Paragon Fine and Speciality Chemicals IPO Review: Paragon Fine and Speciality Chemicals is coming up with its Initial public offering. This is an SME (small and medium-sized enterprise) which is going to be listed on NSE SME. The IPO will be open for subscription on 26th October 2023 and closes on 30th October 2023.
This article about Paragon Fine and Speciality Chemicals IPO Review, includes an in-depth analysis of the company’s financials and the strengths and weaknesses of Paragon Fine and Speciality Chemicals. Keep reading for more details!
About The Company
Incorporated in 2004, Paragon Fine and Speciality Chemicals is a company that specializes in custom synthesis and manufacturing of chemical intermediates for various industries, such as Pharma, AGRO, Cosmetics, Pigment and Dye.
The company has a diverse customer base in India and abroad and offers around 140 products with complex and differentiated chemistry. Some of the products include DICHLONE, CHLORANIL, 3,4-Dimethoxy Aniline, 2-AM-5- METHOXY BENZENE-1,4- DISulfonic acid Disodium SALT, 5-Nitro-2-Amino Phenol and 1-ACETAMIDO 7-NAPHTHO. The company’s manufacturing facility is located in Viramgam District, Ahmedabad, Gujarat and covers an area of approximately 7000 square.
REVENUE: The company’s revenue breakdown by segment is as follows: AGRO – 8.9%, Cosmetics – 6.1%, Dyes – 68.8%, Pharma – 0.06%, Pigment – 1.05%, Other – 14.87%.
GEOGRAPHICAL REVENUE: The company’s revenue breakdown by geography is as follows: India – 66.12%, Other countries – 33.8% (including USA, Israel, Spain, United Kingdom, China, Switzerland, Taiwan, Thailand, Mexico, Japan, Russia, France, Indonesia, Latvia, Germany etc).
Industry Overview
The Indian chemical industry is a global leader in exports and imports of chemicals, excluding pharmaceuticals. It ranks 14th in exports and 8th in imports worldwide.
The industry is projected to add US$ 300 billion to India’s GDP by 2025. It covers more than 80,000 commercial products with a market size of US$ 178 billion in 2018-19. The market is expected to grow at 9.3% and reach US$ 304 billion by 2025, driven by increasing demand for Speciality chemicals and petrochemicals in various end-user segments.
The Speciality chemicals sector alone is expected to reach US$ 40 billion by 2025. The Indian chemical industry is largely de-licensed, except for a few hazardous chemicals.
According to the Crisil report, Indian Speciality chemical manufacturers have grown at a CAGR of 11% in revenue between FY15 and FY21, increasing their share in the global market from 3% to 4%.
They have also accelerated their capex plan to capitalize on the emerging opportunities and strong growth prospects. India exports its chemical products to more than 175 countries.
Paragon Fine and Speciality Chemical IPO Review – Financial Highlights
Paragon Fine and Speciality Chemicals has shown robust financial performance. Revenue surged from ₹83.25 crore in March 2021 to ₹102.2 crore in March 2023, while PAT doubled from ₹4.3 crore to ₹9.8 crore.
Borrowings rose marginally from ₹21.9 crore to ₹25.2 crore, maintaining a debt-to-equity ratio of 1.13. Net worth saw a steady rise from ₹7.9 crore in 2021 to ₹22.3 crore in 2023.
The last quarter brought in a revenue of ₹28.7 crore and a PAT of ₹3.6 crore. The company boasts a high ROE of 56.89% and a ROCE of 38.86%.
Financial Metrics
(Source: RHP of the company)
Competitors of the company:
A Few of the competitors of Paragon Fine and Speciality Chemicals are Aether Industries Limited, Anupam Rasayan India Ltd, Bodal Chemicals Ltd, and Deepak Nitrite Ltd.
Strengths of the company:
- In-house Manufacturing: Equipped with a pilot plant and advanced batch reaction technology, enabling the production of niche and advanced intermediates for various end-products and applications.
- Diverse Product Portfolio: It Offers over 150 customizable products catering to industries like pharma, agrochemicals, cosmetics, pigments, and dyes, reducing dependence on individual products and managing different seasonal and business cycles.
- Global Reach: Established long-term relationships with various corporations have expanded its product offerings, processes, and geographic reach across Europe and America, mitigating risks from customer concentration and market fluctuations.
- Strong R&D Focus: An in-house R&D facility equipped with laboratories for development and innovation gives it a competitive edge in an industry that requires complex catalytic processes and high levels of technical knowledge.
Weaknesses of the company:
- Export Dependence: The company generates more than 30% of its revenue from exports. Any social, political, or economic changes in these countries could affect the company’s revenue.
- Intense Competition: The company faces competition from both domestic and multinational corporations. Factors such as pricing, customer relationships, R&D, and product quality play a crucial role.
- Pricing Pressure: There is a risk of not being able to compete effectively with companies that can produce chemicals at lower costs and offer their products at cheaper prices.
- Revenue Concentration: As of 2023, 68% of the company’s revenue comes from dye intermediates. Any downturns in this industry or changes in technology or consumer tastes that alter product demand could directly affect the company’s profits.
Paragon Fine and Speciality Chemicals IPO Review – GMP
As of 20th October 2023, The IPO for Paragon Fine and Speciality Chemicals is set at a price of ₹95-100 per share. The latest grey market price stands at ₹55. The IPO is projected to be listed at a premium of 55% with an estimated listing price of ₹155.
Paragon Fine and Speciality Chemicals IPO Review – Key IPO Information
| PARTICULARS | DETAILS |
|---|---|
| IPO Size | 51.66Cr |
| Fresh Issue | 51.66Cr |
| opening date | 26th october 2023 |
| closing date | 30th october 2023 |
| face value | ₹10 per share |
| price band | ₹95 to ₹100 per share |
| lot size | 1200 shares |
| Minimum lot | 1 (1200 shares) |
| maximum lot | 1 (1200 shares) |
| Investment amount | ₹1,20,000 |
| listing date | 7th November 2023 |
Promoters: Dr. Pravinchandra Jasmat Vasolia, Vallabh Ratanji Savaliya, Kishorkumar Panchabhai Patolia, Rutesh Vallabhbhai Savalia and Shivam Kishorbhai Patolia are the Promoters of our Company.
Book Running Lead Manager: Hem Securities Limited
Registrar to the Offer: Bigshares Services Private Limited
The Objective of the Issue:
The company intends to utilize the proceeds of the Issue to meet the following objectives: –
- Funding capital expenditure towards civil construction work in the existing premises of the factory
- Funding capital expenditure towards civil construction work in Plot No 10/A, Situated at Survey No. 1359, 1360 Village-Viramgam Taluka- Viramgam, District-Ahmedabad-382150, Gujarat.
- Repayment in full or in part, of certain of our outstanding borrowings;
- Funding Capital Expenditure towards the installation of additional plant and machinery for Expansion.
- Funding to meet working capital requirements 6. General Corporate Purpose.
In Closing
Paragon fine and Speciality chemicals is a chemical intermediates company that serves domestic and global markets. It plans to focus on improving its products and processes, lowering its costs, and increasing its international sales and distribution. Its diversed portfolio and global presence gives it a competitive edge in the market.
However, it is important to note that this is an SME IPO where the minimum investment amount is 1,20,000 which is higher than a mainline IPO.
What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.
Written By Niharika Jadhav
By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment decisions.
The post Paragon Fine and Speciality Chemicals IPO Review – GMP & More appeared first on Trade Brains.
