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Registered in 2019, HP Adhesives Limited is an adhesives and sealants company. The company manufactures a wide range of consumer adhesives and sealants such as PVC, cPVC, and uPVC solvent cement, synthetic rubber adhesive, PVA adhesives, silicone sealant, acrylic sealant, gasket shellac, other sealants, and PVC pipe lubricants. These adhesives and sealant products have applications in multiple industries such as plumbing and sanitary, drainage and water distribution, generalpurpose building/ construction, and interior operations as well as for glazing operations, woodwork, footwear, automotive, foam-furnishing, and other varied industries.

* Apart from the above products, the company also sells ancillary products like ball valves, thread seals, and other tapes and FRP products for drainage and architectural solutions.

* Company has grown from a single product to a multi- product adhesives company with sales across India (through pan-India distribution network) and also in international markets.

* Over the years, Company’s brands “HP” and “Strong Weld” in PVC adhesives product category have gained increasing acceptance on account of high product quality and efficient pricing. 

* The company has a solid business model that focuses on consistently expanding its product portfolio by introducing new product categories and SKUs to cater to a wide range of end-use applications and selling them through their distribution network across India.

* As of September 30, 2021, its distribution network comprised of 4 depots situated in Delhi, Kolkata, Bengaluru and Indore and more than 750 distributors who cater to more than 50,000 dealers in India

* Company wants to expand its manufacturing capacity at Village Narangi, Raigad, Maharashtra to cater to the growing demand for several product categories.

Outlook & Valuation:

In the last 3 years, the company has shown stable growth in revenue where it grew from Rs 87.97 cr to Rs 123.87 cr over the period of FY19 to FY21, during the same period profit has grown from Rs 4 cr in FY19 to Rs 10.05 cr in FY21, but the company faced a huge loss of Rs. (4.67) cr in FY20 on the back of exceptional item. The industry is expected to grow at a CAGR of 6-8% while the company is in a growth phase and is expanding installed capacities for its product lines and is also expanding its portfolio. The IPO is valued at a PE of 35x and P/BV of 28x to its FY21 earnings. However, if we annualized FY22 earnings PE and P/BV work out to be 81x and 10.38x which is in line with the peer. Due to its small size, the IPO is going to be listed in the T2T segment. We have an "AVOID" rating for the IPO.

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