AIK Pipes And Polymers Limited

AIK Pipes And Polymers Limited is engaged in manufacturing of comprehensive range of HDPE (High density polyethylene) pipes, HDPE Fittings, MDPE (Medium density polyethylene) Pipes and PPR (Polypropylene random) Pipes for water distribution, gas transmission, sewerage system and telecom sector. The Company is committed towards constant innovations in drinking water piping solutions, irrigation and sewerage technologies to meet the constantly increasing demands.  The manufacturing facility is situated at Govindgarh, Rajasthan which is equipped with adequate machinery and technology for manufacturing of Pipes. The unit is equipped with German technology-based Machines with different output parameters and has dedicated in-house testing facility to test from procurement of raw material to finished product as per BIS standards for providing superior quality products. The manufacturing plant is located near to National Highway which results for smooth connectivity to various parts of the region. The company has a well-equipped manufacturing facility. It has the latest technology and equipment that helps in the production of high-quality HDPE pipes of different sizes. The manufacturing facility is fully automated. The company also has a well-trained team of engineers, technicians and operators that helps in the production and quality control of the products. The products manufactured are approved by various agencies such as the Bureau of Indian Standards (BIS) and also from organisation, Central Institute of Petrochemicals Engineering and Technology, Indian Oil Corporation, and GAIL. As per financial performance, AIK Pipes And Polymers Limited has posted total income / net profits of Rs 10.21 Cr / Rs 0.27 Cr (FY21), Rs 20.91 Cr / Rs 0.88 Cr (FY22), Rs 30.78 Cr / Rs 1.88 Cr (FY23) and Rs 14.00 Cr / Rs 1.02 Cr (upto Q1 FY24). So as per previous financials data, company has shown good growth, but H1 FY24 data is very poor. Company has posted an average EPS of Rs 3.56 and average RoNW of 36.50% for last three fiscals. Issue is priced at a P/BV of 2.88 as per NAV of 30.88 as on post issue. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 64.43, 30.16 and 13.88 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Shreni Shares Limited is associated with this SME IPO and handled 26 SME IPOs in last 3 years. From last 10 IPOs, all opened above issue price or at par on the day of listing. As of now from last 10 IPOs, all are trading above issue price. ( As on 20.12.23 ) As per financials, AIK Pipes And Polymers Limited has shown good growth, RoNW is 33.50% and P/E is respectively 64.43, 30.16 and 13.88 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. But, higher issue expenses raises doubts. Company is in business of manufacturing HDPE pipes, HDPE Fittings, MDPE Pipes and PPR Pipes for water distribution, gas transmission, sewerage system and telecom sector, which is highly competitive and fragmented segment. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Mr. Imran Khan
• 2 Ms. Tahira Sheikh