Ajay Poly Limited IPO

More About Ajay Poly Limited

Ajay Poly Limited is one of India’s leading manufacturers in the refrigeration sealing solutions, polymer extrusion, and toughened glass products for the appliance industry. As of Fiscal 2024, the company holds a dominant market share, including 61% in refrigeration sealing solutions, 45.96% in profile extrusion, and 31.3% in household refrigeration glass shelves.

Product Offerings

Ajay Poly manufactures a wide range of products including:

• Toughened Glass: Used in refrigerators, microwave ovens, washing machine lids, and more.

• Polymer Extrusion Products: Soft, rigid, and sheet extrusions for refrigerators and commercial refrigeration applications.

• Magnet Products: Magnetic strips and magnet powders, essential for sealing solutions and automotive use.

The company serves sectors such as consumer durables, commercial refrigeration, and automotive industries, with a strong customer base consisting of both multinational and Indian appliance OEMs.

Manufacturing Facilities

Ajay Poly operates ten strategically located manufacturing facilities across India, including Greater Noida, Maharashtra, Gujarat, Punjab, and Tamil Nadu. These facilities reduce lead times, ensuring faster delivery and cost-efficient logistics for its customers.

Backward Integration

To enhance control over its supply chain and margins, Ajay Poly has invested in backward integration initiatives. Key production areas include:

• Soft Profile Extrusion/Gasket Production: In-house compounding, extrusion, and tooling.

• PVC Compound Production: In-house capacity for PVC compound production ensures better quality control and cost efficiency.

• Magnet Powder and Strip Production: Backward integration allows Ajay Poly to control the production of components used in gasket assemblies and automotive products.

Leadership and Workforce

The company is led by experienced promoters with over 25 years of industry experience. Supported by a skilled management team, Ajay Poly employs 580 permanent staff as of November 2024. Their collective expertise is key to navigating market trends and driving business growth.

Industry Outlook

Overview of Indian Home Appliance Markets

• Refrigerator Market

• Market size: INR 465 billion (FY2024), projected to INR 821 billion by FY2029 (12.0% CAGR).

• Sales: 17.1 million units, urban areas contributing 10.5 million units, rural 6.6 million units.

• Growth drivers: Nuclear families, credit access, energy efficiency awareness, and technological advancements.

• Visi Cooler Market

• Sales growth: 380,000 units (FY2022) to 500,000 units (FY2024); projected 870,000 units by FY2029.

• Demand drivers: Organized retail, food and beverage outlets, and sustainable cooling solutions.

• Washing Machine Market

• CAGR: 7.9% (FY2019-FY2024) to 8.1% (FY2024-FY2029).

• Urban-rural split: 69% urban, 31% rural; growing demand for smart, energy-efficient models.

• Room Air Conditioner (RAC) Market

• Domestic sales: 10.4 million units (FY2024); CAGR of 18.4% through FY2029.

• Drivers: Inverter technology, affordability, and energy efficiency.

• Microwave Market

• Revenue: INR 9.9 billion (FY2024); projected 2.0 million units (FY2029, 17.3% CAGR).

• Growth drivers: Rising middle class and demand for convenient cooking solutions.

Manufacturing Process Overview

Polymer extruded and toughened glass products are key components in consumer durables like refrigerators, visi coolers, and washing machines. These include polymer extrusions (gaskets, profiles, HIPS/ABS sheets), toughened glass (for shelves, washing machines, and cooktops), and magnets (made from Barium Ferrite powder).

Market Share of Polymer Extruded Products in India (FY2019 – FY2029E)

• The Gasket Market holds the largest share throughout the forecast period.

• Gasket Market share is expected to slightly decrease.

• The Extruded Sheets Market is projected to grow, with its share rising from 18.97% in FY2019 to 22.07% in FY2029E.

• The Rigid Profile Market’s share is expected to decline slightly over the period.

Toughened Glass in Appliances

• The Indian toughened glass industry is experiencing strong growth, fueled by demand from consumer durables.

