homemarket Newsstocks NewsParadeep Phosphates IPO opens today: Should you subscribe to the public issue?
Paradeep Phosphates IPO opens today: Should you subscribe to the public issue?
Paradeep Phosphates IPO: Fertiliser manufacturer and distributor Paradeep Phosphates Ltd (PPL) has announced a Rs 1,502 crore IPO, with a price band of Rs 39-42 apiece. The public issue will open for subscription on May 17 and close on May 19. Should you subscribe to Pradeep Phosphates IPO? Here is what the brokerage firms suggest -
The initial public offering (IPO) of Paradeep Phosphates Ltd (PPL) — India’s second-largest manufacturer of non-urea fertilisers and di-ammonium phosphates (DAP) in the private sector — opens for subscription today.
The last day to subscribe to the Rs 1,502 crore IPO is May 19 (Monday). The price band for the offer has been fixed at Rs 39-42 per equity share of face value of Rs 10 each.
The IPO consists of a fresh issue of shares worth Rs 1,004 crore and an offer-for-sale of up to 11.85 crore shares by existing shareholders and promoters exists.
The net proceeds from the IPO will be used for partly financing the acquisition of the Goa Facility, repayment or prepayment of certain borrowings and general corporate purposes.
Should you subscribe to Paradeep Phosphates IPO? Here is what brokerage firms suggest:
Dalal & Broacha Stock Broking
The brokerage firm has recommended “Subscribe For Listing Gains” to the issue. It believes that the fertiliser company is well-positioned to capture favourable dynamics of the Indian fertiliser industry supported by conducive government regulations.
PPL is the second-largest private-sector manufacturer of non-urea fertilisers in India and the second largest in terms of Di-Ammonium Phosphate, Dalal & Broacha pointed out.
The brokerage firm added that PPL’s return ratios are lower than its peers and have mediocre earnings before interest, tax, depreciation and amortization (EBITDA) and net profit margins, but is relatively fairly valued compared with peers, which leaves some room for listing gains.
Kotak Securities
The company is committed to integrating the industrial value chain by securing a stable supply of raw materials and owning integrated facilities, the brokerage firm said.
It produces some of its Phosphoric acid and Sulphuric acid requirements, with the other raw materials being sourced from suppliers.
PPL has backwards integrated its manufacturing process by producing the two other key raw materials by value, Phosphoric acid and Sulphuric acid, Kotak Securities highlighted.
Angel One
In terms of valuations, PPL’s stock will trade at a post-issue price to earnings multiples of 15.3 times FY2021 earnings per share (at the upper end of the issue price band), which is in line with other players like Chambal Fertilizer and Deepak Fertilizer though they may not be strictly comparable, said Angel One.
Given the fact that the company is valued in line with peers and is likely to face headwinds in terms of cost pressures due to the recent increase in raw material prices, the brokerage firm has recommended a ‘neutral’ rating on the issue.
BP Equities
At the upper end of the price band, the issue is valued at a price to earnings of seven times based on its FY22 annualised earnings, which according to BP Equities, is reasonably priced.
Hence, the brokerage firm has recommended a ‘Subscribe’ rating on this issue from a long term perspective.
First Published: May 17, 2022 10:19 AM IST
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Supreme Court says it may consider interim bail for Arvind Kejriwal due to ongoing Lok Sabha polls
May 3, 2024 4:57 PM
10% discount on fare on Mumbai Metro lines 2 and 7A on May 20
May 3, 2024 2:40 PM