Standard Glass Lining Technology Ltd (Subscribe)

Highlights

Standard Glass Lining Technology Limited (SGLTL), incorporated in 2012, is among the top few specialised engineering equipment manufacturers for pharmaceutical and chemical sectors in India, with in house capabilities across the entire value chain. 

Their portfolio comprises core equipment used in the manufacturing of pharmaceutical and chemical products, which can be categorized into (i) Reaction Systems (ii) Storage, Separation and Drying Systems and (iii) Plant, Engineering and Services (including other ancillary parts).

They are also one of India’s top 3 manufacturers of glass-lined, stainless steel, and nickel alloy based specialised engineering equipment and one of the top 3 suppliers of polytetrafluoroethylene (PTFE) lined pipelines and fittings in India. Their capabilities include designing, engineering, manufacturing, assembly, installation and commissioning solutions as well as establishing standard operating procedures for pharmaceutical and chemical manufacturers on a turnkey basis.

SGLTL possess in-house capabilities to manufacture all the core specialised engineering equipment required in the active pharmaceutical ingredient (API) and fine chemical products manufacturing process. Over the last decade they have supplied over 11,000 products. They also provide turnkey automated equipment solutions, optimising processes like vacuum distillation, solvent recovery and gas dispersion.

Out of the total proceeds of Rs. 4,100 mn, ~Rs. 400 mn would go towards funding capex, Rs. 1300 mn would utilize towards repayment of portion of certain borrowing availed by the company and its subsidiaries, Rs. 200 mn would towards funding inorganic growth through strategic investments and/or acquisitions. Rs. 200 mn use for general corporate purpose. And Rs. 2000 mn would go towards existing promoter selling shareholders of the company.

Key Highlights

• The global glass lined equipment market valued at USD 2100 mn in 2024 and it is projected to reach at USD 3400 mn in 2028F, showing CAGR of 10.1 pct between 2023-28F. The Glass-Lined Equipment (GLE) industry is poised for significant growth, driven by multiple factors. Glass lining technology is extensively used in various industries for its corrosion resistance and durability.
• SGLTL growth has been compounded by their partnerships. They have entered into an agreement with HHV Pumps Private Limited (HHV), for supply of vacuum pumps along with a private label arrangement. They also have a supply and purchase arrangement for India with Japan based Asahi Glassplant Inc. and GL Hakko Co. Ltd (GL Hakko) for procurement of specified grades of glass for glass lining division. These partnerships have enabled them to fortify their position in the Glass Lining and Vacuum Pumps market in India.
• Further, they have also entered into an exclusive collaboration with GL Hakko for exclusively purchasing glass lined tubes manufactured by GL Hakko using which SGLTL will manufacture and sell shell and heat tube exchangers under the name of GL Hakko in India and abroad except Japan.
• The company has the capabilities to manufacture reactors, receivers, and storage tanks ranging from 30 litres to 40,000 litres in size. They also have the capacity to manufacture around 300-350 equipments per month across their product portfolio and their manufacturing facility can also produce up to 100 reactors per month. Further, they have an exclusive facility to make 30 ANFDs per month. They also have the capacity to manufacture 9,000 units per month of PTFE lined pipes and fittings.
• SGLTL’s key growth strategies include (i) Continue to expand and improve existing product portfolio and enter into additional end-user industries (ii) Expand their capacity by increasing the capabilities of existing manufacturing plants as well as set up new manufacturing plants (iii) Capitalise on increasing demand from international markets to grow exports (iv) Grow inorganically through strategic acquisitions and alliances.
• The company’s sales/EBITDA and Profit has grown by 50.4 pct/55.4 pct/54.61 pct CAGR Over FY22-24. During FY24, company reported sales of Rs. 5,437 mn which grew by 9.26 pct YoY while EBITDA grew by 14.35 pct YoY to Rs. 1,009 mn as EBITDA margin expanded by 71 bps FY24. As of FY24 the company reported profit of Rs. 600 mn which was grew 12.33 pct YoY. As of H1FY25 company registered sales/EBITDA/Profit of Rs. 3,072 mn/Rs. 627 mn/ Rs. 363 mn.

Key Risk

• The majority of SGLTL’s customers operate in the pharmaceutical and chemical sectors. Any slowdown these sectors could have an adverse impact on their financials and business.
• SGKTL experience significant working capital requirements and their inability to meet working capital requirements may materially and adversely affect their business. Working capital days of the company jumped from 70 days in FY23 to 151 days in FY24.

Financial Performance

Peer comparison based on FY24 Financials

Valuation

Standard Glass Lining Technology is leader in Glass Line Equipment Supply. They provide turnkey glass lined equipment solutions including standard and bespoke designs to international standards. At the upper end of the price band of Rs. 140 the issue is priced at a PE of ~37.94 its FY25E annualised earnings. The issue looks fully priced. One may Subscribe this issue from a longer-term perspective.

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