Paramount Dye Tec IPO Lists at ₹109.90 Below Issue Price

Paramount Dye Tec Limited, a manufacturer of recycled synthetic yarns, made a disappointing debut on the Indian stock market on Tuesday, 8th October 2024, with its shares listing at a discount to the issue price on the National Stock Exchange (NSE) SME platform.

Listing Details

• Listing Price: Paramount Dye Tec shares were listed at ₹109.90 per share on the NSE SME platform, marking a weak start to its journey as a publicly traded company.
• Comparison to Issue Price: The listing price represents a substantial discount to the IPO issue price. Paramount Dye Tec had set its IPO price band from ₹111 to ₹117 per share, with the final issue price being fixed at the upper end of ₹117.
• Percentage Change: The listing price of ₹109.90 on the NSE SME translates to a discount of 6.07% below the issue price of ₹117.

First-Day Trading Performance

• Opening vs. Latest Price: Following its weak opening, Paramount Dye Tec's share price continued to decline. By 10:33 AM, the stock was trading at ₹107, down 2.64% from its opening price and 8.55% below the issue price.
• Market Capitalisation: As of 10:33 AM, the company's market capitalisation stood at ₹72.55 crore.
• Trading Volume: The traded volume was 4.14 lakh shares with a traded value of ₹4.49 crore, indicating moderate investor interest on the first day of listing.

Market Sentiment and Analysis

• Market Reaction: The market reacted negatively to Paramount Dye Tec's listing. The significant discount to the issue price indicates weak demand and investor caution regarding the company's prospects.
• Subscription Rate: Despite the weak listing, the IPO was oversubscribed 50.09 times, with NIIs leading at 135.31 subscriptions, followed by retail investors at 36.26 times, and QIBs at 10.22 times.
• Price Band: The stock hit a low of ₹104.40 during early trading, reflecting investor scepticism.

Growth Drivers and Challenges

Expected drivers of future performance:

• Utilisation of recycled synthetic waste as raw material
• Cost benefits compared to competitors
• Custom yarn solutions for specific customer requirements
• ISO 9001:2015 and Good Manufacturing Practice (GMP) certified

Potential challenges:

• Highly competitive textile industry
• Potential volatility in raw material prices
• Limited financial history as a public limited entity

Utilisation of IPO Proceeds

Paramount Dye Tec plans to use the funds for:

• Setting up a new manufacturing unit
• Repayment/prepayment of certain debt facilities
• Expenses towards registration of land purchased from the promoter
• General corporate purposes

Financial Performance

The company has demonstrated strong financial growth but with limited public financial history:

• Revenue for FY2024 (as of March 31, 2024) was ₹2,367.9 lakh
• Profit After Tax (PAT) for FY2024 was ₹354.09 lakh

As Paramount Dye Tec begins its journey as a listed entity, market participants will closely monitor its ability to leverage its recycling expertise and expand its manufacturing capabilities to drive future growth and improve shareholder value. The weak listing and subsequent price decline suggest cautious market sentiment towards the company's prospects in the competitive synthetic yarn manufacturing sector. Investors will be watching for signs of consistent financial performance and successful implementation of the company's growth strategies, particularly the establishment of the new manufacturing unit.