SPEB ADHESIVES LIMITED IPO Explain

Speb Adhesives IPO Overview

Solvent-based synthetic rubber adhesives manufacturer raising ₹33.73 cr via fresh issue ₹27.18 cr + OFS ₹6.55 cr of 60.24L shares. Price: ₹52-56. Lot: 4,000 shares (₹2.24L min). Funds for new water-based adhesive plant Amravati (₹18.3 cr), debt repayment (₹2.99 cr), working capital (₹2 cr). Founded 1990, 35 years old.

Products: Multi-purpose, spray, premium bonding, ducting, woodworking, footwear adhesives. Polychloroprene & SBS-based. 12,000 liters/day capacity. 41 employees, Raigad, Maharashtra.

FY25: ₹45.54 cr revenue (+5%), ₹5.89 cr PAT (+19%). P/E: 10-11x.

Lead: Unistone Capital. Analyst: “Fully priced”. 69% Maharashtra concentration, fragmented market, contract manufacturing for water-based. Competes with Pidilite, Astral, Jubilant.

IPO DETAILED INFORMATION

Issue Details

Parameter	Details
IPO Type	SME
IPO Open Date	1 December 2025 (Sunday)
IPO Close Date	3 December 2025 (Tuesday)
Allotment Date	4 December 2025 (Wednesday) – Expected
Credit to Demat	5 December 2025 (Thursday) – Expected
Refund Initiation	5 December 2025 (Thursday) – Expected
Listing Date	8 December 2025 (Sunday) – Tentative
Price Band	₹52 – ₹56 per share
Face Value	₹10 per share
Lot Size	4,000 shares
Min Investment (Retail)	₹2,24,000 (1 lot / 4,000 shares at upper band)
Additional Lots	Multiples of 2,000 shares
sHNI Investment	₹4,48,000 (2 lots / 8,000 shares) minimum
bHNI Investment	TBD
Issue Size	₹33.73 crore total (at upper band)
Fresh Issue	₹27.18 crore (80.6%) – 48,54,000 shares
Offer for Sale (OFS)	₹6.55 crore (19.4%) – 11,70,000 shares by promoters Kirtikumar Vithlani (6L) & Harish Vithlani (5.7L)
Total Shares Offered	60,24,000 equity shares
Listing	NSE SME (Emerge Platform)
Post-Issue Market Cap	~₹109 crore (at upper price band)
P/E Ratio	~10-11x (FY25 basis – Reasonable valuation)
EPS	₹5.03 (FY25)
Expected Listing Price	₹56 (no premium expected)

Issue Break-up

Category	Allocation	Shares
QIB (Qualified Institutional Buyers)	30,12,000 shares	50%
NII (Non-Institutional Investors)	9,04,000 shares	15%
Retail Individual Investors	21,08,000 shares	35%
Market Maker	Not disclosed	~5%

Note: Standard mainboard-style allocation pattern for SME (50% QIB vs typical 46-47%). No anchor portion disclosed.

Objects of the Issue (Fund Utilization)

Fresh Issue Proceeds (₹27.18 crore gross / ~₹23.29 cr net) will be used for:

Setting Up New Manufacturing Facility for Water-Based Adhesives at Tambati, Raigad, Maharashtra – ₹18.30 crore (78.5% of net proceeds)
- Major strategic expansion into water-based adhesives segment
- Currently water-based adhesives manufactured on contract basis only
- Backward integration to own water-based production
- New facility in Tambati village, Raigad district, Maharashtra
- Eco-friendly product line for automotive interiors, HVAC, woodworking
- Diversification from pure solvent-based focus
- Capacity addition for growing water-based adhesives market
Repayment/Prepayment of Borrowings – ₹2.99 crore (12.8% of net proceeds)
- Debt reduction from banks
- Deleveraging balance sheet
- Reducing finance costs
Funding Working Capital Requirements – ₹2.00 crore (8.6% of net proceeds)
- Day-to-day operations support
- Inventory and receivables management

OFS Proceeds (₹6.55 crore):

Goes to selling promoters:
- Kirtikumar Vithlani: Selling 6,00,000 shares
- Harish Vithlani: Selling 5,70,000 shares
Partial exit/liquidity for promoters
11,70,000 shares (19.4% of issue) being sold

Strategic Focus:

Massive 78.5% for water-based adhesive plant – clear strategic priority
Backward integration reducing contract manufacturing dependency for water-based products
Diversification from solvent-based to eco-friendly water-based segment
Growing demand for non-toxic adhesives in automotive, HVAC sectors
Only 12.8% for debt and 8.6% for working capital – indicates healthy financial position

Note: 80.6% fresh issue for growth, 19.4% OFS for promoter partial exit.

