Paradeep Phosphates IPO Review: Paradeep Phosphates is looking to raise ₹ 1501.73 crores through an initial public offer (IPO). The IPO will open on 17th May 2022 and will conclude on 19th May 2022. The bids for anchor investors will open on 13th May 2022. It has a price band of ₹39 to ₹42 per share.
The offering includes a fresh issue of equity shares worth ₹ 1255 crores and an offer for sale by its promoters and shareholders. Zuari Maroc Phosphates Private Limited (ZMPPL), its holding company will offload 60.18 lakh equity shares and the Government of India will sell its entire stake in the company and will cease to be a promoter.
In this article, we shall take a look at Paradeep Phosphates IPO review and analyse its strengths and weakness. Keep reading to find out!
Table of Contents
About Paradeep Phosphates Limited
Paradeep Phosphate is part of the Adventz Group of Companies led by the group Chairman Saroj Kumar Poddar. It manufactures, trades, distributes and sells a variety of fertilizers.
The company owns brands like ‘Jai Kisaan – Navratna’ and ‘Navratna’. It is the third-largest private sector manufacturer of non-urea fertilizers in India and the second-largest in terms of DAP volume sales as of March 2021.
Its manufacturing facility is located in Paradeep, Odisha. It includes a DAP and NPK production facility, a Sulphuric acid production plant and a Phosphoric acid production plant. In addition, the plant has 3 operational concentrators to concentrate weak Phosphoric acid into strong Phosphoric acid.
Further, the plant can store up to 120,000 MT, 65,000 MT, 55,000 MT and 35,000 MT of Phosphate Rock, Phosphoric acid, Sulphur and MOP, respectively.
Paradeep Phosphate has an extensive sales and distribution network. It has a strong presence in the eastern part of India. As of March 31, 2022, it distributed products across 14 states in India through the network of 11 regional marketing offices and 468 stock points.
The Goa Transaction
Paradeep Phosphate has to pay ₹ 578.54 crores to acquire a manufacturing facility in Goa. It will acquire the business of developing, manufacturing and trading urea and NPK products carried out at the Goa Facility. This plant has a total annual fertiliser capacity of 1.2 million MT per annum.
Further, it has a captive power plant, a railway siding, infrastructure to store raw material and finished goods and a bagging plant. As a result, Paradeep Phosphate’s total fertilizer production capacity might increase by 1.2 million MT.
Key Information on Paradeep Phosphates IPO
Link Intime India Private Limited is the registrar for the issue. The lead managers are:
- Axis Capital Limited
- ICICI Securities Limited
- JM Financial Consultants Private Limited
- SBI Capital Markets Limited
IPO Dates
| Event | Date |
|---|---|
| IPO Opening Date | May 17, 2022 |
| IPO Closing Date | May 19, 2022 |
| Basis of Allotment | May 24, 2022 |
| Initiation of Refunds | May 25, 2022 |
| Credit of Shares to Demat | May 26, 2022 |
| Paradeep Phosphates IPO Listing Date | May 27, 2022 |
Paradeep Phosphates IPO – Subscription details
| Particulars | Details |
|---|---|
| Face Value | ₹10 per share |
| IPO Price | ₹39 to ₹42 per share |
| Lot Size | 350 Shares |
| Issue Size | Shares of ₹10 (aggregating up to ₹1,501.73 Cr) |
| Fresh Issue | Shares of ₹10 (aggregating up to ₹1,004.00 Cr) |
| Offer for Sale | 118,507,493 shares of ₹10 (aggregating up to ₹497.73 Cr) |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE, NSE |
| QIB Shares Offered | Not more than 50% of the Net Offer |
| Retail Shares Offered | Not less than 35% of the Net Offer |
| NII (HNI) Shares Offered | Not less than 15% of the Net Offer |
Paradeep Phosphates IPO – Grey Market Information
The Grey Market Premium for the shares of the company is unavailable at the moment. However, we shall keep you posted.
Paradeep Phosphates Competitors
Some of the major competitors of Paradeep Phosphates are Coromandel International, Chambal Fertilizers Chemicals, and Deepak Fertilizers and Petrochemicals.
Purpose of the IPO
- Part-financing the acquisition of the Goa Facility.
- Repayment/prepayment of their borrowings.
- General corporate purposes.
Financial Highlights
Paradeep Phosphates reported revenue of ₹ 5164.73 crores in FY21 as against ₹ 4192.87 crores a year ago. Net profit for the period stood at Rs 223.27 crore versus Rs 193.22 crore last year.
For the nine months ending 31 December 2021, the company reported a revenue of ₹5,973.6 crores, while the revenue for fiscal 2021 stood at ₹5,183.9 crores. It reported a profit of ₹362.7 crores in the nine-month period ending 31 December 2021, while profit for fiscal 2021 stood at ₹223.2 crores.
| Particulars (in Rs. Crores) | FY21 | FY20 | FY19 |
|---|---|---|---|
| Revenue | 5,164.73 | 4,192.87 | 4,357.91 |
| EBITDA | 561.26 | 493.83 | 480.75 |
| PAT | 223.27 | 193.22 | 158.96 |
| EPS (basic in Rs.) | 3.88 | 3.36 | 2.76 |
| ROE | 12.22% | 12.05% | 10.72% |
| Particulars (in Rs. Crores) | FY21 | FY20 | FY19 |
|---|---|---|---|
| Total Assets | 4,423.17 | 5,010.33 | 5,627.66 |
| Share Capital | 575.45 | 575.45 | 575.45 |
| Total Borrowings | 1,251.17 | 2,297.95 | 3,123.00 |
Paradeep Phosphates IPO – 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.
Strengths of Paradeep Phosphates
- Paradeep Phosphates is the second largest in terms of phosphatic fertilizer capacity in India.
- It is supported by conducive government regulations. Hence, it is well-positioned to capture favourable Indian fertilizer industry dynamics.
- Its manufacturing facility near the Paradeep port is secure and certified. The port facilitates sizeable material storage, handling and port facilities.
- It is India’s second-largest backward integrated fertilizer manufacturing facility.
- The business has an extensive sales and distribution network and is an established brand name.
Weaknesses of Paradeep Phosphates
- The company’s performance is dependent on the agricultural sector. Any changes in the sector may have an immediate effect on the business. The demand for fertilizers and other products is dependent on the area under cultivation, soil quality, climatic conditions and so on. These factors are beyond control.
- The business is cyclical in nature and climatic conditions have an impact on it. Thus, seasonal variations and unfavourable local and global weather patterns may have an adverse effect.
- The company operates in a regulated industry. Therefore, changes in government policies will have an effect on its operations and profitability.
- Policies relating to the agriculture sector such as the reduction of Government expenditure, the withdrawal of or changes in incentives and subsidies or minimum support prices could affect the ability of farmers to spend on fertilizers.
- There are outstanding litigations against the company, its promoters and directors.
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In Closing
In this article, we covered the Paradeep Phosphates IPO. The Initial Public Offering is a combination of a fresh issue as well as an offer for sale. The company will receive the amount collected from the fresh issue. This amount will be used for the Goa Transaction and general corporate purposes. However, the amount received as an offer for sale will be received by the respective promoters who will be selling their shares.
Let us know what you think about the Paradeep Phosphates IPO review in the comments below? Happy Investing!
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Hey, there! Thank you for stopping by 🙂 Simran is a master graduate in commerce from Bangalore University, an NSE-certified Fundamental Analyst and a NISM-certified Research Analyst. She finds interest in investing and personal finance. Outside of work, you can find her painting, reading and going on long walks.
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Nice article. Covering important features of the IPO in a simple manner.