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Lohia Corp IPO: Lohia Corp. Ltd. is a leading manufacturer of machinery and equipment used to produce technical textiles, which are fabrics with specific functional properties, often used in packaging, agriculture, construction, and geotextiles. The company is a major player in the global plastic woven fabric machine market, boasting a dominant position in India.
Lohia Corp IPO Key Details:
- IPO Type: Offer for Sale (OFS) – Existing shareholders selling shares, no fresh capital raised by the company.
- IPO Dates: Yet to be announced. SEBI approval received in February 2023, but launch date and price band are still pending.
- Offer Size: Up to 31,695,000 equity shares.
Recent News Updates:
- Positive Sentiment: Lohia Corp. has strong financials with consistent revenue growth and market leadership. This, coupled with the growing demand for technical textiles, bodes well for the IPO.
- Market Volatility: Current market uncertainties due to global economic concerns might damp investor enthusiasm.
- Competition: Significant competition from domestic and international players could affect market share and profitability.
Lohia Corp IPO Offer Details:
Securities Offered:
- Equity Shares: The IPO will only involve ordinary equity shares of Lohia Corp. Ltd. with a face value of ₹1 per share. This means investors will directly own a stake in the company’s ownership and performance.
Reservation percentages:
- Retail Individual Investors (RII): 35% of the offer will be reserved for RII investors, providing them with an easier chance to participate.
- Qualified Institutional Buyers (QIBs): 50% of the offer will be reserved for QIBs, typically institutional investors like mutual funds and insurance companies.
- Non-Institutional Investors (NIIs): The remaining 15% will be available for Non-Institutional Investors, which primarily comprises high net-worth individuals and corporate entities.
Minimum Lot Size and Investment Amount:
- Minimum Lot Size: The minimum lot size for subscribing to Lohia Corp’s IPO is still undetermined. This value will be announced closer to the IPO launch date, typically falling within the range of 500-1000 shares.
- Minimum Investment Amount: Based on the face value of ₹1 per share and assuming a minimum lot size of 500 shares, the minimum investment amount would be ₹500. However, the final price band for the IPO is yet to be confirmed, so the actual minimum investment might differ.
Lohia Corp Ltd Company Profile:
History and Operations:
- Founded in 1981 as Lohia Starlinger Limited, a joint venture with Austrian giant Starlinger & Co. for circular loom manufacturing.
- Became Lohia Corp Ltd. in 2013 after Starlinger’s exit.
- Offers a comprehensive range of machinery for woven polypropylene (PP) and polyethylene (PE) fabrics, serving diverse industries like packaging, agriculture, construction, and geotextiles.
- Operates through two manufacturing units in Kanpur, India, with a strong distribution network spanning over 90 countries.
Market Position and Share:
- Global leader in plastic woven fabric machinery, holding a dominant 55% market share in India and significant presence in emerging markets.
- Over 69,400 circular looms and 1650 extrusion lines installed worldwide, producing 5.67 million metric tons of PP & PE annually.
Prominent Brands and Partnerships:
- Lohia Starlinger and Reklamax are established brand names within the technical textiles machinery segment.
- Strategic partnerships with global players like Reifenhäuser and Brückner for specific technologies.
Key Milestones and Achievements:
- Successfully transitioned from a joint venture to a fully independent Indian company.
- Achieved consistent revenue growth exceeding industry averages, demonstrating strong financial performance.
- Continuous technological advancements and product innovations, like high-speed looms and energy-efficient solutions.
- Received prestigious awards and accolades for sustainable practices and environmental responsibility.
Competitive Advantages and USPs:
- Established brand reputation and proven track record in the industry.
- Extensive product portfolio catering to diverse customer needs.
- Vertically integrated operations for cost control and quality assurance.
- Strong focus on R&D and innovation, driving future growth.
- Robust global presence and distribution network.
Lohia Corp Ltd Financials:
- Revenue: Consistent and robust growth, averaging over 20% year-on-year for the past 5 years. This reflects strong demand for technical textiles machinery, particularly in emerging markets.
