Exxaro Tiles IPO: All You Need To Know

Exxaro Tiles Ltd. will launch its launch its Rs 161-crore initial public offering on Wednesday, joining companies going public in what may be India’s record year for maiden offers amid the Covid-19 crisis.

The vitrified floor tilemaker will sell 1.34 crore shares at Rs 118-120 apiece, seeking a market value of Rs 537 crore at the upper end of the price band. The three-day IPO, according to the company’s red herring prospectus, comprises a fresh issue of Rs 134.23 crore and a Rs 26.85-crore offer for sale by non-promoter selling shareholder, Dixitkumar Patel.

The total issue constitutes 30% of the post-issue IPO capital. After the share sale, promoter and promoter group will own close to 42.25% in the company.

Pantomath Capital Advisors is the book-running lead manager for the issue.

Issue Details

• Issue Opens On: Aug. 4.

• Issue Closes On: Aug. 6.

• Face Value: Rs 10 per share.

• Lot Size: 125 shares and multiples.

• Listing: BSE and NSE.

Watch here the full interview with Exxaro Tiles’ management before the launch of the IPO...

Objective

The company plans to use proceeds from the fresh issue to pre-pay long-term debt of up to Rs 50 crore and augment working capital requirement of up to Rs 45 crore.

Business

Exxaro TIles manufactures two categories of tiles — double charge vitrified tiles (suitable for heavy traffic commercial projects) and glazed vitrified tiles (for flooring in residential complexes as well as various commercial buildings and corporate offices).

The company has two manufacturing facilities located at Padra and Talod in Gujarat. It earns 85% of its revenue from domestic retail and institutional segment through its more than 2,000 registered dealers. Exports contribute 13.88% of its total revenue.

Its top five customers accounted for 36.34% of the revenue, while top 10 clients formed 40.76% of the top line in the fiscal ended March 2021.

Financials

Exxaro Tiles’ revenue from operations increased at an annualised rate of 2.62% between 2019 and 2021. The company’s Ebitda grew at an 11.86% CAGR between 2019 and 2021, while profit after tax rose at 30.61% during the period.

The company lost Rs 40-50 crore in revenue in 2020-21 due to the Covid-19-led lockdown. But it expects profitability to improve due to a reduction in interest cost and working capital augmentation in the ongoing fiscal ending March 2022.

The company’s total borrowing stood at Rs 182.27 crore as of March 2021, of which Rs 104.8 crore was working capital facilities.

Exxaro Tiles expects its revenue to touch close to Rs 400 crore in FY22 as operations normalise, and profit at Rs 40 crore, Chief Financial Officer Himanshu Shah told BloombergQuint in an interaction.

Peer

Exxaro Tiles competes with Kajaria Ceramics Ltd., Prism Johnson Ltd., Somany Ceramics Ltd., Nitco Ltd. and Asian Granito India Ltd. in the organised segment. The organised manufacturers account for nearly half of the market size.

Risks

• Volatility in the supply and pricing of raw materials and stores & spares may have an adverse effect on business, financial condition and results of operations.

• The company requires significant amounts of working capital for a continued growth. Inability to meet working capital requirements may have an adverse effect on results of operations.

• Manufacturing operations are critical to its business and any shutdown of our manufacturing facilities may have an adverse effect.