Pyramid Technoplast IPO gets 18% anchor allocated

About the Pyramid Technoplast IPO

The anchor issue of Pyramid Technoplast IPO saw a relatively strong response on 17th August 2023 with 18% of the IPO size getting absorbed by the anchors. Out of the 92,20,000 shares on offer, the anchors picked up 16,59,600 shares accounting for 18% of the total IPO size. The anchor placement reporting was made to the BSE late on Thursday. The IPO of Pyramid Technoplast Ltd opens on 18th August 2023 in the price band of ₹151 to ₹166 and will close for subscription on 22nd August 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of ₹166. This includes the face value of ₹10 per share plus a premium of ₹156 per share, taking the anchor allocation price to ₹166 per share. Let us focus on the anchor allotment portion ahead of the Pyramid Technoplast Ltd IPO, which saw the bidding opening and also closing on 17th August 2023. Before that, here is how the overall allocation will look.

The overall allocation to QIBs is quite small, so even the anchor interest is likely to be limited, as we shall see later.

Finer points of anchor allocation process

Before we go into the details of the actual anchor allotment, a quick word on the process of anchor placement. The anchor placement ahead of an IPO/FPO is different from a pre-IPO placement in that the anchor allocation has a lock-in period of just one month, although under the new rules, part of the anchor portion will be locked in for 3 months. It is just to give confidence to investors that the issue is backed by large established institutions.

However, the anchor investors cannot be allotted shares at a discount to the IPO price. This is explicitly stated in the SEBI revised regulations as under, “As per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirement) Regulations, 2018, as amended, in case the Offer Price discovered through book building process is higher than the Anchor Investor Allocation Price, then the Anchor investors will be required to pay the difference by the pay-in as specified in the revised CAN.

An anchor investor in an IPO is normally a qualified institutional buyer (QIB) like a foreign portfolio investor or mutual fund or insurance company or a sovereign fund which invests before the IPO is made available to the public as per SEBI regulations. Anchor portion is part of the public issue, so the IPO portion to the public (QIB portion) is reduced to that extent. As initial investors, these anchors make the IPO process more attractive for investors, and instil confidence in them. Anchor investors also largely aid in price discovery of the IPO

Anchor placement story of Pyramid Technoplast IPO

On 17th August 2023, Pyramid Technoplast IPO completed the bidding for its anchor allocation. There was a sound response as the anchor investors participated through the process of book building. A total of 16,59,600 shares were allotted to a total of 4 anchor investors. The allocation was done at the upper IPO price band of ₹166 which resulted in an overall allocation of ₹27.55 crore. The anchors have already absorbed 18% of the total issue size of ₹153.05 crore, which is indicative of fairly robust institutional demand.

Listed below are the 4 anchor investors who got allotted the full 100% of the total anchor allocation quota for the Pyramid Technoplast IPO. The entire anchor allocation of ₹27.55 crore was spread across these 4 major anchor investors. These 4 anchor investors listed below accounted for 100% of the total anchor allocation of Pyramid Technoplast IPO.

Data Source: BSE Filings

While the GMP has remained steady and robust at around ₹25 levels, it shows an attractive premium of 15.06% on listing. This has led to reasonable anchor response with the anchors taking in 18% of the total issue size. The QIB portion in the IPO will be reduced to the extent of the anchor placement done above. Only the balance amount will be available for QIB allocation as part of the regular IPO.

The general norm is that, in anchor placements, smaller issues find it hard to get FPIs interested while larger issues do not interest mutual funds. Pyramid Technoplast Ltd has not seen too much of a participation from domestic funds or from the large FPIs and the investments have come in more from dedicated long only funds in the Indian market. Most FPIs have been wary of very small sized issues and that could be one reason for investors staying away from the anchor allocation.

Brief on the Pyramid Technoplast Ltd business model

Pyramid Technoplast Ltd was incorporated in the year 1997 to manufacture polymer-based molded products. These products are more popularly called Polymer Drums and are principally used for packaging in industries like chemicals, agrochemicals, specialty chemicals, and pharmaceutical sectors. It is specialized molding products that can handle high temperatures and also volatile chemicals. Some of its key products include polymer-based bulk packaging drums and Intermediate Bulk Containers (IBC). It also specializes in the manufacture of MS Drums for packaging and transporting of volatile chemicals, agrochemicals, and specialty chemicals.

Pyramid Technoplast Ltd currently has 6 manufacturing units, of which 4 are located in GIDC, Bharuch in the state of Gujarat. The other 2 manufacturing units are located in Silvassa, Dadra & Nagar Haveli, which is a union territory between Gujarat and Maharashtra. Pyramid Technoplast Ltd has total polymer drum manufacturing capacity of 20,612 MTPA (million tonnes per annum), IBC manufacturing capacity of 12,820 MTPA (million tonnes per annum) and MS Drums manufacturing capacity of 6,200 MTPA (million tonnes per annum). It is currently foraying into building its seventh plant, which would also be located in GIDC, Bharuch.

The company is certified by the UN based on the United Nations Recommendation for IBC and MS Drums to meet safety standards that are acceptable globally. Its business is broadly divided into the IBC Containers vertical, MS Barrels vertical and the Plastic Barrels vertical. Some of the premium clients of Pyramid Technoplast for its polymer based packaging solutions include some of India’s premier specialty chemicals and FMCG companies. Some of the big client names include Gujarat Alkalis & Chemicals Ltd (GACL), Deepak Nitrite, United Phosphorus (UPL), Patanjali Group, Adani Wilmar Ltd, Apar group, Alkyl Amines, Asian Paints and the JSW Group, owned by the Jindal family. The issue will be lead managed by PNB Investment Services Ltd and First Overseas Capital Ltd. Bigshare Services Private Ltd will be the registrar to the issue.