Creative Graphics IPO Listing: Stock lists at 106% premium on NSE SME

Creative Graphics IPO Listing

Creative Graphics Soars on Debut: A Deep Dive into the IPO Listing and the Company’s Future

A Stellar Offering Meets Unprecedented Demand

Creative Graphics Solutions India Ltd. (CGSI) recently concluded its initial public offering (IPO) on April 9, 2024, etching a remarkable story in the Indian stock market.

The ₹54.40 crore IPO, open for subscription from March 28 to April 4, witnessed an overwhelming response from investors, receiving a staggering oversubscription of 201.86 times.

This exceptional demand transcended investor categories, with all segments participating enthusiastically.

Qualified Institutional Buyers (QIB) subscribed their portion 98.79 times, Non-Institutional Investors (NII) 472.85 times, and retail investors a commendable 144.63 times. This robust response signifies the immense faith investors have placed in CGSI’s future potential.

A Dream Debut on the NSE SME Platform

The much-anticipated listing on the NSE SME platform on April 9, 2024, lived up to the hype. Shares initially priced at ₹85 per share opened at a phenomenal ₹175, translating to a remarkable 105.88% premium.

Positive sentiment dominated the day, with the stock reaching the upper circuit of ₹183.75. While profit booking brought the price down to ₹178.50 at closing, investors who participated in the IPO still celebrated a significant first-day profit exceeding 110%.

This exceptional debut signifies the potential CGSI holds and paints a promising picture for its future trajectory.

Unveiling the Company: A Leader in Flexographic Printing Solutions

Established in 2014 (formerly known as Tanushi Industries Private Limited), Creative Graphics boasts a comprehensive portfolio in the flexographic printing industry.

They cater to a wide range of printing needs, offering digital and conventional flexo plates, letterpress plates, metal back plates, and coating plates. Their commitment to innovation extends beyond in-house production, as evidenced by their two wholly-owned subsidiaries.

• Creative Graphics Premedia Private Limited: This subsidiary provides pre-media services like design customization and print production to major companies like ITC, Tata Consumers, Haldiram, Dabur India, and Himalaya. This strategic move allows CGSI to offer a complete printing solution, enhancing customer value.
• Vahren India Private Limited: This subsidiary caters specifically to the pharmaceutical industry, providing packaging solutions like Alu-Alu foil and blister foil. This diversification strengthens CGSI’s market reach and reduces dependence on a single sector.

Creative Graphics has a strong national presence with seven strategically located manufacturing facilities across India.

Their commitment to quality and innovation extends beyond geographical boundaries, as their products find satisfied customers in Africa, Thailand, Qatar, Kuwait, and Nepal. This global presence underlines their strong brand reputation and opens doors for further international expansion.

Financial Strength and a Growth-Oriented Vision

A closer look at CGSI’s financial performance reveals a company on a steady growth path. Net profit has shown an impressive upward trend, rising from ₹2.28 crore in FY 2021 to ₹4.65 crore in FY 2022 and further to ₹8.64 crore in FY 2023.

This represents a growth of nearly 280% over a two-year period. Revenue too has exhibited a similar positive trajectory, boasting a compound annual growth rate (CAGR) exceeding 38% annually, reaching a healthy ₹91.78 crore in FY 2023.

The current financial year (April-September 2023) maintains this momentum, with a net profit of ₹7.24 crore and a revenue of ₹48.46 crore recorded in the first half.

These robust financial indicators highlight the company’s strong operational efficiency and its ability to generate consistent profits.

Utilizing Capital for Strategic Growth

The successful IPO and the positive market response have provided CGSI with crucial capital to fuel its growth aspirations. The funds raised will be strategically allocated for various purposes:

• Meeting Working Capital Requirements: Ensuring smooth day-to-day operations and seamless fulfillment of customer orders.
• Debt Repayment: Managing existing debt obligations and improving the company’s financial leverage.
• Capital Expenditure: Investing in additional machinery, technology upgrades, and infrastructure expansion to enhance production capacity and meet future demand.
• Potential Acquisitions: Exploring strategic acquisitions in the flexographic printing space to expand product offerings, gain access to new markets, or acquire complementary technologies.
• General Corporate Purposes: Supporting ongoing business activities and strategic initiatives that align with the company’s long-term vision.

