83 per share to a select group of institutional investors on September 4, 2024. Key investors involved in this pre-IPO anchor round include NAV Capital VCC – NAV Capital Emerging Star Fund, Chanakaya Opportunities Fund I, Next Orbit Growth Fund III, Saint Capital Fund, Steptrade Revolution Fund, and Astorne Capital VCC – Arven. This move sets the stage for a much-anticipated IPO, with the market eagerly watching how it unfolds.

Shree Tirupati Balajee Agro Trading IPO opens for subscription on September 5

The IPO for Shree Tirupati Balajee Agro Trading is scheduled to open on September 5, 2024, and will close on September 9, 2024. The offering is structured to include a fresh issue of up to 14,750,000 equity shares, alongside an Offer for Sale (OFS) of up to 5,690,000 equity shares by the company’s promoter, Binod Kumar Agarwal. The price band for the IPO has been set between ₹78 and ₹83 per share. At the upper end of the price range, the company aims to raise around ₹169.65 crore.

The IPO will be conducted via a book-building process, where 50% of the shares are reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and the remaining 35% for Retail Individual Investors (RIIs). Investors are required to bid for a minimum of 180 equity shares and in multiples thereof. PNB Investment Services Limited and Unistone Capital Private Limited are serving as the book-running lead managers for this IPO, while Link Intime India Private Limited is acting as the registrar.

Shree Tirupati Balajee Agro Trading’s business model and financial performance

Shree Tirupati Balajee Agro Trading Company is a key player in the industrial packaging sector, producing products such as Flexible Intermediate Bulk Containers (FIBCs), large flexible bags, woven sacks, woven fabrics, and narrow fabric tapes. The company caters to a broad range of industries, including chemicals, agrochemicals, food, mining, waste disposal, agriculture, lubricants, and edible oil, both domestically and internationally.

The company’s financial performance has been strong in recent years, with a notable increase in revenue and profit. For the fiscal year ending in 2024, Shree Tirupati Balajee Agro Trading reported a 13.51% rise in consolidated revenue, reaching ₹539.66 crore, up from ₹475.43 crore in the previous year. The profit after tax also saw a significant jump of 74.11%, climbing to ₹36.07 crore from ₹20.71 crore the previous year. This growth trajectory underscores the company’s ability to scale and generate higher margins, positioning it attractively for potential investors.

Expert opinion: A calculated move in a niche market

Financial experts suggest that Shree Tirupati Balajee Agro Trading’s decision to raise funds from anchor investors ahead of its IPO could be a strategic move to instill confidence in the market. By securing ₹50.89 crore from reputable institutional investors, the company has laid a solid foundation for its upcoming IPO. The participation of established funds like NAV Capital VCC and Chanakaya Opportunities Fund I signals strong market confidence in the company’s business model and growth prospects. Analysts believe that the IPO’s pricing strategy, with a reasonable range of ₹78 to ₹83 per share, could attract a diverse pool of investors, from institutional to retail.

Furthermore, the company’s focus on niche markets, such as flexible packaging solutions, allows it to stand out in the industrial sector. The expansion of industries like chemicals, food, and agriculture in India and globally is expected to drive demand for high-quality packaging products. By leveraging its expertise in flexible intermediate bulk containers and other packaging solutions, Shree Tirupati Balajee Agro Trading is well-positioned to capitalize on these growth opportunities.

Outlook and use of funds

The proceeds from the fresh issue are earmarked for several strategic purposes, including the repayment of existing debt, investment in subsidiaries, meeting additional capital requirements, and general corporate expenses. Listing on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) is expected to enhance the company’s visibility and access to capital.

A promising IPO in a growing sector

As Shree Tirupati Balajee Agro Trading gears up for its IPO, the company has already demonstrated strong investor interest, a healthy financial track record, and a solid business model. The industrial packaging sector’s growth, combined with the company’s strategic initiatives, makes this IPO one to watch. Investors looking for a unique opportunity in a niche market might find this IPO particularly appealing.

  Astorne Capital VCC, Bombay Stock Exchange, Chanakaya Opportunities Fund I, NAV Capital VCC, Next Orbit Growth Fund III, PNB Investment Services, Saint Capital Fund, Shree Tirupati Balajee Agro Trading, Steptrade Revolution Fund, Unistone Capital Private Limited