Kumar Arch Tech, a leading manufacturer of PVC blend-based building materials, has filed draft papers with the Securities and Exchange Board of India (SEBI) to raise ₹740 crore through an initial public offering (IPO). This IPO includes a fresh issuance of shares worth ₹240 crore and an offer-for-sale (OFS) of shares valued at ₹500 crore from existing promoters.
Given the company's strong growth trajectory, investors who are keen to invest in IPO opportunities may find this an attractive prospect.
Breakdown of the IPO
The company aims to raise ₹240 crore through the fresh share issue. In addition, the promoters will offload shares worth ₹500 crore in the OFS component. Notably, Kumar Arch Tech may also conduct a pre-IPO placement, raising up to ₹48 crore. If this happens, the size of the fresh issuance will be adjusted accordingly.
Use of proceeds from fresh issue
A significant portion of the funds from the fresh share issuance, amounting to ₹182.09 crore, will be allocated to its subsidiary, Taylias Industry Private Limited. This investment is intended to finance capital expenditure for a greenfield project focusing on the production of PVC-based materials.
Kumar Arch Tech’s product range and market
Kumar Arch Tech is known for its diverse range of products, which are categorised into three main areas:
According to a report by Wazir, the global demand for PVC blend-based building materials has been on the rise, particularly in the United States. US imports of these materials grew at a compound annual growth rate (CAGR) of 6%, increasing from $4.9 billion in 2020 to $6.2 billion by March 31, 2024. India has been a key exporter in this sector, with its exports to the US growing at a remarkable CAGR of 32% during the same period, from $47 million in 2020 to $144 million in 2024.
Motilal Oswal and Equirus Capital as lead managers
Motilal Oswal Investment Advisors and Equirus Capital have been appointed as the book-running lead managers for this IPO. Both firms bring extensive expertise in capital markets, ensuring a well-managed process for Kumar Arch Tech’s listing.
Strategic growth and market potential
Kumar Arch Tech’s decision to invest in IPO comes at a time of increasing global demand for PVC blend-based building materials, positioning the company to leverage this growth. With its strong domestic and international presence, particularly in the US market, the funds raised through the IPO are expected to drive further expansion and operational improvements. The greenfield project supported by this capital injection will enhance Kumar Arch Tech’s manufacturing capacity and product offerings, strengthening its competitive position.
In conclusion, the upcoming IPO presents an opportunity for investors to participate in a growing segment of the building materials industry, with Kumar Arch Tech poised for further growth through strategic investments and market demand.
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