Stallion India Fluorochemicals IPO Day 2 Highlights: Issue booked 32.12x so far. Check GMP, subscription status, review

Stallion India Fluorochemicals IPO was booked 32.12 times at the end of the second day. The QIB portion was booked 0.31 times, while the NII portion was subscribed 77.08 times. The retail portion garnered 31.03 times bids.

Stallion India Fluorochemicals was incorporated as a private limited company, Stallion India Fluorochemicals Private Limited, in Mumbai on September 5, 2002, under the Companies Act, 1956, and was granted its certificate of incorporation by the Registrar of Companies (RoC).

In a significant development, the company changed its name to Stallion India Fluorochemicals Limited following a special resolution passed by its shareholders on August 7, 2023. This change was accompanied by the issuance of a fresh certificate of incorporation on October 5, 2023, marking the company’s conversion into a public limited entity under the Companies Act, 2013.

Additionally, Stallion India Fluorochemicals acquired Stallion Enterprises, the proprietary firm owned by Shazad Sheriar Rustomji, on a slum sale basis, as per the slum sale agreement dated September 30, 2023.

• The company's revenue depends on refrigerant gas sales in specific regions like Maharashtra and Delhi, and any decline in demand could impact growth, sales, earnings, and cash flow.
• Increases in raw material costs, which account for 65.99% of the company’s purchases in FY24, could adversely affect its financial performance, as it lacks long-term supply contracts.
• Stallion imports most raw materials from China, and any import restrictions could impact business operations and results.
• The company is in a dispute with Zhejiang Sanmei Chemical over contractual obligations and payments, and potential legal proceedings could impact its financial condition, reputation, and operations.
• The business is highly dependent on seasonal patterns, with a significant portion of turnover concentrated between February and May. This leads to operational challenges in production capacity, supply chain management, and delivery logistics.
• The company relies on blanket purchase orders from a limited number of customers without long-term agreements, and the loss of any key customer or reduced orders could negatively affect revenue, cash flow, and financial stability.
• The company is exposed to foreign exchange risks due to imports from China, with import costs representing 85% and 77% of revenue in H1FY25 and FY24, respectively. These fluctuations are a potential risk to the company's financial performance.

➢ Geographical Expansion and Product Optimization

The company has a strategic vision to diversify its existing product portfolio by incorporating new products that align with its current offerings and operations. The proposed HFO debulking and HFO/HFC blending facility at Mambattu demonstrates this vision of portfolio diversification. Additionally, the company is focused on expanding its facilities to other key domestic locations to capture market demand from industries concentrated in those areas. This expansion will help broaden the company’s customer base and enhance revenue. By optimizing its processing facilities, the company aims to increase cash flow.

➢ Continuing Focus on Innovation and Leveraging Chemistries and Technology Absorption

Building on their experience, the company will continue to use its expertise in complex chemicals and engineering to introduce new products. The focus will be on adding value-added products that complement their core offerings, including new types of gases. With the rise in demand from initiatives like Make in India, particularly in sectors such as semiconductors, electronics, defense manufacturing, and pharma equipment, the company is focusing on adding environmentally friendly gases like HFOs and specialty gases. These gases are more sustainable and widely accepted in global industries.

➢ Trusted Choice for Quality, Innovation, and Growth

The company’s products are used across various industries, including air conditioning, cold chain, firefighting, pharma, electricity transmission and distribution, automobile manufacturing, and consumer cans. Their commitment to innovation ensures they remain at the forefront of industry advancements, consistently delivering cutting-edge solutions that meet the evolving needs of customers. Over the years, the company has built long-term relationships and earned trust across industries, with strong recognition for its product quality. The company is committed to growth by expanding its reach to a diverse customer base, offering products that not only meet the highest standards but also provide tangible value, delivering reliable and cost-effective solutions to customers.

➢ Customer Relationship Management

In the highly competitive gas industry, building strong relationships with customers is crucial. A focused Customer Relationship Management (CRM) strategy is essential to understanding, satisfying, and retaining customers. By following this comprehensive CRM approach, the company can not only build and maintain strong customer relationships but also become a trusted industry partner. This leads to increased customer loyalty, higher customer lifetime value, and a competitive edge in the ever-changing refrigerant and specialty gas market.

Source: RHP, Anand Rathi Research

They have four facilities located in Khalapur (Maharashtra), Ghiloth (Rajasthan), Manesar (Haryana) and Panvel (Maharashtra). Each of these facilities is designed and equipped to store gases in a controlled environment, ensuring adherence to the safety standards.

Incorporated in 2002, Mumbai-based Stallion India Fluorochemicals is engaged in the business of selling refrigerant and industrial gases and related products. Its primary business includes debulking, blending, and processing refrigerant and industrial gases, as well as selling pre-filled cans and small cylinders/containers.

The gases find application in various industries/segments such as air conditioners & refrigerators, fire fighting, semiconductor manufacturing, automobile manufacturing, pharma and medicals, glass bottle manufacturing, aerosols, and spray foam.

