Shree Tirupati Balajee Agro IPO: ₹170 Crore Issue Opens Today – 10 Key Risks Investors Must Know Before Bidding

The Shree Tirupati Balajee Agro Trading Company IPO opens for investors today and will remain available until Monday, September 9. The company plans to raise ₹169.65 crore through this public issue, which includes both fresh shares and an offer for sale.

The price range for the IPO is set between ₹78 and ₹83 per share. Retail investors can buy one lot, which consists of 180 shares, meaning they need to invest a minimum of ₹14,940 to participate.

Before investing in the IPO, it’s important to understand the key risks mentioned in the company’s Red Herring Prospectus (RHP). Here are 10 major risks:

1. Regional Dependence

All of the company’s manufacturing facilities are located in Pithampur, Madhya Pradesh. This means any disruption, like natural disasters or local unrest in that area, could severely impact its business.

2. Plastic Product Bans

With the growing focus on reducing plastic pollution, there is a possibility that plastic products, including those made by Shree Tirupati Balajee Agro, may face bans. This would negatively affect the company’s business in India and its export markets.

3. Foreign Currency Risk

As the company depends heavily on export revenue, it is exposed to fluctuations in foreign exchange rates. Changes in these rates could hurt its financial performance.

4. Reliance on the Western Region for Domestic Sales

More than 85% of the company’s domestic sales come from the Western zone of India. Any problems in this market, like economic downturns or competition, could impact its revenue.

5. Raw Material Costs

The company uses raw materials like polypropylene granules, LDPE, and HDPE, which are affected by fluctuations in crude oil prices. This could raise costs and hurt profitability.

6. Debt Risk

The company already has debt and may take on more in the future. If it is unable to manage or repay this debt, it could face financial challenges.

7. Product Concentration

Shree Tirupati Balajee Agro’s business is heavily focused on bulk packaging products, especially Flexible Intermediate Bulk Containers (FIBC). If there’s a drop in demand or disruption in this area, it could significantly impact the company’s earnings.

8. Promoter Guarantees

The company’s promoters have given personal guarantees to support some of its loans. If these guarantees are revoked or called upon, it could affect the company’s financial stability.

9. Legal Issues

The company is involved in several legal cases, which also include its subsidiaries, group companies, directors, and promoters. Unfavourable outcomes in these cases could damage its reputation and finances.

10. Competition

Shree Tirupati Balajee Agro operates in a highly competitive industry with both large and small players. This intense competition could put pressure on its business and profitability.

Before deciding to invest, these risks should be carefully considered.