Here’s what top analysts from brokerages recommend
Angel One: Neutral
“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 NEUTRAL rating on the issue, ” said Angel One.
Geojit Financial Services: Subscribe
“At the upper price band of Rs.42, PPL is available at P/E of 7.1x (FY22 annualized) which is attractive on a short to medium-term basis. PPL is well-positioned to capture favourable Indian fertilizer industry dynamics supported by conducive government regulations, driving raw material efficiency through backward integration of facilities and effective sourcing and established brand name backed by an extensive sales and distribution network. Considering PPL’s expansion plans, deepening the presence in western and southern regions of India, we assign a ‘Subscribe’ rating for the issue on a short to medium basis,” said the brokerage.
Choice Broking: Subscribe
The brokerage said that the company faces risks from its dependence of business on seasonal fluctuations and climatic variations. Unfavourable government policies and regulations and delays in receiving the subsidy payments from the government could add unwanted pressure on the business. However, Paradeep Phosphates is well-positioned to capture the favourable Indian fertilizer sector dynamics supported by conducive government regulations.
“At a higher price band of Rs 42, PPL is demanding an FY21 EV/Sales multiple of 0.7x, which is at a significant discount to the peer average of 1.1x. Considering the above observations, we assign a “SUBSCRIBE” rating for the issue,” Choice Broking said in its note.
Arihant Capital: Subscribe for long-term
“The company is a major player in the fertilizer sector and is expanding its capacity and backward integration operations. Also, it has raw material security through its promoters. Factoring in the business model, the demand for its products and the company fundamentals, we recommend that long term investors can subscribe,” said Arihant Capital in a note.
Dalal & Broacha Stock Broking: Subscribe for listing gains
“The company is well-positioned to capture favourable Indian fertilizer industry dynamics supported by conducive government regulations. We recommended ‘Subscribe for listing gains’ to the issue,” said Dalal & Broacha Stock Broking.
Grey Market Information
Grey market premium is the extra amount that buyers are ready to pay over and above the issue price. According to grey market observers, the grey market premium for Paradeep Phosphates IPO is ₹3 per share. It has remained steady over the past three days. This premium might change as the IPO has opened for subscription
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