Lead Managers & Registrar

Book Running Lead Manager (BRLM):

Unistone Capital Private Limited
Address: A/305, Dynasty Business Park, Andheri Kurla Road, Andheri East, Mumbai – 400059, Maharashtra
Phone: 022 4604 6494
Website: www.unistonecapital.com

Registrar:

MUFG Intime India Private Limited (formerly Link Intime India)
Address: C-101, 247 Park, 1st Floor, L B S Marg, Vikhroli (West), Mumbai – 400083
Phone: +91 810 811 4949
Website: www.in.mpms.mufg.com

Promoters & Management

Key Promoters – Vithlani Family (4 Promoters):

Mr. Kirtikumar Vithlani – Promoter
- Key family member
- Selling 6,00,000 shares in OFS (₹3.36 cr at upper band)
Mr. Bhaumik Vithlani – Promoter
- Family member
Mr. Gaurav Vithlani – Promoter
- Family member
Mr. Harish Vithlani – Promoter
- Key family member
- Selling 5,70,000 shares in OFS (₹3.19 cr at upper band)

Company History:

Founded 1990 as “M/s Speb Rubber Industries” (proprietorship)
35 years of operating history – Long-established business
Converted to private limited company and later to public limited company
Operating Brand: Speb
Evolution: From rubber-based adhesives trading to manufacturing solvent-based and water-based adhesives
Workforce: 41 permanent employees (as of November 20, 2025)
Manufacturing: Own facility for solvent-based; contract manufacturing for water-based (till new plant operational)

Company Contact:

Registered Office: Plot No. J 33, MIDC, Taloja, Raigad, Panvel – 410208, Maharashtra
Manufacturing Facility: Same location – MIDC industrial area, Taloja, Raigad
New Facility (IPO funded): Tambati, Raigad district, Maharashtra (water-based adhesives)
Phone: +91 7738532223
Website: www.speb7.com
Workforce: 41 permanent employees

COMPANY OVERVIEW

Establishment & Background:

Founded in 1990 as proprietorship “M/s Speb Rubber Industries” (35 years old)
Converted to Speb Adhesives Limited (public limited company)
Industry: Adhesives Manufacturing – Solvent-Based & Water-Based
Headquartered and Manufacturing in Raigad, Maharashtra (MIDC Taloja)
Workforce: 41 permanent employees
Long-standing family business with 35-year track record

Business Model:

Manufacturer & Distributor of Industrial Adhesives
Two Product Categories:
1. Solvent-Based Synthetic Rubber Adhesives (In-house manufacturing – Primary focus):
  - Polychloroprene-based adhesives (Neoprene/CR-based)
  - SBS-based adhesives (Styrene-Butadiene-Styrene polymer)
  - Products: Multi-purpose adhesives, spray-grade adhesives, premium bonding adhesives, ducting & insulation adhesives, woodworking adhesives, footwear-grade adhesives, generator set adhesives
  - Strong bonding, heat & water resistance, flexibility, durability
2. Water-Based Adhesives (Currently contract manufactured – Expanding in-house with IPO):
  - Eco-friendly, low VOC, non-toxic adhesives
  - Applications: Automotive interiors, HVAC systems, woodworking, packaging
  - Growing segment with environmental regulations favoring water-based over solvent-based
SKU Range: 10ml to 30 liters (catering to retail and industrial customers)
Manufacturing Capacity: 12,000 liters per day (existing Taloja facility for solvent-based)
Target Industries:

Hardware & Tools
Foam & Furnishing
Ducting & Insulation
Woodworking & Furniture
Footwear
Generator Manufacturing
Packaging
Automotive
Construction
Distribution Channels:

Dealer-Distribution Network: Extensive dealer network across regions
Industrial Sales: Direct B2B sales to manufacturers
Government Supply Contracts: Public sector procurement
Geographic Revenue Mix:

Maharashtra: 68.8% of revenue (as of Dec 31, 2024) – Heavy concentration!
Rajasthan: 14.2%
Gujarat, Haryana, MP, UP, Karnataka, Delhi NCR: Remaining ~17%
Business Focus: B2B model serving industrial customers, no significant retail consumer presence

Market Position:

Positioned as industrial adhesives supplier in India’s growing adhesives market
Competing in fragmented market with local and national players
Niche player vs giants like Pidilite Industries (₹50,000+ cr market cap), Astral Limited, Jubilant Industries
35-year track record provides credibility and established customer relationships
Focusing on quality, innovation, eco-friendliness in formulations

Operations:

Main Manufacturing Facility: Plot No. J 33, MIDC, Taloja, Raigad, Panvel – 410208 (solvent-based)
New Facility (IPO funded): Tambati, Raigad district (water-based adhesives) – ₹18.3 cr investment
Installed Capacity: 12,000 liters per day (existing facility)
Production Range: 10ml sachets to 30-liter containers
Quality Focus: Non-toxic, environment-friendly formulations meeting industrial standards

