Hi-Green Carbon IPO Review: Hi-Green Carbon is coming up with its Initial Public Offering. This IPO will be open for subscription on September 21, 2023, and closes on September 25, 2023. This is an SME (Small and Medium-sized Enterprise) IPO, and the company is going to be listed on the NSE SME Platform.
In this article, we will look at the Hi-Green Carbon IPO Review, analyze its strengths and weaknesses and see what unfolds.
Table of Contents
Hi-Green Carbon IPO Review : About the Company
Hi-Green Carbon Limited was incorporated in 2011, it is a part of the Radhe Group Energy, based in Rajkot, Gujarat, which focuses on renewable energy as its core with a diversified balanced portfolio stretching from castings, consumer goods, corporate farming, packaging and herbal products.
The company is engaged in the business of waste Tyre recycling. Following continuous pyrolysis, it processes end-of-life Tyre (ELT) pieces to produce energy components and raw materials.
Its major products are Recovered Carbon Black (rCB), sodium silicate and Steel Wires under the Raw Material Category, Fuel Oil and Synthesis Gas under the Energy components category.
The company’s production facility in Rajasthan is installed with a capacity of recycling 100 MT waste tyres per day. The company’s manufacturing plants operate on a continuous pyrolysis process, It is an uninterrupted working method with a continuous feeding and discharging system controlled by the program logic controller system.
The company is proposing a new manufacturing plant in the Dhule district of Maharashtra, with the capacity of recycling 100 MT waste tyres per day.
In FY23 the company generated 95.96% of its sales from domestic sales and the rest 4.04% from international sales, and the product sales breakdown is as follows Fuel oil 46.82%, Sodium Silicate Glass 30.98%, Recovered Carbon Black 22.06% and Steel Scrap and others 0.15%.
Product Portfolio
- Recovered Carbon Black: Recovered Carbon Black (rCB) is a processed solid residue created from the pyrolysis of end-of-life tyres (ELTs). It is used for Plastics, Toners and Printing Inks, Coatings, Tyres and Industrial Rubber Products, Activated carbon, As a fuel.
- Fuel Oil: Fuel Oil produced from Pyrolysis, sometimes also known as bio-crude or bio-oil, is a synthetic fuel under investigation as substitute for petroleum as it has higher energy content.
- Sodium Silicate: Sodium silicates are colourless glassy or crystalline solids, or white powders, they are readily soluble in water, producing alkaline solutions.
- Steel Wires: The steel tyre wires scrap are derived from shredding of waste tyres , which have high carbon content.
- Sodium Silicate Glass: It produces Sodium silicate glass also known as raw glass and the energy for this process is derived from the synthesis gas which is a by-product of the pyrolysis process.
Hi-Green Carbon IPO Review : Industry Overview
Agencies worldwide continue to project India as the fastest-growing major economy at 6.5%-7.0% in FY23, The Capital Expenditure (Capex) of the central government, which increased by 63.4 per cent in the first eight months of FY23, was another growth driver of the Indian economy in the current year.
The credit growth to the Micro, Small, and Medium Enterprises (MSME) sector has been remarkably high, over 30.6%, on average during Jan-Nov 2022, supported by the extended Emergency Credit Linked Guarantee Scheme (ECLGS) of the Union government. If inflation declines in FY24 and if the real cost of credit does not rise, then credit growth is likely to be brisk in FY24.
Significant initiatives have been introduced under the Aatmanirbhar Bharat and Make in India programs to enhance India’s manufacturing capabilities and exports across the industries.
Hi-Green Carbon IPO Review : Financials
If we look at the financials of Hi-Green Carbon, it has reported assets worth 33.10 Cr in FY21 and 43.87 Cr in FY23, the company’s assets have grown by ~35% over the last 3 years.
