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Industry : Engineering – Industrial Equipment

Standard Glass Lining Technology Limited View all IPOs

Price Band

Rs 133 – Rs 140

Standard Glass Lining Technology Limited is going public with a fresh issue an offer for sale. The issue opens on 06th January 2025.

MOJO CALL

Why

MOJO CALL

Avoid

Neutral

Partnerships with global players

The company has achieved growth through partnership with global leaders like Asahi Glassplant and GL Hakko of Japan. These collaborations enable the company to procure specialized grades of glass for its glass lining division, enhancing the overall quality of its products. Additionally, the company has formed an exclusive partnership with GL Hakko to market their shell-and-tube heat exchanger products in India.

Quality products using latest technologies

The company has adopted advanced technologies, incorporating automated CNC machines across key processes such as cutting, production, welding, machining, and finishing. Its capability to produce high-quality products in-house has fostered strong customer relationships, leading to a high percentage of repeat orders.

High dependence on top customers and repeat orders

The company generated 51% of its revenue from its top 10 customers in H1 FY2025, an increase from 40.5% in FY2024. A substantial portion of the company's revenue also comes from repeat orders from its key customers, accounting for 56.5% of total revenue in H1 FY2025, up from 53.5% in FY2024. This highlights a high level of dependency, indicating that any loss or slowdown among these customers or sectors could adversely affect the company’s financial performance.

Valuations

Based on the annualized FY2025 financials, the company is seeking a P/E of 38.5x and a market cap-to-sales ratio of 4.5x. This valuations is reasonably low compared to some of its listed player which are operating at similar scale. The company operates at higher margins compared to its listed players operating in similar industries. We, therefore, recommend subscribing to the issue.

Issue Details

Issue Opens	06th January 2025
Issue Closes	08th January 2025
Price Band	Rs 133 – Rs 140
Issue size (Upper Band)	Rs. 410.05 Cr
Issue Type	FRESH ISSUE & OFFER FOR SALE
Market cap (based on upper band)	Rs. 2792.88 Cr
Sales- March 2024 (Rs./Crs)	543.67 Cr
Net Profit - March 2024 (Rs./Crs)	60.01 Cr
Industry	Engineering – Industrial Equipment
Promoters	NAGESWARA RAO KANDULA, KANDULA KRISHNA VENI, KANDULA RAMAKRISHNA, VENKATA MOHANA RAO KATRAGADDA, KUDARAVALLI PUNNA RAO AND M/S S2 ENGINEERING SERVICES
Lead Manager	IIFL Capital and Motilal Oswal Investment Advisors

Objective of the Issue

Details

Objectives of the Issue Fresh Issue – Rs 210 cr & Offer for sale – Rs 200.05 cr

The Objectives of the Offer are for:
1. Funding the capital expenditure requirements of the company towards purchase of machinery and equipment – Rs 10 crore
2. Repayment or pre-payment, in full or part, of certain borrowings availed by the company and its subsidiaries – Rs 130 crore
3. Investment in a Material Subsidiary, S2 Engineering Industry Private Limited, for funding its capital expenditure requirements towards purchase of machinery and equipment - Rs 30 crore
4. Funding inorganic growth through strategic investments and/or acquisitions – Rs 20 crore
5. General corporate purposes – Rs 20 crore

List of Shareholders Selling Their Stake

Name	Type	Value of Shares (in Rs)	% of OFS
S2 Engineering Services	Promoter	72,85,60,000	36%
Kandula Ramakrishna	Promoter	40,18,91,140	20%
Kandula Krishna Ven	Promoter	33,62,40,240	17%
Nageswara Rao Kandula	Promoter	10,71,00,000	5%
Standard Holdings	Promoter Group	7,05,60,000	4%
Katragadda Venkata Ramani	Promoter Group	8,12,00,000	4%
Venkata Siva Prasad Katragadda	Promoter Group	4,90,00,000	2.5%
Mahitha Katragadda	Individual Investor	4,90,00,000	2.5%
Katragadda Harini	Individual Investor	4,90,00,000	2.5%
Likitha Katragadda	Individual Investor	4,90,00,000	2.5%

Business Operations

About Company

Standard Glass Lining Technology is engaged in the business of manufacturing specialized engineering equipment’s for the pharmaceutical and chemical sector in India. It also provides designing, engineering, manufacturing, assembly, installation and commissioning of said equipment's and providing SOPs for the use of these equipment’s.

The company’s product portfolios include 1) Reaction Systems, 2) Storage and Drying Systems and 3) Plant, Engineering and Services.

The company is one of the top three manufactures of glass-lined, stainless steel and nickel-alloy based specialized engineering equipment, in terms of revenue in FY2024.

The company majorly caters to the pharmaceutical sector with 75% of the total revenues, followed by chemical sector with 13% of the total revenues in H1 FY2025.

Segment Revenue Breakup

Revenue Breakdown by Segment:
Segment	H1 FY2025	FY2024	FY2023	FY2022
Reaction Systems	54%	57%	61%	68%
Storage, Separation and Drying Systems	33%	30%	31%	26%
Plant, Engineering and Services	13%	13%	8%	6%

Financials

Financial Overview

The company’s revenue grew by 126% between FY2022 and FY2024 and stood at Rs 544 crore for FY2024. For H1FY2025, the revenues stood at Rs 307 crore.

In FY2024, the company’s Return on Net Worth stood at 20.74%, down from 47.56% and 54.89% recorded in FY2023 and FY2022, respectively.

For H1 FY2025, operating margins for the company stood at 20.09%, up from 18.36% and 17.65% recorded in FY2024 and FY2023, respectively.

Consequently, profit margins for H1 FY2025 stood at 11.62%, up from 10.92% and 10.68% recorded in FY2024 and FY2023, respectively.

The company has failed to generate positive cash flow from operations for the past 3 years. The company reported a negative CFO of Rs 65 crore in FY2024. For H1 FY2025, company generated a negative CFO of Rs 19.3 crore.

As of 30th September 2024, the company had debt (incl. lease liabilities) of Rs 174 crore.

Financial Performance (Rs/crore)

Rs./Crs	H1 FY25	FY 24	FY 23	FY 22
Revenue	307.20	543.67	497.59	240.19
Net Profit	36.27	60.01	53.42	25.15