It offers a variety of products that make the company distinct in the industry. By using knowledge of its clients' industries and expertise in gases and engineering, it provides customized solutions to help businesses operate more efficiently. The company’s goal is to streamline operations and improve productivity.

• Funding incremental working capital requirements of our Company
• Funding capital expenditure requirements for our Semiconductor & Specialty Gas debulking & blending facility (“Khalapur, Maharashtra”)
• Funding capital expenditure requirements for our Refrigerant debulking & blending facility (“Mambattu, Andhra Pradesh”)
• General corporate purposes

Stallion India Fluorochemicals is engaged in the business of a variety of refrigerant and industrial gases. The company has carved a unique space in the segment with quality and cost-effective products. It holds a prominent position in the fluorochemicals industry, with a market share of 10%. With its planned business strategy and capex investments, there is significant potential to improve earnings in the coming years.

On the valuation front, at the upper band, the company is fairly priced with a P/E ratio of 48x, based on FY24 earnings post the equity share issuance. We believe the company has room for business growth, driven by industry tailwinds and scalability.

Therefore, we recommend a “SUBSCRIBE – long term” rating for the IPO.

Stallion India Fluorochemicals IPO GMP today is ₹42. At current GMP and IPO price of ₹90, the stock could list at ₹132, a premium of 47% over IPO price.

Stallion India Fluorochemicals IPO was booked 8.91 times so far on the second day of the bidding process on Friday. QIB portion was subscribed 0.04 times, NII portion 13.76 times and the retail portion 11.89 times.

The bidding for Stallion India Fluorochemicals IPO kicked off for the second day on Friday. Investors can place their bids till 5 pm today. The issue will close on Monday, January 20.

The initial public offer of Stallion India IPO has been subscribed 7.08x on the first day of subscription today, at 17:00 IST, as per BSE data.

The initial share sale received bid for 10,97,82,090 shares against 1,55,12,978 shares on offer, according to BSE.

The portion for retail investors received 9.69 times subscription while the quota for non-institutional investors got subscribed 10.36 times. The qualified institutional buyers (QIBs) part is booked 4%.

By capitalizing on these opportunities, Stallion India fluorochemicals limited having a strong market recognition plans to diversify existing product portfolio by incorporating new products that align with current offerings and current operations. The company focus will remain on innovation and leveraging chemistries and technology expertise. Investors looking to invest can invest in the IPO for the long term.

The company has four Plants in Khalapur, Raigad (Maharashtra), Ghiloth, Alwar (Rajasthan), Manesar, Gurugram (Haryana) and Panvel, Raigad (Maharashtra).

"As we prepare for our IPO, we take great pride in reflecting on our journey and accomplishments. Operating from four facilities, our company serves gases to multiple industries and has built a strong reputation among clients through consistent service and reliability.

The IPO funding will support capital expenditure at our Khalapur, Maharashtra, and Mambattu, Andhra Pradesh plants for semiconductor and specialty gas debulking and blending, as well as refrigerant debulking and blending facilities and addressing incremental working capital needs. These investments position us to drive a new phase of growth and expansion," said Shazad Sheriar Rustomji, Chairman & Managing Director.

The initial public offer of Stallion India IPO has been subscribed 4.94x on the first day of subscription today, at 14:51 IST, as per BSE data.

The initial share sale received bid for 7,66,82,265 shares against 1,55,12,978 shares on offer, according to BSE.

The portion for retail investors received 7.24 times subscription while the quota for non-institutional investors got subscribed 6.15 times. The qualified institutional buyers (QIBs) part is booked 2%.

• Geographical expansion and product optimization.
• Trusted Choice for Quality, Innovation, and Growth.
• Continuing focus on innovation and leveraging chemistries and technology absorption.
• Customer Relationship Management.

• Engaged in the refrigerant and industrial gases business.
• The company has strong market recognition.
• It has a track record of strong financial performance.
• The IPO is priced at a fair valuation.
• Investment Recommendation: We recommend subscribing to the Stallion India IPO given its strong market position and financial performance.

The book running lead manager for the issuance is Sarthi Capital Advisors Private Ltd, while the Registrar for the issuance is Bigshare Services Private Ltd.

The company plans to use the net proceeds from the IPO to support incremental working capital needs, fund capital expenditures for its semiconductor and specialty gas debulking and blending facility located in Khalapur, Maharashtra, finance capital expenditures for its refrigerant debulking and blending facility in Mambattu, Andhra Pradesh, and for various corporate purposes. Anchor bidding is set to commence on January 15, 2025, and the issuance will conclude on January 20, 2025.

The initial public offer of Stallion India IPO has been subscribed 3.86x on the first day of subscription today, at 13:39 IST, as per BSE data.

The initial share sale received bid for 5,98,78,335 shares against 1,55,12,978 shares on offer, according to BSE.

The portion for retail investors received 5.84 times subscription while the quota for non-institutional investors got subscribed 4.38 times. The qualified institutional buyers (QIBs) part is booked 1%.

