High risk appetite investors can consider Plastene India IPO: SMC

SMC Investments and Advisors is of the view that investors with a high risk appetite can consider subscribing to the initial public offering of Plastene India.

The company has entered the capital market to raise between Rs 75 crore and Rs 78 crore by issuing shares in the price band of Rs 81-84 apiece of a Rs 10 face value.

“Plastene India appears to be a midsized player in the plastic segment. Hence, it may be difficult to get a healthy profit margin in the future. The issue at 24 P/E multiple and 1.52 P/BV seems very richly valued,” the report said.

The company is available at a P/E of 24.72 while peers like Jumbo Bag and Emmbi Polyarns are quoting a P/E of 14.77 and 7.44, respectively, the report said.

Plastene India manufactures transport and storage containers, woven sack products, laminates structures for food and non-food applications and a range of high tenacity polypropylene multifilament yarn – dope dyed.

It plans to use the IPO proceeds to expand manufacturing facilities and purchase plant and machinery for manufacturing its new product, block bottom valve bags, at Nani Chirai, as well as to expand its manufacturing facilities at Rajpur.