What you must know about the Quality Foils India IPO

Quality Foils India Ltd, is an SME IPO on the NSE which is opening for subscription on 14th March 2023. The company, Quality Foils India Ltd, was incorporated in 1990 to manufacture and export cold rolled stainless strips and cold rolled coils; better known as CR coils. It also manufactures stainless steel flexible hoses. Most of its raw materials are procured from Jindal Stainless Hissar. With over 30 years track record in the market, the company has established a strong brand in the domestic and the international market.

The products manufactured by Quality Foils India Ltd are used in the manufacture of downstream SS Tubes, kitchen sinks, stainless steel hoses, utensils etc. In addition, the products manufactured by Quality Foils also find application extensively in the automotive industry. The flexible hose pipes find application in high temp and medium pressure hydraulic oil, steam, and gas applications etc. They also find application in sectors like sugar, petrochemicals, steel, and power sector. The fresh funds will be used by the company to fund its capex for new machinery and for working capital requirements.

Key terms of the SME IPO of Quality Foils India Ltd

Here are some of the highlights of the Quality Foils India IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 14th March 2023 and closes for subscription on 16th March 2023; both days inclusive.
   

• The company has a face value of Rs. 10 per share and the issue price for the fresh issue portion has a fixed price of Rs. 60 per share.
   

• The company will issue a total of 7.54 lakh shares at the price of Rs60 per share aggregating to a total fund raising of Rs. 4.52 crore.
   

• The company has allocated 50% of the issue size for the retail investor while the balance 50% is allocated to HNI / NII investors.
   

• The minimum lot size for the IPO investment will be 2,000 shares. Thus, retail investors can invest a minimum of Rs. 120,000 (2,000 x Rs60 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO.
   

• HNI / NII investors can invest a minimum of 2 lots comprising of 4,000 shares and having a minimum lot value of Rs. 240,000. There is no upper limit on what the HNI / NII investors can apply for.
   

• Like every SME IPO, this issue also has a marketing making portion with a market maker portion allocation of 38,000 shares. Khambatta Securities will act as the market maker to the issue providing two-way quotes to ensure liquidity on the counter.
   

• The company has been promoted by Kuldip Bhargava and Tejaswi Bhargava and the promoter stake in the company stands currently at 72.8%. Post the IPO, being a fresh issue of shares, the promoter stake will be get diluted proportionately.

While Khambatta Securities Ltd will also be the lead manager to the issue, Bigshare Services Private Limited will be the registrar to the issue.

Key dates to be aware of in the Quality Foils India Ltd IPO (SME)

The SME IPO of Quality Foils (India) IPO opens on Tuesday, March 14th, 2023 and closes on Thursday March 16th, 2023. The Quality Foils (India) IPO bid date is from March 14th, 2023 10.00 AM to March 16th, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is the 16th of March 2023.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account.

Financial highlights of Quality Foils India Ltd

The table below captures the key financials of Quality Foils India Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

The profit margins have been fairly low and the sales growth has been quite erratic. However, the company has an established model with a matured market. However, investors must remember that this is a traditionally low margin business. That could be an overhang on valuations.