• The glass door market is projected to grow at a CAGR of 73.9%, from INR 531 million in FY2024 to INR 8,449 million by FY2029.

• Shift to domestic sourcing is expected to drive growth starting in FY2025.

• Glass door market penetration is expected to rise from 2% in FY2024 to 20% by FY2029.

• APL’s market share in toughened glass adoption is projected to be 15%.

• Household refrigerator glass shelves contribute INR 3,875 million, with APL’s share at 31.3%.

Market Overview of Key Materials in Home Appliances

• Epoxidised Soyabean Oil (ESO):

• ESO is a non-toxic, eco-friendly plasticizer in PVC production.

• Market growth from INR 3.2 billion (FY2019) to INR 4.6 billion (FY2024), with a 7-8% annual growth rate.

• Key for components like refrigerator doors and microwave glass.

• PVC Compounds:

• PVC compounds crucial for appliance manufacturing (e.g., door profiles, shelves).

• CAGR of 5.1% (FY2019 – FY2024) and 5.6% (FY2024 – FY2029E).

• Growing demand due to urbanization and rising disposable incomes.

• Raw Material Price Trends:

• PVC resin prices fluctuated from INR 78,970 to INR 96,488.

• Soybean oil prices rose from INR 93,600 to INR 113,900, driven by supply chain and economic factors.

How Will Ajay Poly Limited Benefit?

• Dominant Market Share in Key Segments

Ajay Poly holds a leading market share in critical areas such as 61% in refrigeration sealing solutions, 45.96% in profile extrusion, and 31.3% in household refrigeration glass shelves, positioning the company for continued growth amid increasing demand in the appliance market.

• Diverse Product Range

With a comprehensive range of products, including toughened glass, polymer extrusions, and magnet products, Ajay Poly meets diverse needs in the consumer durables, commercial refrigeration, and automotive industries, catering to both domestic and multinational OEMs.

• Strategic Manufacturing Facilities

Ajay Poly operates 10 strategically located facilities across India, enabling faster delivery and reducing logistics costs, giving the company a competitive edge in meeting growing market demands with high efficiency.

• Backward Integration for Cost Control:

The company’s investments in backward integration, including in-house PVC compound production and magnet powder manufacturing, enable Ajay Poly to enhance quality control, improve cost-efficiency, and strengthen its position in the supply chain.

• Experienced Leadership and Skilled Workforce

Ajay Poly’s experienced management team and skilled workforce, comprising 580 permanent employees, play a pivotal role in navigating market trends and driving innovation, ensuring sustained growth in the competitive home appliance industry.

Peer Group Comparison

Company	Face Value per Equity Share (₹)	EPS (₹)	NAV (per Share) (₹)	P/E	RoNW (%)	Total Income (in ₹ millions)
Ajay Poly Limited	1.00	2.19	9.10	N.A.	N.A.	3,663.93
Amber Enterprises India Ltd	10.00	39.44	612.68	155.19	6.85%	67,845.77
PG Electroplast Limited	10.00	5.47	421.15	169.75	19.11%	27,595.09
EPACK Durable Limited	10.00	4.35	109.67	106.55	5.87%	14,285.06

Key Insight

• Face Value per Equity Share: Ajay Poly Limited has a face value of ₹1 per equity share, which is significantly lower than its listed peers, all of which have a face value of ₹10. The lower face value could indicate a more accessible entry point for retail investors in comparison to its competitors.

• EPS: Ajay Poly Limited’s earnings per share (EPS) stands at ₹2.19, which is considerably lower than Amber Enterprises India Ltd’s ₹39.44 and PG Electroplast Limited’s ₹5.47. The relatively lower EPS suggests that Ajay Poly might not generate as much profit on a per-share basis as its industry counterparts.

