Shakti Polytarp SME IPO

Strengths · 8

• 01This is the cheapest issue in the current SME batch on earnings, at about 10.05 times on an EPS of Rs 5.87.
• 02Sales have grown more than three times in two years, from Rs 62.23 crore in FY2024 to Rs 166.50 crore in FY2025 and Rs 216.10 crore in FY2026.
• 03Profit has grown enormously over the same period, from Rs 0.98 crore to Rs 10.06 crore.
• 04EBITDA improved from Rs 3.83 crore in FY2024 to Rs 19.29 crore in FY2026.
• 05Return on net worth is very high at 44.04%.
• 06It sells under its own brand Dinotarp rather than only doing unbranded job work.
• 07Its focus on six-layer and eight-layer tarpaulins targets the more durable end of the market rather than competing only on the cheapest grades.
• 08The products go into agriculture, construction, automotive, transport and consumer goods, so demand is spread across sectors.

Risks · 10

• 01Debt is very high. Total borrowing was Rs 72.51 crore against a net worth of only Rs 27.86 crore, a debt to equity ratio of 2.60, and it has more than tripled in two years from Rs 23.36 crore.
• 02The high return on net worth of 44.04% is largely a product of that leverage. RoCE, which is the better measure here, is much lower at 17.87%.
• 03The profit margin is thin at 4.66%.
• 04None of the issue money repays debt. Rs 20.88 crore of the Rs 26.93 crore issue goes into capital expenditure, so the borrowing stays where it is.
• 05The company is young, having been set up only in March 2018.
• 06The raw material is polymer granules, whose price follows crude oil and is outside the company's control.
• 07A part of the revenue comes from simply selling plastic granules, which is trading and earns less than manufacturing.
• 08Tarpaulins are close to a commodity, with many manufacturers competing largely on price.
• 09Promoter holding will come down from 90.9% to 66.67% after the issue.
• 10This is an SME issue. One lot is 2,000 shares, which is about Rs 1.18 lakh at the upper band of Rs 59, and SME shares usually trade in low volume after listing.

Shakti Polytarp Ltd was set up in March 2018. It makes tarpaulins and other plastic based products including shade nets. A tarpaulin is a water resistant sheet used to cover and protect goods, equipment and material from rain, moisture and sunlight.

It makes its tarpaulins from polypropylene granules along with linear low density, low density and high density polyethylene. The sheets come in different sizes, colours, thicknesses and specifications as the customer asks, and the company places particular emphasis on six-layer and eight-layer tarpaulins, which are the more durable grades. Its products are sold under the brand name Dinotarp.

Its tarpaulins are used across agriculture, construction, automotive, transportation and logistics, consumer goods and other industries. The company works mainly business to business, supplying bulk orders to industrial customers, while also selling to individual consumers. Alongside making tarpaulins it also sells plastic granules, which are the raw material used in that manufacturing. It offers design and customisation depending on what the product will be used for.

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