Company Strengths

Strong Profit Growth – PAT +19% (FY24 to FY25):
- FY25 revenue: ₹45.54 cr (+5.4% vs ₹43.21 cr FY24)
- FY25 PAT: ₹5.89 cr (+19.2% vs ₹4.94 cr FY24)
- Healthy profit margin: 12.9% (FY25) vs 11.4% (FY24) – improving profitability
- Consistent revenue growth with accelerating profit expansion
- Demonstrates operational leverage and efficiency improvements
35-Year Operating History – Long-Established Business (Since 1990):
- Founded in 1990 as Speb Rubber Industries – 35 years of operations
- One of the oldest companies in this IPO batch
- Survived multiple economic cycles, industry disruptions, competitive pressures
- Three-decade track record provides significant credibility
- Established customer relationships and brand recognition
- Multi-generational family business demonstrating sustainability
Attractive Valuation – P/E ~10-11x:
- Issue priced at P/E of ~10-11x (FY25 basis) – very reasonable
- Lower than industry averages (Pidilite trades at 70-80x, Astral at 60-70x)
- Value pricing for established 35-year-old business
- Despite “fully priced” analyst comment, P/E remains reasonable vs peers
- Margin of safety at current pricing
- Growth potential if water-based facility succeeds
Strategic Expansion into Water-Based Adhesives – ₹18.3 Cr Investment:
- IPO proceeds (78.5% or ₹18.3 cr) funding new water-based adhesive manufacturing facility
- Backward integration – currently outsourcing water-based production
- Water-based adhesives = eco-friendly, low VOC, non-toxic – growing market segment
- Environmental regulations globally favoring water-based over solvent-based
- Applications in high-growth sectors: Automotive interiors, HVAC, woodworking
- Product diversification reducing reliance on solvent-based adhesives
- New Tambati facility strengthens competitive position
Diversified Product Portfolio – 7+ Adhesive Categories:
- Wide range: Multi-purpose, spray-grade, premium bonding, ducting, insulation, woodworking, footwear, generator set adhesives
- Both polychloroprene-based and SBS-based formulations
- Multiple SKUs (10ml to 30 liters) catering to varied customer needs
- Serves diverse industries: Hardware, foam/furnishing, construction, footwear, automotive
- Reduces dependency on single product or application
- Cross-selling opportunities across customer base
Growing Indian Adhesives Market – Industry Tailwind:
- Indian adhesives market growing driven by construction, automotive, packaging, furniture sectors
- Packaging industry growth (e-commerce boom) driving adhesive demand
- Construction and infrastructure spending (government push) benefiting industrial adhesives
- Automotive sector recovery post-pandemic increasing usage
- Growing awareness of quality adhesives vs low-cost alternatives
- Shift towards organized players from unorganized market
Multi-Channel Distribution – Dealer Network + Industrial + Government:
- Three distribution channels reduce dependency on single route
- Dealer network provides retail and small-business reach
- Direct industrial sales for large manufacturers
- Government contracts add stability and credibility
- Geographic expansion easier with multi-channel approach
Healthy Financial Position – Minimal Debt Burden:
- Only ₹2.99 cr (12.8% of IPO) allocated to debt repayment
- Indicates low leverage and healthy balance sheet
- Not a distressed company raising money for survival
- Majority of proceeds (78.5%) going to genuine growth (new plant)
- Financial discipline and prudent capital management

