Paradeep Phosphates IPO Details: Paradeep Phosphates IPO has started

New Delhi: Paradip Phosphates’ initial public offering (IPO) of Rs 1,501.73 crore started for subscription on Tuesday, May 17. The company will sell its shares for Rs 39-42 each

The non-urea fertilizer manufacturer, which was hired in 1981, is involved in the production, trade, distribution and sale of various complex fertilizers under the brand names ‘Joy Kisan-Navaratna’ and ‘Navaratna’.

The initial offer includes the issuance of new equity shares worth Rs 1,004 crore, along with the sale offer (OFS) of Rs 497.73 crore by existing shareholders and promoters.

Through OFS, Maroc Phosphates (ZMPPL), which owns 80.45 per cent equity shares, will offload 60,18,493 equity shares and the Government of India will sell 11,24,89,000 shares, offloading a full 19.55 per cent shares.

Investors can subscribe to the issue by bidding for a minimum of 350 shares and its multiples. The issue is open for subscription until Thursday, May 19th.

Paradip Phosphates is the second largest private sector manufacturer of non-urea fertilizer and D-ammonium phosphate (DAP) in terms of nine-month volume sales ending December 31, 2021.

Paradip Phosphates production facility is located in Paradip, Odisha. This facility can store 120,000 MT, 65,000 MT, 55,000 MT and 35,000 MT of phosphate rock, phosphoric acid, sulfur and MOP, respectively.

As of March 31, 2022, it has distributed products across 14 states of India. The company has a network of 4,761 dealers and more than 67,150 retailers serving more than 5 million farmers in India.

The company has made a profit of Rs 223.27 crore for the financial year 2020-21 as compared to Rs 193.22 crore in the previous year. The company’s revenue declined from Tk 4,397.21 crore to Tk 4,227.78 crore during the period under review.

In the nine months ended December 2021, it earned Rs 362.781 crore, while revenue from operations increased significantly to Rs 5,183.94 crore in the same period.

The Paradeep Phosphates IPO is set at 35% of the quota net offer for retail investors. The QIB quota has been fixed at 50 per cent whereas the quota for NII is reserved at 15 per cent.

Axis capital,

And Capital Markets is the chief managing editor of the issue book, where Link is the registrar of the Intime India issue.

Most brokerages are positive about this, thanks to its sound financial track record, established brand name, reach of sales and distribution, extensive storage, reasonable valuation and capacity expansion. However, a few weather-sensitive businesses have identified problems, including cost pressures and in-line pricing due to rising raw material prices, leaving little room for reversal.

Let’s take a look at what the brokerages have to say and recommend for the IPO of Paradip Phosphates:

Rating: Subscribe

Pardeep Phosphates is in a good position to capture the dynamics of the Indian fertilizer industry backed by favorable government regulations, brokerage Reliance Securities said, adding that it has a subscribe rating on the subject.

“It is able to drive the efficiency of raw materials through retroactive integration and efficient sourcing of facilities. Furthermore, its production facilities are secured and certified with unused land available for expansion,” it added.

Rating: Neutral

In terms of valuation, the stock will trade at the post-issue P / E multiples of 15.3xFY2021 EPS, which is consistent with other players such as Chambal Fertilizer and Deepak Fertilizer although they may not be strictly comparable, Angel One said.

The company has recommended a ‘neutral’ rating on the brokerage issue in light of the fact that it is compatible with peers and is likely to face headwinds in the face of cost pressures due to the recent rise in raw material prices.

Rating: Subscribe

In the high priced band of Rs 42, it is claiming a FY21 EV / Sales Multiple of 0.7x, which is a significant drop from the peer average of 1.1x, says Choice Broking. “Considering the above observations, we set a ‘subscribe’ rating for the issue.”

  • Marwari Financial Services

Rating: Subscribe

Based on an annual EPS of Rs 2.74 crore in FY21, the company is going to list at a P / E of 15.32x with a market cap of Rs 3,420.9 crore where its peers are trading at a PE of 16.9x and 12.9x respectively.

The second largest private sector manufacturer of phosphatic fertilizers in India is in a good position to capture the favorable dynamics of the Indian fertilizer industry, it said while giving a subscribe rating to the issue citing reasonable valuation.

Subscribe: Rating

Using rock phosphate and sulfuric acid, Paradip phosphates have been partially integrated into backward phosphoric acid production, which gives it a cost advantage because imported phosphoric acid is cheaper than imported phosphoric acid, BP Equities says in its IPO.

“At the top end of the price band, the issue price is 7x P / E based on FY22 annual earnings, which we believe is reasonably priced,” said the brokerage with a ‘subscribe’ rating to the issue.

Rating: Subscribe

The company is a major player in the fertilizer sector and is expanding its capacity and backward integration activities, Arihant Capital said. “It has raw material security through advertisers.”

Based on the business model, the demand for its products and the fundamentals of the company, the brokerage recommended that long-term investors subscribe to the issue of Paradip Phosphates.

(Disclaimer: The recommendations, suggestions, opinions and opinions offered by the experts are their own. These do not represent the views of the Economic Times)

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