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PARADEEP PHOSPATES LTD
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IPO Details:

 

IPO Opening Date

May 17, 2022

IPO Closing Date

May 19, 2022

Issue Type

Book Built Issue IPO

Face Value

₹10 per equity share

IPO Price

₹39 to ₹42 per equity share

Market Lot

350 Shares

Min & Max Order Quantity

350 & 4550 Shares

Min & Max application amount

₹ 14,700& ₹ 191,000

Listing At

BSE, NSE

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)

Basis of Allotment Date

May 24, 2022

Initiation of Refunds

May 25, 2022

Credit of Shares to Demat Account

May 26, 2022

IPO Listing Date

May 27, 2022

Promoter

ZUARI MAROC PHOSPHATES PRIVATE LIMITED, ZUARI AGRO CHEMICALS LIMITED, OCP S.A AND THE PRESIDENT OF INDIA, ACTING THROUGH THE DEPARTMENT OF FERTILIZERS, MINISTRY OF CHEMICALS AND FERTILIZERS, GOVERNMENT OF INDIA

Retail portion, QIB, NII(HNI)

 35%, 50%, 15%

Registrar

Kfin Technologies Private Limited

 

 

Company Profile :

 

Incorporated in 1981, Paradeep Phosphates Limited is a manufacturer of non-urea fertilizers in India. The company is engaged in manufacturing, trading, distribution and sales of a variety of complex fertilizers The Company established an extensive sales and distribution network, with a strong presence in the eastern part of India. As of March 31, 2022, Paradeep Phosphates distributed products across 14 states in India through the network of 11 regional marketing offices

 

Objects of the Issue:

 

The Offer comprises of a Fresh Issue of [●] Equity Shares, aggregating up to ₹ 10,040.00 million by the Company and an Offer for Sale of up to 118,507,493 Equity Shares, aggregating up to ₹ [●] million by the Selling Shareholders.

 

The Offer for Sale

 

The object of the Offer for Sale is to allow the Selling Shareholders to sell up to such number of Equity Shares held by them aggregating up to ₹ [●] million. The Company will not receive any proceeds from the Offer for Sale. The Selling Shareholders will be entitled to the proceeds of the Offer for Sale, net of its proportion of Offer related expenses and the relevant taxes thereon.

 

Fresh Issue

 

The net proceeds of the Fresh Issue, i.e. gross proceeds of the Fresh Issue less the offer expenses apportioned to the Company (“Net Proceeds”) are proposed to be utilised in the following manner:

 

• Part-financing the acquisition of the Goa Facility;

 

Repayment/prepayment of certain of borrowings; and

 

General corporate purposes.

 

In addition, the Company expects to achieve the benefit of listing of Equity Shares on the Stock Exchanges.

 

 

Utilisation of Net Proceeds:

 

Particulars

Amount

Part-financing the acquisition of the Goa Facility

520

Repayment/prepayment of certain of borrowings

300

General corporate purpose

[●]

Total

[●]

 

 

KEY FINANCIAL SUMMARY:

 

₹ (cr)

For 9 months period ended 31 Dec 2021

For the year ended 31 March 2021

For the year ended 31 March 2020

For the year ended 31 March 2019

Revenue from Operations

5959.97

5164.73

4192.86

4357.91

Other Income

13.71

19.2

34.91

39.3

Total Income

5973.68

5183.94

4227.77

4397.21

Total Expenses

5491.4

4817.24

3997.38

4145.76

Total Tax Expense

120.12

143.23

36.34

92.43

Profit Before Tax

482.90

366.5

229.56

251.39

Profit After Tax

362.78

223.26

193.22

158.96

Margin %

6.1

4.3

4.5

3.6

EPS

6.3

3.88

3.36

2.76

RoNW %

16.57

12.22

12.05

10.72

 

 

Strengths:

  India's third-largest producer of non-urea fertilizer. The second-largest producer of Di-Ammonium Phosphate (DAP). Annual turnover of about Rs. 5,000 crores.

 

 Strong presence in east India. Distribute their products in 14 states in India. They have 11 regional marketing offices and over 450 stock points across India.

 

 Its network also includes 4,761 dealers and over 67,150 retailers, which cater to over 50 lakh farmers in India

 

 The PAT is growing YOY and the Revenues as well.

 

 The government of India also holds equity share capital in the company.

 

 Has entered into long term agreement for procuring some of its raw materials Strong parentage, experienced management team and prominent shareholders 

 

 Zuari Maroc Phosphates Private Limited (ZMPPL) holds 80.45% of the equity share capital.

 

 

Listed Peer Comparison:

 

Name of the company

Paradeep          Phosphates

Coromandel Int Ltd

Chambal Fertilizers

Deepak Fertilizers

Total income

5183.94

14257

12756.4

5841.2

OPM %

10.5

14.1

19.4

21.3

NPM %

4.3

9.2

10.6

11.5

FV / equity share

10

1

10

10

P/E

12.6 *

18.72

11.57

16.91

EPS Basic

3.88

45.34

39.76

41.47

EPS Diluted

3.88

45.22

39.76

39.2

RoNW %

12.22

25.81

33.3

15.04

NAV per Equity Share

31.76

176

126

263

*Considering IPO Upper band price and 3yrs Avg EPS

 

 

Key Concerns :

 

 Dependent on the performance of the agricultural sector in which fertilizers are used.

 

 Seasonal variations and unfavorable local and global weather patterns may have an adverse effects.

 

 Demand for its fertilizers depends on the cropping pattern, which may vary each year

 

 Operates in the regulated fertilizer industry. The government subsidies accounted for 34% of its revenue in 9MFY22. Changes in Government policies towards agriculture sector could adversely affect business

 

 Has only one manufacturing facility until the transaction for acquiring the Goa facility is completed

 

 Excluding subsidies, Maharashtra, Uttar Pradesh and Odisha combined accounted for approximately 50% of its revenue in 9MFY22

 

 

Summary:

 

 PPL marked growth in top lines except for FY20, it continued to mark improvements in its bottom lines.

 

 If we take last 3 years average EPS  3.33 and upper price band of ₹42 , P/E ratio comes out to 12.6x and if we take EPS of Dec 21 of 6.3 and upper price band of ₹42 P/E ratio comes out to 6.66x and hence its upper band pricing is attractive. Also, PPL’s PE is lowest amongst its peers.

 

 Since the issue is reasonably priced and it is worth considering for medium to long term rewards it is recommended to “Apply” for this issue.

 

 

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