Unlike mainline IPOs that are vetted by the market regulator, SME IPOs are managed by exchanges.
Small and medium-sized enterprises (SMEs) may not always make headlines, but some of them are making investors laugh all the way to the bank.
In the past year, a select few SME IPO stocks have skyrocketed up to 1,200%, leaving many investors scratching their heads and asking, ‘Are you kidding me?’
SME exchange is a relatively recent phenomenon. BSE SME platform started in March 2012 while NSE SME IPO platform started later the same year.
Unlike mainline IPOs that are vetted by the market regulator, SME IPOs are managed by exchanges.
SME IPO platform was offered on exchange as a way for small companies to go public, as they did not meet the requirements related to profitability and net worth to go on main exchange.
If you’re looking for high-growth potential and don’t mind a little risk, SME companies are worth a closer look.
In today’s article, we take a look at the biggest gainers within the SME IPO space.
#1 Taylormade Renewables (1,232%)
First company on this list is Taylormade Renewables.
Trading at less than Rs 10 a year ago, the renewable energy company has multiplied wealth by 12x in just a year.
The stock currently trades at Rs 128 and continues to hit its upper circuit band daily.
As the name suggests, Taylormade Renewables is engaged in the business of providing renewable energy solutions, so the hype revolving the company may as well be true.
The company manufactures solar parabolic concentrating systems for steam generation used in steam cooking and other industrial applications.
It also makes components and does EPC work for renewable energy and solar thermal applications, primarily parabolic concentrators.
Some other products include bio-mass cook stoves, Eco Chullas, and PV cells.
Prominent names such as ISRO, Jindal Power, Ami Organics, Vardhman Group, Asian Paints, among others are the company’s clients.
The recent rally in Taylormade can be attributed to the large orders it received in the past couple months. On 24 February 2023, it received a new work order worth Rs 130.6 million (m).
The company’s PE multiple shot up in financial year 2022 when it was back to reporting profits. Prior to that in the previous year, the company had losses to the tune of Rs 18.1 m.
#2 Captain Pipes (696%)
Next on this list is Captain Pipes.
In the past one year, shares of the company have multiplied wealth by almost 7x.
The stock was trading at Rs 88 a year ago and currently it trades at Rs 700 with a marketcap of Rs 3.2 billion (bn).
Captain Pipes is engaged in the business of manufacturing and selling uPVC pipes and fittings.
It has a manufacturing facility spread over an area of 62,000 square feet with production capacity of 17,700 metric tons per annum.
It holds close to 10% stake in another group company Captain Polyplast.
This year on 27 January 2023, the company’s board decided to split the shares in a ratio of 1:10. In the same meeting, they also recommended issue of bonus shares in the ratio of 2:1.
Despite all concerns surrounding PVC not being biodegradable or for releasing toxic chemicals, PVC remains an important material in many industries.
In recent years, efforts have been made to develop more sustainable alternatives to PVC, such as biodegradable plastics and other materials made from renewable resources. But for now, PVC continues to be an important and widely used material in the modern world.
Going forward, the company is looking to increase reach in international markets.
#3 Growington Ventures (633%)
Next on this list is Growington Ventures.
In the past one year, shares of the company have multiplied wealth by over 6x.
The stock was trading at Rs 12 a year ago and currently it trades at Rs 90 with a marketcap of Rs 1.2 bn.
Erstwhile known as VMV Holidays, the company is engaged in the business of providing all the travel & tourism related services. These include air tickets booking, tour packages, hotels & resort booking, car rental services, visas, event management and wedding planning.
The recent rally in the stock price can be attributed to the company declaring bonus issue in the ratio of 24:100. It also increased the authorized share capital recently.
#4 Rajeshwari Cans (624%)
Fourth on this list is Rajeshwari Cans.
In the past one year, shares of the company have multiplied wealth by over 6x.
The stock was trading at Rs 21 a year ago and currently it trades at Rs 152 with a marketcap of Rs 0.8 bn.
Incorporated in 2018, Rajeshwari Cans manufactures containers & packaging products.
It allotted a little over 2 m shares at a premium of Rs 10 per share in April 2021 through an initial public offer (IPO) and was listed on SME BSE platform.
Last year, it made a profit of Rs 3.8 m and this year’s TTM profit has already surpassed Rs 9 m.
#5 Knowledge Marine (604%)
Last on this list is Knowledge Marine.
In the past one year, shares of the company have gained 604%.
The stock was trading at Rs 145 a year ago and currently it trades at Rs 1,020 with a marketcap of Rs 11 bn.
Knowledge Marine & Engineering Works is primarily engaged in the business of owning, hiring along with manning, operation, and technical maintenance of marine crafts as well as repairs/maintenance of marine crafts and marine infrastructure, and allied works in India.
Foreign investors have found quite a liking to this company as they’ve added stake for the past two quarters.
In its 2022 annual report, the company mentioned the Indian dredging and marine time industry is likely to experience significant expansion in the coming years.
The government’s plans to create new waterways and ports, as well as upgrade and expand the current ports, will account for the majority of this expansion.
Over the years, the company has reported increasing revenues and profits. The year gone by was its best where PAT rose more than three times.
No wonder one of the top investing gurus in India Ashish Kacholia is bullish on the company.
Which other SME IPO stocks have rallied in the past one year?
In conclusion
In conclusion, SME IPO stocks have proven to be a lucrative investment for those with the capital and risk appetite.
However, the minimum lot size and lack of liquidity are significant hurdles that can make investing in these stocks challenging.
While some SME IPOs have experienced massive gains, investors must be cautious and conduct thorough research before investing.
It’s crucial to keep in mind that many of these companies may not survive in the long run, and exiting the investment may prove to be difficult.
Ultimately, investing in SME IPO stocks can provide high-growth potential, but it comes with significant risks that investors must be prepared to navigate.
Disclaimer:Â This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
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