SMPP Ltd IPO

About SMPP Ltd IPO

The IPO of SMPP Ltd is a 100% book-built issue comprising a fresh issue and an offer for sale. While the fresh issue aggregates up to ₹580 crore, the offer for sale aggregates up to ₹3420 crore.

Objectives of SMPP Ltd IPO

The company plans to utilise the IPO proceeds for:

• Financing the capital expenditure towards construction of buildings and land development and procurement of plant and machinery for setting up the planned ammunition manufacturing facility through investment in SMPP Ammunition Private Limited (its subsidiary).

• General corporate purposes

Industry Outlook

India’s defence spending was approximately USD 94 billion in Fiscal 2024, growing at a 3.8% CAGR from Fiscal 2019 to Fiscal 2023. It is estimated to reach approximately USD 145 billion in Fiscal 2029, growing at a CAGR of 9.1% over Fiscal 2024 to Fiscal 2029.

Company Information

SMPP Ltd is an Indian designer and manufacturer of defence equipment including ammunition components, personal protection products and protection kits for land, air and sea platforms. It has developed a portfolio of mission critical products of national importance that cater to the safety and survivability equipment requirements of the armed forces, police, paramilitary and other security forces.

Risks of SMPP Ltd IPO

• The company’s business depends on orders from different entities of the state governments and central government and its revenues from such entities accounted for 92.19%, 54.37%, 85.19%, 67.96% and 74.72% of its revenue from operations for the three months ended June 30, 2024 and 2023 and Fiscals 2024, 2023 and 2022, respectively. Consequently, a decline in government budget, reduction in orders from such entities or termination of its existing contracts with them, or change in schemes and policies may adversely affect its business, results of operations, financial condition and cash flows.

• The company depends on certain customers for a significant portion of its revenues. Its top 10 customers contributed 98.05%, 99.11%, 92.78%, 89.74% and 96.06% of its revenue from operations for the three months ended June 30, 2024 and 2023 and Fiscals 2024, 2023 and 2022, respectively. Any decrease in demand from such customers, the loss of such customers or their inability to diversify its customer base could have an adverse effect on its business, results of operations, financial condition and cash flows.

• They depend on a few suppliers for the supply of raw materials and they do not have continuing and exclusive supply agreements with them. Any interruptions in the supply of raw materials, fluctuations in raw material prices or any failure by their suppliers to make timely delivery of raw materials could adversely affect their ability to manufacture products and meet their contractual obligations.

IPO Registrar and Book Running Lead Manager

Link Intime India Pvt Ltd is the IPO registrar. The book running lead managers are:

• Axis Capital Ltd
  
• ICICI Securities Ltd
  
• IIFL Securities Ltd
  
• J M Financial Ltd
  
• Motilal Oswal Investment Advisors Ltd
  

Business Model

SMPP Ltd is into designing and manufacturing defence equipment. Its ammunition component offerings comprise combustible cartridge cases, while its protection products consist of personal protection products like bullet resistant jackets, armour plates, ballistic helmets and shields.

Company Growth Trajectory

The company’s revenue from operations grew from ₹368.888 crore in FY 22 to ₹516.077 crore in FY 24. Its PAT margin grew from 23.78% in FY 22 to 28.39% in FY 24.

Market Position

The company has an established track record of supplying defence products to the Indian armed forces with an experience in handling military grade explosives for over three decades. Its achievements include pioneering the development of combustible cartridge cases in 1992 in response to a global tender floated by the Defence Research and Development Organisation (DRDO).

It’s the first Indian company to secure a patent for a protective band specifically designed to improve the defence capabilities of bullet-resistant helmets against hard steel core bullets fired from AK47 rifles. It’s one of the few armour manufacturing companies in India to manufacture bullet resistant boron carbide plates.

How to Check Allotment Status of SMPP Ltd IPO?

You can check the allotment status of SMPP Ltd IPO from the BSE website or through its registrar’s portal. To check the status from the BSE website:

• Visit the BSE website
• Click on “Investor Services” and choose “Application Status Check”
• Choose the issue type — Equity or Debt
• Select the Issue Name from the drop-down.
• Enter your application number or PAN number
• Check the box that says “I’m not a Robot” and click on “Search” to know the allotment status

To check the status on the registrar's portal:

• Visit the website of Link Intime India Pvt Ltd
• Choose ‘Public Issues’ from Investor Services dropdown
• Choose the name of the company from ‘Select Company’ dropdown
• Enter any of these - PAN Number, Application Number, DP/Client ID, Account Number / IFSC
• Click on Submit to check the status

How to Apply for SMPP Ltd IPO?

To apply for SMPP Ltd IPO:

• Step 1: Log in to your Kotak Securities Demat account: Log in to your Demat account to access IPO investments. Next, select the current IPO section.
• Step 2: Specify IPO details: Enter the number of lots and the price you wish to apply for.
• Step 3: Enter UPI ID After entering your UPI ID, click submit. This will place your bid with the exchange.
• Step 4: Mandate Notification: Your UPI app will receive a mandate notification to block funds.
• Step 5: Approve Request Your funds will be blocked once you approve the mandate request on your UPI.