Stallion India Fluorochemicals IPO Day 2: A Promising Start
Stallion India Fluorochemicals Ltd, a key player in the distribution of industrial gases and refrigerants, launched its Initial Public Offering (IPO) on January 16, 2025, aiming to raise ₹199.45 crore. The shares are set to be traded on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Just a day prior to the IPO opening, the company successfully raised ₹59.83 crore from six institutional investors through its anchor book, indicating strong initial interest from the market.
IPO Structure and Subscription Details
The Stallion India IPO has a lot size of 165 equity shares, with additional purchases required in multiples of this figure. The allocation of shares in the public offering is strategically divided: 50% for qualified institutional buyers (QIB), 15% for non-institutional investors (NII), and 35% reserved for retail investors.
As of the second day of subscription, the IPO has garnered significant attention, being subscribed 32.06 times by 5:00 PM IST, according to BSE data. The initial share sale received bids for 49,73,74,020 shares against the 1,55,12,978 shares on offer. Notably, the retail investor segment saw a subscription rate of 30.93 times, while the NII portion was subscribed 77.04 times. The QIB segment, however, was booked at 31%.
On the first day of bidding, the IPO was subscribed 7.08 times, showcasing a growing interest as the days progressed.
Company Overview and Market Position
Stallion India Fluorochemicals specializes in the distribution of refrigerants and industrial gases, alongside related products. The company engages in debulking, blending, and processing these gases, as well as marketing pre-filled cans. Its diverse clientele spans various industries, including air conditioning and refrigeration, firefighting, semiconductor manufacturing, automotive production, pharmaceuticals, glass bottle production, aerosol manufacturing, and spray foam applications.
With four operational facilities, Stallion India is well-positioned in the market. Its competitors include notable names such as Navin Flourine International Ltd (P/E of 70.82), SRF Ltd (P/E of 49.30), and Gujarat Fluorochemicals Ltd (P/E of 108.36), indicating a competitive landscape.
Expert Reviews and Recommendations
Stoxbox Analysis
According to Prathamesh P Masdekar, a Research Analyst at Stoxbox, Stallion India is strategically expanding its operations across various domestic locations to capture market demand. The company is also focusing on enhancing product accessibility to widen its customer base and boost revenue. This approach not only optimizes the use of processing facilities but also improves cash flow.
Masdekar highlights the company’s shift towards high-margin products, which is expected to enhance profitability. With a fair valuation at a P/E ratio of 35.4x based on FY24 earnings, he recommends a "SUBSCRIBE" rating for the IPO.
Bajaj Broking Insights
Bajaj Broking emphasizes Stallion India’s strong market position due to its high-quality, cost-effective products. The company’s strategic focus on high-margin offerings is anticipated to bolster profitability. With a solid financial track record, the IPO appears reasonably priced, making it a suitable option for medium to long-term investors.
IPO Utilization of Funds
The ₹199.45 crore IPO comprises a fresh issue of ₹160.73 crore and an offer-for-sale (OFS) of 43,02,656 equity shares by the promoter. The funds raised will be utilized for various purposes, including meeting additional working capital requirements and financing capital expenditures for its semiconductor and specialty gas debulking and blending facility in Khalapur, Maharashtra, as well as its refrigerant facility in Mambattu, Andhra Pradesh.
Shazad Sheriar Rustomji, Chairman & Managing Director, stated, "These investments will enable us to embark on a new phase of growth and expansion."
Grey Market Premium Insights
As of today, the grey market premium (GMP) for Stallion India Fluorochemicals IPO stands at +₹38, indicating that shares are trading at a premium in the grey market. This suggests a potential listing price of approximately ₹128 per share, which is 42.22% higher than the IPO price of ₹90. The grey market premium reflects investor confidence and willingness to pay above the issue price.
Conclusion
The Stallion India Fluorochemicals IPO has made a strong impression in its early days, with significant subscription rates and positive expert reviews. As the company aims to expand its operations and enhance profitability through strategic investments, it presents an intriguing opportunity for investors looking to enter the industrial gases and refrigerants market. With the IPO set to conclude on January 20, 2025, investors are keenly watching the developments and potential listing outcomes.
Disclaimer: The views and recommendations presented are those of individual analysts and experts, and investors are advised to consult certified professionals before making any investment decisions.