This judicious use of capital will allow CGSI to not only solidify its current market position but also but also to capitalize on emerging opportunities within the flexographic printing industry.

The Future of Flexographic Printing: Opportunities and Challenges

The global flexographic printing market is projected to witness significant growth in the coming years, driven by factors like:

• Rising Demand for Flexible Packaging: Flexible packaging offers several advantages over traditional rigid packaging, including lighter weight, increased durability, and improved design flexibility. This trend is expected to continue, creating a favorable environment for flexographic printing solutions.
• Growth in E-commerce: The booming e-commerce sector necessitates high-quality, cost-effective printing solutions for product labels and packaging. Flexographic printing caters perfectly to this need, offering a competitive edge.
• Sustainability Concerns: As environmental awareness grows, there’s a rising demand for eco-friendly packaging solutions. Flexographic printing is well-positioned to address this concern, as it allows for the use of recyclable and sustainable materials.

However, the industry also faces certain challenges:

• Competition from Digital Printing: While flexographic printing excels in large-volume production runs, digital printing offers advantages for shorter runs and personalization. CGSI will need to adapt and potentially integrate digital printing technologies to remain competitive.
• Fluctuations in Raw Material Costs: The flexographic printing industry relies heavily on raw materials like polymers and inks. Price fluctuations in these commodities can impact production costs and profitability. CGSI will need to implement effective risk management strategies to mitigate these challenges.
• Skilled Labor Shortage: The printing industry faces a scarcity of skilled personnel, particularly in areas like machine operation and pre-press design. CGSI may need to invest in employee training programs and talent acquisition initiatives to address this issue.

Creative Graphics: A Company Poised for Success

Creative Graphics Solutions India Ltd. is well-positioned to navigate the dynamic landscape of the flexographic printing industry. Here’s why:

• Diversified Product Portfolio: CGSI offers a comprehensive range of flexographic printing solutions, catering to a wide variety of customer needs. This diversification helps mitigate risks associated with dependence on any single segment.
• Strong Financial Performance: The company’s consistent growth in profitability and revenue reflects its operational efficiency and ability to generate healthy returns.
• Focus on Innovation: CGSI’s commitment to innovation is evident in its in-house production capabilities and its strategic subsidiaries. This will be crucial for developing new solutions and staying ahead of the curve.
• Experienced Management Team: The company boasts a team of experienced professionals with a proven track record in the printing industry. Their expertise will guide CGSI’s future growth strategies.

Investor Considerations: Long-Term Potential Beyond the Initial Buzz

While the impressive IPO listing and first-day performance are positive indicators, long-term investment success hinges on CGSI’s ability to execute its growth plans and maintain financial health. Here are some key factors for investors to consider:

• Execution of Growth Strategy: Investors should monitor the company’s progress in implementing its capital expenditure plans, exploring potential acquisitions, and navigating the competitive landscape.
• Financial Performance Sustainability: Continued growth in profitability, revenue, and efficient management of debt will be crucial for long-term investor confidence.
• Innovation and Market Adaptation: Investors should assess CGSI’s commitment to innovation and its ability to adapt to evolving market trends and technologies.

By closely following these metrics and the company’s performance updates, investors can make informed decisions regarding their investment in Creative Graphics Solutions India Ltd.

Final Thoughts

Creative Graphics Solutions India Ltd. has made a remarkable entry into the public market. The overwhelming investor response, coupled with the strong financial performance and future growth potential, paints a promising picture for the company.

However, consistent execution of its strategic plans, navigating industry challenges, and maintaining financial health will be key to securing long-term success.

Investors who participated in the IPO and those considering an entry point should remain vigilant and monitor the company’s progress in the coming quarters.