Bhavik Enterprises IPO Set for BSE SME Debut with Flat Grey Market Premium
Bhavik Enterprises, a polymer trading company, is set to list on the BSE SME platform on October 6 after a Rs 77.00 crore IPO. The IPO was subscribed 1.07 times overall, with Non-Institutional Investors at 1.30 times and Retail Investors at 0.67 times. The grey market shows no premium, suggesting a possible listing around the issue price of Rs 140.00 per share. The company's financials show a 6% revenue increase to Rs 531.46 crore in FY23, but a 28% decrease in profit to Rs 5.68 crore. IPO proceeds will primarily fund working capital requirements (Rs 47.50 crore) and general corporate purposes (Rs 7.10 crore).
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Bhavik Enterprises, a polymer trading company, is poised to make its debut on the BSE SME platform on October 6, following a Rs 77.00 crore Initial Public Offering (IPO). The company's entry into the public market comes with mixed signals, as reflected in its subscription rates and grey market performance.
Subscription Details
The IPO garnered an overall subscription of 1.07 times, indicating a lukewarm response from investors. Here's a breakdown of the subscription rates:
| Investor Category | Subscription Rate |
|---|---|
| Non-Institutional Investors | 1.30 times |
| Retail Investors | 0.67 times |
Grey Market Performance and Listing Expectations
The grey market, often considered a barometer for listing day performance, shows no premium for Bhavik Enterprises shares. This suggests that the stock may list around its issue price of Rs 140.00 per share, potentially indicating a muted debut on the BSE SME platform.
Company Overview and Financials
Bhavik Enterprises operates on a stock-and-sale model, importing and selling polymers such as Polyethylene and Polypropylene to plastic manufacturers across India. The company's recent financial performance presents a mixed picture:
| Financial Metric | FY23 | FY22 | Year-on-Year Change |
|---|---|---|---|
| Revenue | Rs 531.46 crore | Rs 501.38 crore | 6% increase |
| Profit After Tax | Rs 5.68 crore | Rs 7.89 crore | 28% decrease |
The decline in profit despite revenue growth suggests margin pressure, which could be a point of concern for potential investors.
IPO Proceeds Allocation
The funds raised through the IPO are earmarked for specific purposes:
| Purpose | Amount (in Rs crore) |
|---|---|
| Working Capital Requirements | 47.50 |
| General Corporate Purposes | 7.10 |
Investor Considerations
While Bhavik Enterprises has shown revenue growth, the decrease in profitability and the underwhelming subscription rates, particularly in the retail segment, may warrant caution. The flat grey market premium further suggests that investors might be adopting a wait-and-watch approach.
As the company prepares for its BSE SME debut, market participants will be closely watching its listing performance and subsequent market behavior. Investors considering this IPO should carefully evaluate the company's business model, financial trends, and the competitive landscape of the polymer trading industry before making investment decisions.
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