Exxaro Tiles IPO – Issue Details, Review and Analysis
Exxaro Tiles is coming up with IPO that would open for subscription on 4th August 2021. Exxaro Tiles Ltd is engaged in the manufacturing and marketing activities of vitrified tiles in India. Company revenues are stagnant in the last few years. However, its margins are improving. Should you invest in Exxaro Tiles IPO? What are the risk factors in this IPO?
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About Exxaro Tiles Limited
Company is engaged in manufacturing and marketing of vitrified tiles used majorly for flooring solutions.
Its business operations are broadly divided into two product categories:”
1) Double Charge Vitrified Tiles: These are tiles that are fed through a press which “prints the pattern with a double layer of pigment, 3 to 4 mm thicker than other types of tiles. This process does not permit complex patterns but results in a long-wearing tile surface, suitable for heavy traffic commercial projects.
2) Glazed Vitrified Tiles: These tiles are flat slabs manufactured from ceramic materials such as clay, foldspar and quartz and other additives and tired at high temperatures to ensure high strength and low water absorption. These tiles are coated with glaze materials prior to the tiring process.
As on date, company supply products mainly in 6 sizes. They have 1,000+ designs in its product basket, which are marketed under its brand “Exxaro”.
They believe that their well-known brand series include Topaz Series, Galaxy Series, High Gloss Series, etc. They focus its research and development efforts on developing products which we believe are innovative and in line with the trends.
Exxaro Tiles IPO details
| IPO Opening Date | 04-Aug-21 |
| IPO Closing Date | 06-Aug-21 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 10 per equity share |
| IPO Price band | Rs 118 to Rs 120 per equity share |
| Lot Size | 125 Shares |
| Min Order Quantity | 125 Shares |
| Listing at | BSE and NSE |
| Issue Size | Total Size: Rs 161.09 Crores i) OFS: Rs 26.86 Crores ii) Fresh Issue: Rs 134.23 Crores |
What are Exxaro Tiles Limited competitive strengths?
1) Company has variety of vitrified tiles design choices in different sizes.
2) It has large dealer network with 2,000+ registered dealers.
3) Company has strong PAN India presence in 27 states of India.
4) It has international presence with export to 13+ countries across the globe.
5) Company is one of the largest manufacturing plants of glazed vitrified tiles in India.
What are the Objects of the IPO Offer?
Exxaro Tiles IPO size is Rs 161.09 Crores and it has two objects of the issue.
1) Offer for Sale (OFS) Rs 26.86 Crores: Under OFS selling shareholders would sell the shares and company would not get any proceeds from the issue.
2) Fresh issue of Rs 134.23 Crores: Fresh issue would be used towards funding the following:
i) To make repayment or prepayment of secured borrowings availed by the company.
ii) Working capital requirements.
iii) General corporate purposes.
Who are the Exxaro Tiles Limited Promoters?
Mr. Mukeshkumar Patel, Mr. Kirankumar Patel, Mr. Dineshbhai Patel, and Mr. Rameshbhai Patel are the company promoters.
How is the company financial track record?
Here are the total assets, revenue and profits of the company in the last 3 years.
| Particulars | FY19 | FY20 | FY21 |
|---|---|---|---|
| Total Assets | 3,582.5 | 3,870.5 | 3,693.1 |
| Revenues | 2,440.0 | 2,439.6 | 2,598.5 |
| Profit After Tax | 89.1 | 112.5 | 152.2 |
| Profit % | 3.65% | 4.61% | 5.86% |
Exxaro Tiles IPO dates for subscription, Allotment and Listing
| Offer Open | 04-Aug-21 |
| Offer close | 06-Aug-21 |
| Finalization of Allotment | 11-Aug-21 |
| Initiation of Refunds | 12-Aug-21 |
| Credit to Demat Account | 13-Aug-21 |
| IPO Shares Listing Date | 17-Aug-21 |
What is Exxaro Tiles IPO GMP?
GMP for Exxaro Tiles IPO is not known as there are no trades yet. GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about IPO price as it is unorganized market.
Is Exxaro Tiles IPO Price is underpriced or overpriced?
Its IPO price band is Rs 118 to Rs 120.
1) On the upper price band of Rs 120 and EPS of Rs 4.54 for FY21, the P/E ratio works out to be 26x.
2) For the last 3 years average EPS of Rs 3.83, the P/E ratio is 31x.
3) Means, the company asking price of Rs 120 on the upper price band in the P/E range of 26x to 31x.
5) There are listed peers like Orient Bell trading at P/E 61x (Highest) and Asian Granito trading at P/E 9.9x (Lowest) and industry average P/E of 42.7x. Hence Exxaro Tiles Share price at upper band of Rs 120 is fully priced.
Why to invest in Exxaro Tiles IPO?
Here are the positive factors in this company.
1) Exxaro Tiles is engaged in the manufacturing and marketing activities of vitrified tiles. It manufactures variety of vitrified tiles design with strong dealer network. It is one of the largest manufacturing plants of glazed vitrified tiles in India.
2) Company has strong PAN India presence and with international presence across 13+ countries across the globe.
3) Company’s margins are improving year on year. Its margins for FY19, FY20 and FY21 are 3.65%, 4.61% and 5.86%. Companies with improved margins can create value to shareholders.
Risk Factors in Exxaro Tiles IPO
1) Investors should always invest in company that is consistently growing. If you take Exxaro Tiles, there is no major growth in company revenues. Its revenues for FY19, FY20 and FY21 are at Rs 244 crores, 243.9 Crores and 258.9 Crores.
2) Volatility in supply and pricing of raw material can have adverse effect on the business.
3) Any shortage or non-availability of power, fuel and water facilities may adversely affect its vitrified tiles manufacturing process which can affect company business.
4) Company business require significant working capital for continued growth. Its inability to meet working capital can affect company business.
5) Company business is dependent on performance of real estate and infrastructure sector where its products are utilized. Any down trend or under performance of these sectors can affect company business
6) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.
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Exxaro Tiles IPO Review – Is it good or bad for investment?
Exxaro Tiles Limited is engaged in the manufacturing and marketing activities of vitrified tiles in India.
There is not much revenue growth in the last 3 years.
However, its margins are improving in the last 3 years.
Exxaro Tiles IPO price is fully priced.
In the current bull run, investors can subscribe to this IPO for listing gains only. In short, medium to long term unless we see revenue growth, no point in investing in such companies.
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