Euro Pratik Sales IPO — Should You Subscribe Or Avoid? Read DRChoksey's Report For Key Issue Details

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Deven Choksey Report

Euro Pratik Sales will launch its initial public offering on Sep. 16 and the offer closes for subscription on Sep. 18. The seller of decorative wall panels has fixed the price band in the range of Rs 235 and Rs 247 per equity share.

The Rs 451.31-crore issue is an entirely offer-for-sale of 1.83 crore shares. Since the IPO is entirely an OFS, proceeds from the offer will go directly to the selling shareholders.

The allotment for Euro Pratik Sales IPO is expected to be finalized on Sep 19. 

The shares will be listed on both the National Stock Exchange and the BSE on Sep 23.

Axis Capital Ltd., DAM Capital Advisors Ltd. are the book-running lead managers for the public issue.

Outlook:

Euro Pratik Sales, is the largest decorative wall panel and laminate Company in India with deep and strong experience of two decades long. To deploy asset-light model, it outsources all the finished products from contract manufacturers located in India and globally, to focus higher on branding, marketing, product innovation and distribution, by leveraging its in-house research team and entrenched network of 180 distributors spread across 25 states and five union territories.

The company plans to expand both domestically and internationally in selected markets, through setup of additional distributors to capitalize on growing demand for quality, premium and luxury home interiors.

It has witnessed a strong revenue growth of 23.7% CAGR over FY20-25, while during the same period Ebitda margins have improved from sub 30% range to 35.7% in FY25, significantly higher compared to peer’s margin range of 8.0-18.0%, led by its stronger focus on improving product mix skewed towards high margin products. It’s initial issue comprises of OFS amounting for Rs 4.5 billion, with no proceeds reaching the company, as it stands well capitalized.

Euro Pratik’s initial issue is priced at 32.9 times trailing twelve months P/E, similar to listed peers in ceramics and paints industry. With stronger revenue growth and higher Ebitda margin profile, we expect the company to deliver stronger financial growth, driven by stronger demand across end sectors.

We assign a “Neutral” rating to the issue.

Risks:

• Higher dependence on contract manufacturers for supply of finished products, leads to higher operational vulnerability. Losing key manufacturers could materially impact its business operations and financial performance.

• Higher dependence on overseas vendors and customers spread across China, Indonesia, Portugal, Romania, South Korea, Turkey, and the US, can impact it business and financial performance significantly, with change in trade policies, imposition of tariffs in the global market.

• The company doesn’t own the IP for most product designs. Inability to safeguard its designs or IP could materially impact its competitive positioning and financial performance.

• Higher competition from international players operating in the competitive Decorative Wall Panel and Laminates market may adversely impact its growth ambitions of international and domestic expansion.

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