Paradeep Phosphates IPO: The fertilizer company will open its initial public offering (IPO) on May 17 and will close on May 19. Should you subscribe?
Paradeep Phosphates IPO: The initial public offer (IPO) for India’s second-largest manufacturer of non-urea fertilisers and di-ammonium phosphates (DAP) in the private sector, Paradeep Phosphates Ltd, opens for subscription today. The fertilizer company will open its initial public offering (IPO) on May 17 and will close on May 19. The IPO consists of a fresh issue of shares worth Rs 1,501 crore and an offer for the sale of 11.85 crore shares by promoters and shareholders of the company.
Paradeep Phosphates IPO: Price Band
The price band has been fixed at Rs 39-42 per share. Ahead of the opening of the IPO, fertilizer company Paradeep Phosphates had raised a little over Rs 450 crore from anchor investors at Rs 42 apiece. Goldman Sachs, BNP Paribas Arbitrage, Kuber India Fund, Copthall Mauritius Investment and Societe Generale are among the anchor investors.
Paradeep Phosphates IPO: Objective
Proceeds of fresh issue ( Rs 1,000 crore) will be used to partly finance the acquisition of the fertiliser manufacturing facility in Goa and payment of debt and general corporate purposes.
Paradeep Phosphates IPO: Lot size
Bids can be made for a minimum of 350 Equity Shares and in multiples of 350 equity shares thereafter.
Paradeep Phosphates IPO: Financials
According to Kotak Securities, Paradeep Phosphates has an established track record of delivering robust financial performance. Its total income for the nine months ended December 31, 2021, and the financial years 2021, 2020 and 2019 was Rs 5973.69 cr, Rs 5183.94 cr, Rs 4227.78 cr, and Rs 4397.21 cr, respectively, while
Its profit for the period/year was Rs 362.78 crore, Rs 223.27 crore, Rs 193.22 cr and Rs 158.96 crore, respectively. Its EBITDA for the nine months ended December 31, 2021 and the Financial Years 2021, 2020 and 2019 was Rs 593.06 cr, Rs 561.26 cr, Rs 493.83 cr and Rs 480.75 cr, respectively.
Paradeep Phosphates IPO: GMP Today
Shares of the company are demanding a premium of Rs 3 per share in the grey market, which is 10 per cent on the issue price. The Grey market is the unofficial market where shares are traded before they are either offered or listed.
Paradeep Phosphates IPO: Should You Subscribe?
Choice Broking has a subscribe rating to the issue. “At higher price band of Rs. 42, PPL is demanding an FY21 EV/Sales multiple of 0.7x, which is at significant discount to the peer average of 1.1x. Considering the above observations, we assign a “SUBSCRIBE” rating for the issue,” the brokerage said in a note.
Brokerage firm Angel One has a neutral rating on the issue. “In terms of valuations, the stock will trade at post issue P/E multiples of 15.3xFY2021 EPS (at the upper end of the issue price band), which is in line with other players like Chambal fertilizer and Deepak fertilizer though they may not be strictly comparable. Given the fact that the company is valued in line with peers and likely to face headwinds in terms of cost pressures due to recent increase in raw material prices, we recommend a neutal rating on the issue.”
Paradeep Phosphates IPO: About the Company
Paradeep Phosphates is primarily engaged in manufacturing, trading, distribution and sales of a variety of complex fertilizers such as Di-Ammonium Phosphate (DAP) and NPK fertilizers. Paradeep Phosphates Limited (PPL) is the second largest private sector manufacturer of non-urea fertilizers in India and the second largest private sector manufacturer in terms of DAP volume sales for the nine months ended December 31, 2021. Its fertilizers are marketed under some of the key brand names in the market — ‘Jai Kisaan – Navratna’ and ‘Navratna.