In FY21 and FY23 the company generated revenue of 24 Cr and 79 Cr, the company’s revenue has almost tripled over the last 3 years. The rise in revenue is accompanied by rising profits, which have increased from 0.09 Cr in FY21 to 10.84 Cr in 2023, the company’s profits have almost increased by 120 times over the last 3 years which is a good sign.
In terms of return ratios, in FY23 it had an ROE of 63.19% and an ROCE of 64.70%. These ratios indicate a good return to shareholders’ capital and an efficient use of company resources.
The company reported a Debt-to-equity ratio of 0.6 in FY23 which is a positive sign as the company has lower leverage in proportionate to its equity.
Financial Metrics
(Source: RHP of the company)
Competitors of Hi-Green Carbon
The company has no listed peers as mentioned in the RHP of the company.
Strengths of the company
- The company has a manufacturing plant that operates on a continuous pyrolysis process controlled by the Program Logic Controller system which is fully automatic and requires almost no human intervention.
- It has Permanent Demand and Wide Application of Products i.e. the fuel and recovered black carbon from recycling tyres is used for energy and plastic process, Tonner, tyre and rubber products etc.
- It is certified with Environmental Management Measures, Occupational Health & Safety Management standards Quality Management Standards, Good Manufacturing Practice (GMP), RoHS and the company’s product is REACH complied.
Weaknesses of the company
- The Company is dependent on a few customers for major sales. Loss of any of the large customers may affect revenues and profitability.
- The company’s domestic revenue mostly comes from its operations in Rajasthan, any adverse changes in the region can affect its operations and profitability.
- The company has not entered into long-term agreements for the supply of raw materials(Tyres) from select suppliers and any change in supply or relationship between the both can affect the company’s operations.
Hi-Green Carbon IPO Review : GMP
The shares of Hi-Green Carbon traded at a premium of 66.67% in the grey market on September 19, 2023. The shares traded at ₹125, this gives it a premium of ₹50 per share over the offer price of ₹75 per share.
Hi-Green Carbon IPO Review : Key IPO Information
| Particulars | Details |
|---|---|
| IPO Size | ₹52.80 Cr |
| Fresh Issue | ₹44.93 Cr |
| Offer for sale | ₹7.88 Cr |
| Opening date | September 21, 2023 |
| Closing date | September 25, 2023 |
| Face value | ₹10 per share |
| Price band | ₹71 to ₹75 per share |
| Lot size | 1600 |
| Minimum lot | 1(1600) |
| Maximum lots | 1(1600) |
| Investment Amount | ₹1,20,000 |
| Listing Date | October 4, 2023 |
Promoters: M/S RNG Finlease Private Limited, Mr. Amitkumar Hasmukhrai Bhalodi, Dr. Shaileshkumar Vallabhdas Makadia, Mrs. Krupa Chetankumar Dethariya, Mrs. Radhika Amitkumar Bhalodi, Mrs. Shriyakumari Shaileshkumar Makadia, and Mr. Koosh Chetanbhai Dethariya.
Book Running Lead Managers: Beeline Capital Advisors Private Limited.
Registrar to the Issue: Link Intime India Private Ltd.
Objectives of the Issue
The Proceeds from the Fresh Issue will be utilized towards the following objects.
- Setting up of new Manufacturing Unit in Maharashtra
- To Meet Working Capital Requirements
- General Corporate Purpose
- To meet Public Issue Expenses
In Closing
In this article, we looked at the Hi-Green Carbon IPO Review, through this article, we can see that the company has made good and consistent growth with increasing revenue and profits and has good potential to grow further in the future provided it increases its supplier base and area of operations.
Hi-Green Carbon IPO is an SME(Small and Medium-sized Enterprise) IPO, it is different from the mainline IPO as the investment required and the Lot size of the shares is larger. The minimum investment required and the Minimum/Maximum lot size for this IPO is ₹120000(1600 shares).
What do you think the future holds for the company? Are you applying for this IPO? Let us know in the comments below.
Written By Bharat
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