• NAV: Ajay Poly Limited’s Net Asset Value (NAV) per share is ₹9.10, a modest figure compared to the significantly higher NAVs of Amber Enterprises India Ltd (₹612.68) and PG Electroplast Limited (₹421.15). This suggests that Ajay Poly’s assets are comparatively smaller in value, impacting its overall financial standing.

• P/E Ratio: Ajay Poly Limited does not have a P/E ratio (N.A.), which could indicate either that the company has not reported sufficient data to calculate this ratio. In contrast, Amber Enterprises India Ltd has a P/E ratio of 155.19, suggesting strong market expectations of its earnings growth.

• RoNW: Ajay Poly Limited does not report Return on Net Worth (RoNW), unlike its peers like PG Electroplast Limited, which has a RoNW of 19.11%, indicating a better return on equity. The absence of RoNW data for Ajay Poly suggests it might not be achieving as high a return relative to its equity.

• Total Income: Ajay Poly Limited’s total income is ₹3,663.93 million, which is significantly lower than Amber Enterprises India Ltd’s ₹67,845.77 million. This indicates that Ajay Poly operates on a much smaller scale compared to its peers, potentially affecting its ability to compete in a larger market.

Ajay Poly Limited IPO Strengths

• Market Leadership in Refrigeration Sealing Solutions

Ajay Poly Limited holds a dominant position in the refrigeration sealing solutions market, with a 61% market share in gaskets, and significant shares in rigid and total profile extrusion. They also lead in glass products for appliances, positioning themselves to benefit from the growth in India’s consumer durables sector, projected to expand at a CAGR of 14.5% through Fiscal 2029.

• Marquee Customer Base with Long-Term Relationships

Ajay Poly Limited boasts a strong portfolio of multinational and domestic appliance OEM customers. With longstanding associations, their ability to meet specific customer needs through tailored solutions has allowed them to build lasting relationships, resulting in a high retention rate of approximately 99% in recent years.

• Strategic Manufacturing Facility Locations

The company operates ten manufacturing facilities across key regions of India, including Greater Noida, Maharashtra, and Tamil Nadu. Strategically located near major appliance manufacturing hubs, these facilities enhance operational efficiency, reduce lead times, and ensure quicker delivery to their customers in the consumer durables, refrigeration, and automotive sectors.

• Focus on Backward Integration and In-House Capabilities

Ajay Poly Limited focuses on backward integration by manufacturing critical raw materials in-house, including PVC compounds, plasticizers, and magnetic strips. This integration enhances supply chain control, optimizes costs, and improves margins. Their commitment to in-house production across multiple production areas strengthens their operational precision.

• Strong Commitment to Quality and Sustainability

Ajay Poly Limited’s manufacturing facilities are ISO-certified and adhere to environmental and safety standards, ensuring high product quality and sustainability. Their commitment to reducing environmental impact includes wastewater treatment plants and an ongoing audit system to mitigate risks. Their products meet international compliance standards, such as RoHS and REACH.

• Tailored Solutions for Diverse Customer Needs

Ajay Poly Limited serves a variety of sectors, including consumer durables, commercial refrigeration, and automotive industries. Their ability to design and deliver customized solutions, such as toughened glass, profile extrusions, and refrigerator gaskets, has allowed the company to establish strong partnerships with appliance OEMs and address the evolving needs of their customers.

Key Insights from Financial Performance

• Assets: As of June 30, 2024, total assets amount to ₹3,290.14 crore, reflecting significant growth from ₹1,290.66 crore in March 2022. This 155% increase in two years suggests robust expansion, likely driven by strategic investments and operational growth.

• Revenue: Revenue for June 30, 2024, totals ₹1,307.39 crore, a notable drop from ₹3,663.93 crore in March 2024. However, it marks an increase from ₹1,427.23 crore in March 2022. This fluctuation highlights cyclical trends or potential shifts in business strategy.

• Profit After Tax: Profit after tax (PAT) for June 30, 2024, stands at ₹122.89 crore, decreasing from ₹224.12 crore in March 2024. The PAT trend demonstrates growth from ₹33.91 crore in March 2022, showcasing improved profitability despite recent declines.

