Agarwal Toughened Glass India Ltd. (ATGIL) is stepping into the capital markets with its maiden IPO, aiming to raise INR 62.64 crore. Specializing in the production of toughened glass, the company caters to diverse industries, including construction, automotive, and interiors, while boasting certifications like ISO 9001:2015 and BIS compliance. But is this IPO worth the plunge? Let’s break it down.
ATGIL manufactures toughened glass and value-added variants like laminated, frosted, and double-glazed glass. Its products find applications in everything from architectural interiors to bulletproof glass, making it integral to high-demand industries. The company operates primarily in India, with 95% of its revenue generated from B2B operations.
Despite its promising market presence, ATGIL's top line has remained relatively static over the past three years, while its bottom line saw a sharp rise in FY24, raising concerns about the sustainability of such profits.
The IPO opens on November 28, 2024, with a price band of INR 105–INR 108 per share. Investors must apply for a minimum of 1,200 shares, and the issue constitutes 32.81% of the post-IPO paid-up capital. Proceeds will be used for purchasing machinery (INR 9.67 crore), debt repayment (INR 6 crore), and working capital (INR 25 crore), among other purposes.
Post-IPO, the company’s equity capital will increase from INR 11.88 crore to INR 17.68 crore, giving it a market cap of INR 190.89 crore at the upper price band. However, the issue appears fully priced with a P/E of 22 based on FY24 earnings.
ATGIL’s revenue has hovered around INR 40 crore annually over the past three years, but profits surged from INR 0.97 crore in FY23 to INR 8.69 crore in FY24. The first half of FY25 shows continued profitability, with a PAT margin of 20.37%. Still, the sharp margin expansion raises questions about its long-term sustainability.
The company cites Sejal Glass and Borosil (NS:BORO) Ltd. as peers, but the comparison falls short due to differing business models. Both peers trade at higher P/E ratios of 104 and 71.5, respectively, making ATGIL’s valuation appear modest but not a clear bargain.
ATGIL’s IPO offers an opportunity to invest in a niche market with growth potential. However, its static revenue, inflated margins, and fully priced valuation warrant caution. Well-informed investors with a medium-term horizon might consider parking moderate funds, but sustainability remains a key risk
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