In the fiscal year 2024, the company recorded a revenue from operations amounting to ₹23,323.58 Lakhs, an EBITDA of ₹2,670.48 Lakhs, and a PAT of ₹1,478.83 Lakhs. As of September 24, the company has generated a revenue from operations of ₹14,073.15 Lakhs, with an EBITDA of ₹2,553.76 Lakhs and a PAT of ₹1,656.51 Lakhs.

As per the red herring prospectus (RHP), the company's listed peers are Navin Flourine International Ltd (with a P/E of 70.82), SRF Ltd (with a P/E of 49.30), and Gujarat Fluorochemicals Ltd (with a P/E of 108.36).

The initial public offer of Stallion India IPO has been subscribed 3.27x on the first day of subscription today, at 12:54 IST, as per BSE data.

The initial share sale received bid for 5,17,48,125 shares against 1,55,12,978 shares on offer, according to BSE.

The portion for retail investors received 5.07 times subscription while the quota for non-institutional investors got subscribed 3.73 times. The qualified institutional buyers (QIBs) part is booked 1%.

• Revenue from operations is restricted to certain geographies only.
• Increases in the cost of raw materials may impact its financial condition.
• Most of its raw materials are imported from China.
• Subject to risks arising from foreign exchange rate movements.

Incorporated in 2002, Stallion India Fluorochemicals Limited is engaged in the business of selling Refrigerant and Industrial Gases and related products. The company's primary business includes debulking, blending and processing Refrigerant and Industrial gases, and selling of pre-filled cans and small Cylinders/ Containers.

Specializing in various refrigerant and industrial gases, the company has established a strong market position by offering high-quality, cost-effective products. Its strategic shift towards high-margin products is expected to enhance profitability. The management remains optimistic about future earnings growth. Considering its financial track record, the issue seems reasonably priced, making it suitable for medium to long-term investment.

The initial public offer of Stallion India IPO has been subscribed 1.94x on the first day of subscription today, at 11:27 IST, as per BSE data.

The initial share sale received bid for 3,00,75,210 shares against 1,55,12,978 shares on offer, according to BSE.

The portion for retail investors received 3.00 times subscription while the quota for non-institutional investors got subscribed 2.05 times. The qualified institutional buyers (QIBs) part is yet to be booked.

• Strong Market recognition.
• Business model and ability to mitigate operational risk.
• Customer base across high growth industries and long-standing relationships with customers.
• Track record of consistent financial performance.
• Experienced Promoter and Key Managerial Personnel.

Stallion India IPO size is ₹199.45 crore. Stallion India shares will list in T category of securities as the mainboard IPO having size below ₹250 lists in trade-to-trade category.

The initial public offer of Stallion India IPO has been subscribed 85% on the first day of subscription today, at 10:33 IST, as per BSE data.

The initial share sale received bid for 1,32,36,300 shares against 1,55,12,978 shares on offer, according to BSE.

The portion for retail investors received 1.35 times subscription while the quota for non-institutional investors got subscribed 82%. The qualified institutional buyers (QIBs) part is yet to be booked.

Anchor Portion: up to 66,48,418 equity shares;  QIB Portion: Not More than 44,32,279 equity shares(Net off Anchor Portion); Non-Institutional Investors: Not Less than 3,324,210 equity shares* Retail Individual Investors: Not Less than 7,756,489 equity shares

The initial public offer of Stallion India IPO has been subscribed 13% on the first day of subscription today, at 10:09 IST, as per BSE data.

The initial share sale received bid for 20,36,595 shares against 1,55,12,978 shares on offer, according to BSE.

The portion for retail investors received 18% subscription while the quota for non-institutional investors got subscribed 20%. The qualified institutional buyers (QIBs) part is yet to be booked.

Avinash Gorakshkar, Head of Research at Profitmart Securities stated that the public issue is reasonably priced, and company management has claimed to be improving its margins and revenue. However, the company is working on high-margin products expected to improve quarterly earnings in upcoming quarters. Those with a medium to long-term view may apply for the book build issue.

Tentatively, Stallion India IPO basis of allotment of shares will be finalised on Wednesday, January 24, and the company will initiate refunds on Thursday, January 25, while the shares will be credited to the demat account of allottees on the same day following refund. Stallion India share price is likely to be listed on BSE and NSE on Monday, January 29.

Stallion India IPO has reserved not more than 50% of the shares in the public issue for qualified institutional buyers (QIB), not less than 15% for non-institutional Institutional Investors (NII), and not less than 35% of the offer is reserved for retail investors.

On January 15, one day prior to the commencement of the issue, this company raised ₹59.83 crore through the anchor book from six institutional investors. Saint Capital Fund, Ashika Global Securities, Craft Emerging Market Fund, Mint Focused Growth Fund, Ashika India Select Fund, and Leading Light Fund were the six anchor investors that took part in the anchor book.

Stallion India IPO GMP today or grey market premium is +48. This indicates Stallion India share price were trading at a premium of ₹48 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Stallion India share price was indicated at ₹138 apiece, which is 53.33% higher than the IPO price of ₹90.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.