Paradeep Phosphates IPO opens for subscription on 17 May 2022 and is scheduled to close on 19 May 2022. Like always, IPO Central is ready with its analysis of the upcoming IPO. Read on more for Paradeep Phosphates IPO review.
Incorporated in 1981, Paradeep Phosphates is the third largest private sector manufacturer of non-urea fertilizers in India and second largest in terms of Di-Ammonium Phosphate (DAP) volume sales. It is primarily engaged in manufacturing, trading, distribution and sales of a variety of complex fertilizers such as DAP, three grades of Nitrogen-Phosphorus-Potassium (NPK) (namely NPK-10, NPK-12 and NP-20), Zypmite, Phosphogypsum and Hydroflorosilicic Acid (HFSA). It is also engaged in the trading, distribution and sales of Muriate of Potash (MOP), Ammonia, Speciality Plant Nutrients (SPN) and City compost. Its fertilizers are marketed under ‘Jai Kisaan – Navratna’ and ‘Navratna’ brands.
As of March 31,2021, (i) Its total annual granulation capacity of DAP and NPK production plant was approximately 1.40 million MT; (ii) Its total annual installed capacity of Sulphuric acid production plant was approximately 1.30 million MT; and (iii) Its total annual installed capacity of Phosphoric acid production plant was 0.30 million MT. In addition, the plant has three operational concentrators to concentrate weak Phosphoric acid into strong Phosphoric acid.
It also has facilities to store its raw material in Paradeep, Odisha and at any point of time, it can store 120,000 MT of Phosphate rock, 65,000 MT of Phosphoric acid solution, 50,000 MT of sulphur, 45,000 MT of Sulphuric acid, 40,000 MT of liquid ammonia and 35,000 MT of MOP. It also has two captive power plants of 16 MW each, designed to run on the excess steam generated by the Sulphuric acid production plant.
Paradeep Phosphates IPO Review – Strengths
- Second largest manufacturer of Phosphatic fertilizers in India
- Well-positioned to capture favorable fertilizer industry dynamics supported by conducive government regulations
- Backward integration of facilities and effective sourcing
- Strategic location of manufacturing facility and sizeable material storage, handling and port facilities
- Established brand name backed by an extensive sales and distribution network
- Strong parentage, experienced management team and prominent shareholders
Paradeep Phosphates IPO Analysis – Risk Factors
- Business’ fortunes are closely tied with the performance of the agricultural sector
- subject to climatic conditions and is cyclical in nature
- fertilizer industry in India is a regulated industry
- only one manufacturing facility as of now
- The Goa facility (planned to be acquired) has incurred losses in each of the last three financial years
- Maharashtra, Uttar Pradesh and Odisha accounted for 50% of revenues in nine months of FY2022
Paradeep Phosphates IPO Analysis – Financial Performance
| Â | FY2019 | FY2020 | FY2021 | 9M FY2022 |
| Revenue | 4,397.2 | 4,227.8 | 5,183.9 | 5,973.7 |
| Expenses | 4,145.7 | 3,997.4 | 4,817.2 | 5,491.4 |
| Net income | 159.0 | 193.2 | 223.3 | 362.8 |
| Margin (%) | 3.6 | 4.5 | 4.3 | 6.1 |
Paradeep Phosphates Valuations & Margins
| FY2019 | FY2020 | FY2021 | 9M FY2022 | |
| EPS | 2.76 | 3.36 | 3.88 | 6.30 |
| PE ratio | – | – | 10.05 – 10.82 | – |
| RONW (%) | 10.72 | 12.05 | 12.22 | 16.57 |
| ROCE (%) | – | – | – | – |
| EBITDA (%) | 10.93 | 11.68 | 10.83 | – |
| Net Debt/Equity | – | – | – | – |
| NAV | – | – | 31.76 |
Paradeep Phosphates IPO Review – Broker Calls
Angel One – Neutral
Arihant Capital –
Ashika Research –
Asit C Mehta –
BP Wealth – Subscribe
Canara Bank Securities – Subscribe
Choice Broking – Subscribe
Elite Wealth – Subscribe
GEPL Capital – Subscribe
Hem Securities –
ICICIdirect –
Jainam Broking – Subscribe
KR Choksey –
LKP Securities –
Marwadi Financial Services –
Nirmal Bang – Subscribe for long term
Reliance Securities –
Religare Broking –
Samco Securities – Subscribe with caution
Share India Securities –
SMC Global – 2/5
Systematix – Not rated
Ventura Securities – Not rated
