Paradeep Phosphates IPO Day 2: The IPO of Paradeep Phosphates, the second largest private sector manufacturer of non-urea fertilizers and diammonium phosphates (DAP) in India, is now open for tender. The fertilizer company opened its first public offering (IPO) from May 17 and will close on May 19. According to the information available on the BSE website, Paradeep Phosphates has set the price range of its public offering at Rs 39 to Rs 42 per share. The company aims to raise Rs 1,501 crore from a combination of a new share issue totaling up to Rs 1,004 crore and an offer for sale (OFS) of 118,507,493 shares of Rs 10 each added up to Rs 497.73 crore. The OFS includes 6.02 million shares of Zuari Maroc Phosphates Pvt Ltd (ZMPPL), a joint venture of Zuari Agro Chemicals and OCP Group SA, and up to 112.49 million shares of the government. ZMPPL has an 80.45 percent stake while the government owns about 19.55 percent in the company.
Paradeep Phosphates IPO: Subscription Status
As of 10:30 a.m., private investors have bid for 64 percent of the shares reserved for them, at 13.15 crore, while the non-institutional investor’s portion was bid at 7 percent at the launch of Paradeep Phosphates’ IPO. Qualified institutional buyers have subscribed to 4,900 shares of the issue against their quota of 8.07 crore shares.
Approximately 50 percent of the net offering will be reserved for QIBs, 35 percent for retail investors and the remaining 15 percent for non-institutional investors.
Paradeep Phosphates IPO: GMP today
According to gray market observers, Paradeep Phosphates IPO GMP (Gray Market Premium) today is Rs 3, which is unchanged from yesterday’s gray market premium. Observers added that Paradeep Phosphates IPO GMP has been stable at Rs 3 for the past three days. They said that Paradeep Phosphates IPO gray market price may change as there is trend reversal in secondary market.
However, stock market experts suggested to investors that GMP is unofficial, unregulated. So those who follow GMP are advised to also go through the financial records of the company as the balance sheet of the company will give a better idea of the fundamentals of the company.
Paradeep Phosphates IPO: Financials
Paradeep Phosphates reported a profit of Rs 362,781 crore in the nine months ended December 2021 with operating revenues increasing significantly to Rs 5,183.94 crore over the same period. Axis Capital, ICICI Securities, JM Financial and SBI Capital Markets are the leading managers in this field.
Established in December 1981, Paradeep Phosphates is mainly engaged in manufacturing, trading, distributing and selling a variety of complex fertilizers such as DAP, three types of Nitrogen-Phosphorus-Potassium (NPK), namely NPK-10, NPK-12 and NP -20, zypmite, phosphogypsum and hydroflorosilicon acid (HFSA).
Paradeep Phosphates IPO: Should You Subscribe?
According to the brokerage firm Choice Broking, Paradeep Phosphates is well positioned to capture the favorable dynamics of the Indian fertilizer industry, supported by favorable government regulations. It drives resource efficiency through backward integration of facilities and effective sourcing. The company has a secured and certified production facility, infrastructure and unused land available for expansion. The strategic location of the production facility and extensive material storage, transshipment and port facilities are other positive points for the company. It also has a strong heritage, an experienced management team and prominent shareholders. “At a higher price range of Rs 42, PPL is demanding an FY21 EV/Sales multiple of 0.7x, which is a significant discount from the peer average of 1.1x. Given the above observations, we are assigning a “SUBSCRIBE” rating for the issue,” it said in its note.
In an IPO note, Geojit said: “At the top price range of Rs.42, PPL is available at a P/E of 7.1x (YY22 year on year), which is attractive in the short to medium term. PPL is well positioned to to capture favorable dynamics of the Indian fertilizer industry, supported by favorable government regulations, and drive raw material efficiency through backward integration of facilities and effective sourcing and an established brand name supported by an extensive sales and distribution network.Given PPL’s expansion plans and the strengthening the presence in the western and southern regions of India, we are assigning a ‘Subscribe’ rating to the issue on a short-to-medium basis.”
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