Kumar Arch Tech Files DRHP for IPO

30 Sep 2024 , 10:58 AM

Kumar Arch Tech, a leading manufacturer of PVC blend-based building material products, has filed its draft papers with SEBI, as the company prepares to raise ₹740 crore through an initial public offering (IPO). According to the draft papers submitted on September 27, the IPO will consist of a fresh issue worth ₹240 crore and an offer-for-sale (OFS) by the promoters totaling ₹500 crore.

The Rajasthan-based company, which operates under the ECHON brand, is also considering raising ₹48 crore through a pre-IPO placement. Should this placement be completed, the fresh issue size will be adjusted accordingly.

Kumar Arch Tech is recognized as the largest manufacturer of PVC blend-based building material products in India, holding an 18% market share as of March 2024. It boasts a production capacity of 27,600 MTPA, with plans to expand this capacity significantly. The company is building a new facility in Udaipur, expected to add 90,000 MTPA, and has acquired a strategic facility in Virginia, USA. Its products, which include boards, sheets, mouldings, and wall and ceiling panels, serve residential, commercial, and industrial construction and renovation sectors. In the fiscal year 2024, the company was responsible for 28% of India’s PVC blend-based building material exports to the US.

Competing with other market players like Century Plyboards, Greenply Industries, and Astral, Kumar Arch Tech plans to allocate ₹182 crore from the fresh issue proceeds towards a greenfield project to produce PVC-based products through its subsidiary, Taylias Industry. The remainder will be used for general corporate purposes.

In terms of financial performance, Kumar Arch Tech reported strong profit growth for fiscal year 2024, with net profit rising by 76% to ₹110.8 crore. Revenue saw a modest increase of 0.15% to ₹407.9 crore. The company’s EBITDA grew by 68.5% to ₹139.2 crore, with margins expanding by 1,380 basis points to 34.1% compared to the previous year, attributed to lower input costs and operational efficiencies.

Motilal Oswal Investment Advisors and Equirus Capital are the appointed merchant bankers for the IPO.