- Profitability: Healthy operating margins in the range of 20-25%, with net profit margins exceeding 10%. This demonstrates efficient operations and cost control.
- Debt: Debt levels are moderate, with a debt-to-equity ratio below 1. This provides financial flexibility and room for future investments.
Key Financial Ratios:
- P/E Ratio: Based on historical data and estimated IPO price, the P/E ratio could fall within the range of 15-20. This is comparable to industry peers and suggests a reasonable valuation.
- Debt-to-Equity Ratio: As mentioned earlier, the debt-to-equity ratio below 1 signifies a healthy financial position and strong creditworthiness.
Growth Prospects and Earnings Drivers:
- Growing technical textiles market: The global technical textiles market is projected to reach over $250 billion by 2028, driven by factors like urbanization, infrastructure development, and increasing environmental awareness. This bodes well for Lohia Corp.’s future growth.
- Expanding international presence: The company is actively expanding its presence in emerging markets like Africa and Latin America, offering significant growth potential.
- Focus on innovation and new product development: Continuous investments in R&D and development of new machinery with higher efficiency and productivity can further strengthen Lohia Corp.’s competitive edge.
Lohia Corp IPO objectives:
Reasons for going public:
- Raise capital for growth: Lohia Corp. aims to raise capital through the IPO to primarily:
- Expand production capacity through setting up new manufacturing facilities or upgrading existing ones.
- Strengthen its global distribution network and market reach, particularly in emerging markets.
- Enhance R&D capabilities and accelerate innovation in new machinery and technologies.
- Reduce debt burden, if any, potentially lowering financing costs and improving financial flexibility.
- Enhance brand visibility and credibility: Public listing can improve Lohia Corp.’s brand image and recognition, creating a positive impact on market perception and attracting talent.
- Provide an exit route for existing shareholders: Some existing shareholders, including promoters, may want to partially exit their investments and unlock liquidity through the IPO.
Utilization of raised funds:
The specific allocation of IPO proceeds will be outlined in the final prospectus. However, based on the aforementioned reasons, the funds are likely to be directed towards:
- Capital expenditure: Expanding manufacturing facilities, acquiring new equipment, and upgrading existing technology.
- Market expansion: Establishing new sales and service offices in key markets, investing in marketing and brand building initiatives.
- R&D investment: Developing new machinery with improved efficiency and productivity, exploring new technologies like automation and digitalization.
- Debt repayment: Potentially reducing outstanding debt to optimize the capital structure and improve financial health.
Lohia Corp IPO Risks:
Industry Headwinds:
- The global technical textiles market, while promising, is also characterized by intense competition from both domestic and international players. This competition could put pressure on Lohia Corp.’s margins and market share.
- Fluctuations in raw material prices, particularly for polypropylene and polyethylene, could impact production costs and profitability.
- Dependence on exports makes Lohia Corp. vulnerable to currency fluctuations, potentially affecting revenue and profit margins.
Company-Specific Challenges:
- Execution Risk: Despite a clear growth strategy, successful execution of expansion plans and R&D investments will be crucial for maximizing the impact of the IPO funds. Delays or setbacks in implementation could negatively affect investor confidence.
- Debt burden: While Lohia Corp.’s current debt levels are manageable, the IPO might involve raising additional debt. Investors should carefully assess the potential impact of increased debt on the company’s financial health and future flexibility.
- Limited track record as a public company: As Lohia Corp. is a new entrant to the public market, investors may perceive higher uncertainty regarding its future performance compared to established publicly traded companies.
Financial Health Analysis:
- Lohia Corp. boasts strong financial performance with consistent revenue growth, healthy profitability, and moderate debt levels. This suggests a robust financial foundation.
- However, potential investors should scrutinize the company’s detailed financial statements in the final prospectus for any red flags, such as contingent liabilities, unusual accounting practices, or sudden changes in financial metrics.
Lohia Corp Limited – DRHP
Also Read: How to Apply for an IPO?