• Reserves and Surplus: Reserves and surplus grew consistently, reaching ₹1,045.67 crore in June 2024 from ₹542.76 crore in March 2022. This 92% increase reflects retained earnings and capital appreciation, supporting the organisation’s financial stability and growth trajectory.

• Total Borrowings: Total borrowings rose to ₹1,291.26 crore in June 2024, from ₹448.16 crore in March 2022. This 188% increase indicates reliance on external financing, possibly for expansion projects, with implications for debt servicing capacity.

• Total Liabilities: Total liabilities reached ₹2,235.15 crore in June 2024, a 199% increase from ₹747.90 crore in March 2022. This surge reflects higher borrowings and operational obligations, aligning with the firm’s growth and investment activities.

Other Financial Details

• Cost of Materials Consumed: Cost of materials consumed represents the highest expense across all periods, reflecting the scale of operations. It increased significantly in FY 2024 compared to FY 2023, demonstrating rising production levels and potentially higher raw material costs.

• Employee Benefits Expense: Employee costs exhibit a steady rise, emphasizing the organization’s investment in human resources. The significant growth in FY 2024 reflects either hiring increases or improved compensation packages, aligning with scaling operations and retaining skilled talent.

• Finance Costs: Finance costs remain consistent but increased in FY 2024, reflecting higher borrowings or interest rates. The trend suggests strategic use of debt for expansion, with controlled costs in earlier years pointing to limited reliance on external financing.

• Depreciation and Amortization: Depreciation and amortization expenses grew across the periods, reflecting increased capital investments. The growth signifies the acquisition of long-term assets critical to production and operations. This upward trend underscores the organization’s focus on capacity building.

• Other Expenses: Other expenses, encompassing miscellaneous operational costs, saw significant increases in FY 2024. The steady growth signals higher administrative or operational activities, likely linked to scaling operations or introducing new business functions.

Key Strategies for Ajay Poly Limited

Expanding Glass Capacities and Value-Added Products

Ajay Poly Limited plans to enhance its glass manufacturing capacities, including toughened glass, rigid profile extrusion, and magnetic strip production. The company intends to invest ₹649.68 million in advanced machinery for automation, facility upgrades, and product diversification. The expansion aims to meet the growing demand for innovative value-added products such as refrigerator glass door assemblies and double-glazed units, leveraging an estimated market CAGR of 21.1% for toughened glass appliances.

Diversification into New Product Lines

Ajay Poly Limited seeks to diversify its product offerings by introducing rigid magnets, rubber grommets, and weight balances for appliances. Through advanced technology and customer-centric innovation, the company aims to broaden its portfolio, capture additional market opportunities, and strengthen competitive differentiation, ensuring sustainable revenue growth and delivering long-term value to stakeholders.

Expanding Customer Base and Enhancing Wallet Share

Ajay Poly Limited focuses on deepening its relationships with existing customers and acquiring new ones in key appliance and automotive manufacturing hubs. By providing tailored solutions and broadening its product range, the company seeks to grow wallet share. Long-standing customer engagements have led to significant revenue increases, highlighting its ability to meet evolving customer requirements effectively.

Strengthening Export Presence

Ajay Poly Limited aims to expand its export market, particularly in Europe and America, targeting toughened glass and polymer extrusions. By leveraging marquee customer relationships and establishing local offices or subsidiaries, the company plans to enhance its global footprint. Dedicated sales teams will drive business development while ensuring quality standards to meet international demands.

Focusing on Cost Optimization and Operational Efficiency

Ajay Poly Limited prioritizes cost optimization and operational excellence through backward integration, process automation, and in-house manufacturing. Initiatives like improved productivity, inventory management, and adoption of advanced technology have enhanced operational efficiency. The company’s focus on automation has driven its Operating EBITDA margin growth, which reached 17.42% for the period ending June 30, 2024.