Should you be Investing in Paradeep Phosphates Limited IPO?
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About The Company
Paradeep Phosphates Limited was established in 1981 and manufactures non-urea fertilizers in India. The company manufactures, trades, distributes and sells a variety of complex fertilizers, including DAP, three grades of Nitrogen-Phosphorus-Potassium, Zypmite, Phospho-gypsum, and Hydroflorosilicic Acid.
In terms of volume sales, Paradeep Phosphates Limited is the second-largest private-sector producer of non-urea fertilizers and Di-Ammonium Phosphate (DAP). Navratna and Jai Kisaan-Navratna are the company’s fertilizer brands.
The manufacturing facility of Paradeep Phosphates Limited is located in Paradeep, Odisha, and consists of a plant producing DAP and NPK, a sulphuric acid plant, and a phosphoric acid plant. Among the storage capacities of the facility are 120,000 MT of phosphate rock, 65,000 MT of phosphoric acid, 55,000 MT of sulfur, and 35,000 MT of metal oxide powder. It has 4,761 dealers and more than 67,150 retailers in India that serve more than five million farmers.
💰Issue Details
- IPO open from May17th – May19th 2022
- Face value: ₹10
- Price Band: ₹39-42
- Market Lot: 350 shares
- Minimum Investment: ₹14,700
- Listing on: BSE and NSE
- Total issue size: up to ₹1501crores
- Fresh Equity Issue: up to ₹1004crores
- Offer for sale: up to ₹497crores
- Promoters: Zuari Maroc Phosphates Private Limited, ZuariAgro Chemicals Limited, OCP S.A and President of India, acting through the Ministry of Chemicals and Fertilizers, Government of India are the company promoters.
- Book running lead managers: Axis Capital Limited, ICICI Securities Limited, JM Financial Consultants Private Limited, SBI Capital Markets Limited.
What is an IPO and should you invest in them?
✂️Offer Breakup
The offer is broken up into the following investor classes:
🏷️IPO Object
Paradeep Phosphates IPOSize is ₹1,501 crores and below are the objects of the IPO:
1) Offer for Sale (OFS) ₹497crores: Under this OFS, shareholders would sell their shares and the company would not receive any part of the IPO proceeds.
2) Fresh issue of ₹1,004crores: Fresh issue would be done for the following purposes:
- Part-financing the acquisition of the Goa facility.
- Repayment/prepayment of certain borrowings
- And for other corporate purposes.
📊IPO Timeline
| IPO open date | May 17th 22 | Initiation of refunds | May 25th 22 |
| IPO close date | May 19th 22 | The credit of shares to the Demat Account | May 26th 22 |
| Basis of allotment date | May 24th 22 | IPO listing date | May 27th 22 |
🔭IPO Strengths
Second largest Phosphatic Manufacturer: As of March 31, 2022, it was the second-largest phosphatic fertilizer producer among private sector entities focusing on the non-urea market.
Backward Integration: Through the integration of the industrial value chain, the Company was able to secure a stable supply of raw materials, operate integrated facilities, and maintain a large distribution network.
Strategic location: In addition to manufacturing in Paradeep, they also own facilities to unload solid or liquid cargo at the port.
🔎IPO Risks
Climatic conditions: Subjected to climatic conditions and is cyclical in nature thus, seasonal variations and unfavorable local and global weather patterns may have an adverse effect.
Regulated industry: Operates in a regulated industry, thus, changes in government policies will affect the operations and profitability.
Limited revenue source: Historically derived a significant portion of its revenues from operations from a limited number of states.
🚀Financial Data
| Particulars | For the year/period ended (₹ in Cr) | ||
| 30th Mar 22 (9M) | 31th Mar 21 | 31th Mar 20 | |
| Total Revenue | 5,984 | 5,184 | 4,228 |
| Total Expenses | 602 | 4,817 | 3,997 |
| Profit After Tax | 126.41 | 223 | 193 |
