Quality Foils IPO Details [2023] - Learn Important Insights

Quality Foils IPO, Quality Foils SME IPO, Quality Foils IPO Details, Quality Foils IPO Review, Quality Foils IPO Date

Quality Foils IPO subscription is opening up on 14^th March 2023 till 16^th March 2023. According to the prospectus, the IPO consists of a fresh issue of 754,000 Equity Shares aggregating to INR 4.52 Cr. There is no offer for sales in the IPO issue. The Equity Shares have a face value of Rs 10 each. The retail allocation is 50% of the total size.

Quality Foils IPO – The Company Business Description

Quality Foils is engaged in manufacturing and exporting Cold Rolled Stainless Steel Strips or Coils and Stainless-Steel Flexible hose pipes in India. The company has over thirty years of experience in the manufacturing of stainless-steel products.

The products can be broadly categorized into two broad categories – Cold Rolled Stainless Steel Coils/Strips and Stainless-Steel Flexible Hose Pipes.

The products sold under the brand name “Quality” have various applications such as kitchen sinks, automobiles, and many other heavy engineering sectors.
Quality Foils has one manufacturing plant located at Industrial Development Colony, Hisar, Haryana.
The company has a total installed capacity of 12,000 MT per annum for CR Stainless steel coils/strips and 2,00,000 meters per annum for SS Hose pipes.
The products are exported to more than seven countries including Germany, the UK, the Philippines, Sri Lanka, Turkey, Poland, and Bogota Colombia.

Quality Foils (India) Limited Founders and Leadership team

Mr. Kuldip Bhargava is one of the promoters and Chairman of Quality Group of companies. He is also the president of the Hisar Industries Association currently. He has strong experience in the industry.

Mr. Tejasvi Bhargava is one of the promoters and Managing Director of the company.

Quality Foils (India) Limited Revenue and Profit

Quality Foils (India) has recorded strong revenue from operation for FY2022 that reached Rs. 17,978.58 lakhs from Rs. 12,398.37 lakhs in FY 2020. For the Period ended September 2022, the company registered total revenue of Rs. 10,471.59. The revenues from exports aggregated Rs. 235.80 lakhs, Rs. 1,030.16 lakhs, and Rs. 728.30 lakhs for the period ended Fiscals 2022, 2021, and 2020, respectively. Export contributed 2.25%, 5.71%, 5.86%, and 2.13%, respectively from the total revenue from the operation.

Quality Foils IPO Review : Financial Snapshot

All amounts in INR Lakhs (Year ended March 31)	2020	2021	2022	September 30 , 2022
Revenue Operation	15,146.59	12,398.37	17,978.58	10,445.27
Total Income	15,210.77	12,436.67	18,030.63	10,471.59
Profit After Tax	107.87	95.86	161.88	205.99
Earnings Per equity Share-Diluted	7.70	6.85	11.56	5.29
Net Cash from Operating Activities	618.16	393.69	(176.72)	840.80
Debt/Equity Ratio	2.40	2.28	2.44	1.80
RoE %	12.02	8.07	5.23	5.86
ROCE (%)	8.34	12.56	11.89	13.57

Objective Behind the Quality Foils IPO

Out of the net proceeds of this IPO, the company is planning to spend INR 151.21 lakhs to meet the capital expenditure requirements toward the purchase of machinery
The rest of the net proceeds will be utilized to meet the Working Capital Requirements and General Corporate Purpose.

Quality Foils IPO: Do you invest?

Quality Foils (India) Limited registered a strong total revenue in FY2022. However, the growth was stagnant over the period from FY 2020 to FY2022.
The company has witnessed significant growth in PAT from INR 96 lakh in FY 2021 to INR 162 lakh in FY 2022. PAT for the period ended September 2022 was Rs. 205.99 lakh.
The EPS has also gone up from 7.70 in FY 2020 to 11.56 in FY2022.
However, net cash flow from operating activities was negative for FY 2022.
The debt-to-equity ratio of the company is quite high over the period from FY2020 to FY2022. For FY2022 debt to equity ratio was 2.44 which is quite high.
The metal sector is cyclical and Global growth is forecast slow during 2023 and 2024, with a slowdown in Auto Industries.
Indian economy is fundamentally strong and China opening up may be helpful to this industry.
However, looking at the financials and factors mentioned above, I would prefer to avoid or be cautious about this SME IPO at the moment.