Key Risks & Challenges

Flat GMP (₹0) – Zero Market Enthusiasm:
- GMP at ₹0 as of Nov 25-Dec 1 – completely flat, no premium
- Zero grey market interest or speculation
- Indicates extreme market skepticism and lack of confidence
- Expected listing price = issue price (₹56) with no gains
- High risk of flat or negative listing
- Investors showing no enthusiasm despite reasonable P/E
“Fully Priced” Valuation – Analyst Caution:
- Analyst verdict (Toruscope): “Based on its recent financial data, the issue appears fully priced“
- Recommendation: “Investors with a medium to long-term horizon and higher risk appetite may evaluate”
- Suggests limited upside at current pricing
- No margin of safety despite P/E 10-11x
- Market cautious about modest revenue growth (+5%) and competitive intensity
Extreme Geographic Concentration – 69% Revenue from Maharashtra!:
- Critical Risk: Maharashtra accounted for 68.8% of revenue (as of Dec 31, 2024)
- Over-dependence on single state creates massive vulnerability
- Political instability, regulatory changes, economic slowdown in Maharashtra = severe impact
- Natural disasters, floods, earthquakes in Maharashtra = business disruption
- Competition concentration in Maharashtra limits pricing power
- Limited pan-India presence despite 35-year history
- Rajasthan (14.2%) and other states contribute minimal revenue
Highly Competitive & Fragmented Market – Price Wars:
- Competing with giants:
  - Pidilite Industries: ₹50,000+ cr market cap, dominant in adhesives
  - Astral Limited: ₹28,000+ cr market cap, adhesives & building materials
  - Sika India, Jubilant Industries, Apcotex Industries
- Plus hundreds of regional and unorganized players
- Low barriers to entry in adhesives manufacturing
- Price-based competition eroding margins
- Difficult to differentiate in commodity-like adhesive products
- Customer loyalty limited – price-sensitive procurement
Modest Revenue Growth – Only +5% (FY24 to FY25):
- Revenue growth decelerated: +5.4% (FY24-FY25)
- PAT growth +19% driven more by margin expansion than revenue growth
- Top-line momentum slowing despite growing market
- Questions about market share gains and competitive positioning
- New water-based plant will take 12-18 months to operationalize
- Near-term growth may remain muted
Contract Manufacturing Dependency for Water-Based – Quality Risk:
- Currently 100% reliant on contract manufacturers for water-based adhesives
- No control over quality, timelines, costs for this product category
- Water-based segment growing but company outsourcing production
- Quality issues from contract manufacturer can damage brand
- Supply chain disruptions impact ability to serve customers
- New Tambati facility (₹18.3 cr) will address this but won’t be operational for 12-18 months
- Until then, contract manufacturing dependency persists
Small Scale & Limited Brand Recognition – Regional Player:
- Revenue of ₹45.54 cr (FY25) – very small vs Pidilite (₹12,000+ cr), Astral (₹6,000+ cr)
- 41 employees only – limited organizational bandwidth
- No national brand recognition vs established players
- Difficult to win large enterprise contracts due to small size
- Limited R&D and innovation capabilities
- Cannot match marketing and distribution investments of larger competitors
Promoter Partial Exit via OFS – ₹6.55 Cr (19.4% of Issue):
- Kirtikumar Vithlani and Harish Vithlani selling 11.7 lakh shares
- OFS of ₹6.55 cr (19.4% of total issue size)
- Promoters taking significant money off table at IPO itself
- Questions: Why exit now if new water-based plant poised for success?
- Signal of reduced confidence in future valuations?
- Only 80.6% proceeds go to company for genuine growth
Raw Material Price Volatility – Petrochemical Dependency:
- Solvent-based adhesives use petrochemical derivatives (neoprene, SBS polymers)
- Subject to crude oil price fluctuations
- Global supply chain disruptions impact raw material availability
- Limited pricing power to pass on cost increases due to competition
- Margin compression risk during inflationary cycles
- No long-term hedging or supply contracts mentioned
Regulatory & Environmental Risks – VOC Restrictions:

Solvent-based adhesives contain Volatile Organic Compounds (VOCs)
Increasing environmental regulations restricting VOC emissions
European and global markets moving away from solvent-based to water-based
India may follow with stricter VOC norms
Core solvent-based business could face regulatory headwinds
Water-based expansion is response to this risk, but still nascent
Compliance costs rising with stricter environmental norms

SME Listing Liquidity Risk – Limited Trading Volumes:

NSE SME listing = lower liquidity vs mainboard
Institutional participation limited due to SME status
Trading volumes typically low
Wide bid-ask spreads
Exit opportunities constrained
Difficulty selling large quantities
May remain SME listing for extended period

Customer Concentration Risk – Typical of Industrial B2B:

While not explicitly disclosed, B2B adhesive companies typically have high customer concentration
Top 10 customers likely account for 50-70% of revenue
Loss of major industrial customer = significant revenue impact
No long-term contracts mentioned
Customer switching costs low in commoditized adhesive market

CONCERNS: Analyst Toruscope states issue is “fully priced” and recommends “investors with medium to long-term horizon and higher risk appetite may evaluate.” Flat GMP (₹0) indicates zero market interest. Extreme geographic concentration (69% from Maharashtra alone!), highly competitive and fragmented market (competing with Pidilite ₹50K cr, Astral ₹28K cr), modest revenue growth (+5%), contract manufacturing dependency for water-based products, promoter partial exit (₹6.55 cr or 19.4% OFS). Small scale (₹45.54 cr revenue, 41 employees) vs giants. Water-based plant (₹18.3 cr) strategic but 12-18 months to operationalize.

Disclaimer: This information is based on publicly available sources including SEBI RHP filings, analyst reports, and company disclosures. Investors should conduct their own research and consult with financial advisors before making investment decisions. Past performance is not indicative of future results. SME investments carry higher risks than mainboard listings.