What You Must Know About Indian Phosphate IPO: Price Band ₹94 to ₹99 Per Share

Linear Alkylbenzene Sulfonic Acid (LABSA 90%, or LABSA) is an anionic surfactant produced by Indian Phosphate Limited, which was founded in 1998. LABSA produces various washing powders, cakes, toilet cleaners, and liquid detergents.

Additionally, the company produces "Single Super Phosphate" (SSP) and "Granules Single Super Phosphate" (GSSP), which are fortified with zinc and boron and produced and provided in powder and granule form as per the guidelines of the Fertilizer Control Regulation of India. The company's manufacturing plant is near the two raw materials required to produce the products, (a) rock phosphate and (b) 98% sulfuric acid, in the Girwa region of Udaipur, Rajasthan. The suppliers of linear alkyl benzene (LAB), another crucial raw ingredient, include Reliance Industries Ltd. in Patalganga, Nirma Ltd. in Vadodara, and IOCL in Vadodara.

Major states, including Punjab, Bihar, Gujarat, Haryana, Madhya Pradesh, Maharashtra, Rajasthan, Uttar Pradesh, Himachal Pradesh, West Bengal, and Uttarakhand, are home to Indian Phosphate Limited. There were 105 workers in the company as of March 31, 2024.
 

The Objective of the Issue

• Setting up a New Manufacturing Facility: The company aims to establish a new manufacturing unit at SIPCOT Industrial Park in Cuddalore, Tamil Nadu. This facility will produce sulphuric acid, LABSA 90%, and magnesium sulphate, key chemicals in various industries. The strategic location offers access to raw materials and efficient logistics for distribution.
• Meeting Working Capital Requirements: The IPO proceeds will strengthen the company's working capital. This infusion will ensure smooth operational activities, including raw material procurement, inventory management, and handling day-to-day expenses, thus supporting the company's ongoing and future production demands.
• General Corporate Purposes: Funds allocated for general corporate purposes will help Indian Phosphate in various operational enhancements, including potential debt reduction, investment in technology upgrades, marketing activities, and improving overall financial flexibility, ensuring sustainable growth and competitiveness in the market.

Highlights of Indian Phosphate IPO

Indian Phosphate IPO is set to launch with a fixed price issue of ₹67.36 crores. The issue comprises a fresh issue of 68.04 lakh shares. Here are the key details of the IPO:

• The IPO opens for subscription on August 26, 2024, and closes on August 29, 2024.
• The allotment is expected to be finalised on Friday, August 30, 2024.
• Refunds will be initiated on Monday, September 2, 2024.
• Credit shares to Demat accounts are also expected on Monday, September 2, 2024.
• The company will tentatively list on BSE SME on Tuesday, September 3, 2024.
• The price band is set at ₹94 to ₹99 per share.
• The lowest lot size for the IPO application is 1200 shares.
• Retail investors need to invest a minimum of ₹118,800.
• The minimum investment for High-Net-Worth Individuals (HNIs) is 2 lots (2,400 shares), amounting to ₹237,600.
• Beeline Capital Advisors Private Limited is the book-running lead manager for the IPO.
• Bigshare Services Pvt Limited serves as the registrar.
• Spread X Securities is the market maker.

Indian Phosphate IPO - Key Dates

Here is the timeline of the Indian Phosphate IPO:

Indian Phosphate IPO Issue Details/Capital History

The book-built issue of Indian Phosphate is valued at ₹ 67.36 crores. The 68.04 lakh shares are a completely fresh issue. The Indian Phosphate IPO will open for subscriptions on August 26, 2024, and end on August 29, 2024. On Friday, August 30, 2024, the allocation for the Indian Phosphate IPO is anticipated to be completed. The tentative listing date for the Indian Phosphate Initial Public Offering (IPO) is Tuesday, September 3, 2024, on NSE SME.

Indian Phosphate IPO Allocation & Minimum Investment Lot Size

The IPO shares are allocated as follows:

Investors can bid on a minimum of 1200 shares, and they can bid more than that. Below is a table that shows the lowest and maximum shares and the number of investments made by HNIs and retail investors.

SWOT Analysis: Indian Phosphate Limited IPO

Strengths:

• Established Market Presence: Indian Phosphate Limited has a strong presence in the chemical manufacturing sector, particularly in producing essential chemicals like Sulphuric Acid, LABSA 90%, and Magnesium Sulphate.
• Strategic Location: The new manufacturing facility at SIPCOT Industrial Park, Tamil Nadu, offers logistical advantages and access to key raw materials.
• Diverse Product Portfolio: The company's wide range of products caters to various industries, ensuring a stable revenue stream.

Weaknesses:

• High Capital Expenditure: Setting up a new manufacturing facility involves significant capital investment, which could impact short-term profitability.
• Dependency on Raw Material Prices: Fluctuations in prices could affect the company's cost structure and margins.
• Limited Geographic Reach: While the company has a strong regional presence, its market reach beyond certain areas might be limited.

Opportunities:

• Growing Demand for Chemicals: Increasing industrial demand for chemicals in various sectors presents growth opportunities.
• Expansion Potential: The new facility allows for expansion into new markets and product lines, enhancing revenue potential.
• Government Initiatives: Supportive government policies for the chemical industry could provide additional avenues for growth.

Threats:

• Regulatory Compliance: Stringent environmental and safety regulations in the chemical industry could pose operational challenges.
• Market Competition: The company faces stiff competition from established players in the chemical manufacturing sector.
• Economic Downturns: Economic fluctuations could reduce demand for the company’s products, impacting overall sales and profitability.

Financial Highlights: Indian Phosphate Limited

Below are the financial results of Indian Phosphate Limited till March 2024 and the fiscal years FY23 and FY22:

The financial performance of Indian Phosphate Limited over the past three fiscal years shows a mixed trend. As of March 31, 2024, the company’s total assets increased significantly to ₹25,518.6 million, up from ₹17,407.45 million in March 2023 and ₹10,789.93 million in March 2022, indicating substantial asset growth. Revenue in 2024 decreased to ₹71,757.81 million from ₹77,093.2 million in 2023 but remained higher than ₹55,838.56 million in 2022. Despite this revenue decline, the company's net worth steadily increased to ₹8,099.06 million in 2024 from ₹6,751.8 million in 2023 and ₹5,092.27 million in 2022, reflecting improved financial stability.

However, Profit After Tax (PAT) dropped to ₹1,210.21 million in 2024 from ₹1,659.53 million in 2023 and ₹1,616.61 million in 2022, indicating a downward trend in profitability. The company's borrowing surged to ₹4,023.17 million in 2024, suggesting an increase in debt to support growth. Reserves and Surplus slightly declined to ₹6,280.56 million in 2024, down from ₹6,480.37 million in 2023.