New SME IPO : Paragon Fine and Speciality Chemicals Limited IPO 2023

Paragon Fine and Specialty Chemicals Limited IPO 2023 is all set to go public with an IPO, offering a book-built issue worth Rs 51.66 crores. This IPO comprises an entirely fresh issue of 51.66 lakh shares.

The IPO subscription window for Paragon Fine and Specialty Chemicals Limited opened on October 26, 2023, and is scheduled to close on October 30, 2023. The allotment for the Paragon Fine and Specialty Chemicals IPO 2023 is anticipated to be completed by Thursday, November 2, 2023. The IPO is earmarked to be listed on the NSE SME platform with a tentative listing date set for Tuesday, November 7, 2023. This marks a significant step in the company’s journey toward being a publicly traded entity.

The Paragon Fine and Speciality Chemicals Limited IPO has set a price band ranging from ₹95 to ₹100 per share. For those looking to apply, the minimum lot size is 1,200 shares, requiring a minimum investment of ₹120,000 for retail investors. High Net Worth Individuals (HNI) are expected to invest in a minimum of 2 lots, equivalent to 2,400 shares, totalling ₹240,000.

Hem Securities Limited serves as the book running lead manager for the Paragon Fine and Speciality Chemicals IPO, while Big Share Services Pvt Ltd is the appointed registrar for this offering. In addition, Hem Fin lease has been designated as the market maker for the Paragon Fine and Speciality Chemicals IPO. This comprehensive team is actively involved in managing and overseeing various aspects of the IPO.

Paragon Fine and Speciality Chemicals Limited IPO 2023 Details with Offer:

 

Paragon Fine and Speciality Chemicals Limited IPO 2023	TimeLine
Bid/ Offers Opens On	26-Oct-2023
Bid/ Offers Closes On	30-Oct-2023
Allotment On	02-Nov-2023
Initiation Refunds On	03-Nov-2023
Credit of Shares to Demat	06-Nov-2023
Listing On	07-Nov-2023
Cut-Off for Mandate Confirmation	30-Oct-2023
Total Issue Size Details	Fresh Value of 5,166,000 Equity Shares
Issue Size (In Rs.)	51.66 Cr.
Face Value (In Rs.)	10/- Per Share
Price Band (In Rs.)	95-100
Bid Lot Size	1200 Shares
Listing On	BSE, NSE
IPO Registrar	Link Intime India Private Ltd.

 

Lot Size of Paragon Fine and Speciality Chemicals Limited IPO 2023

IPO Details	Category	Lot	Share/Amount
Min Bid Lot	Retails	1	1200
Max Bid Lot	Retails	1	1200
Min	HNI	2	2400

 

IPO GMP Details in Date wise : Paragon Fine and Speciality Chemicals Limited IPO 2023

GMP	Estimate Listing Price	As Per Date
99	199	29-10-2023
88	188	28-10-2023
85	185	26-10-2023
75	175	24-10-2023
55	155	23-10-2023
55	155	20-10-2023
20	120	19-10-2023

 

Know Expected Profit of IPO

IPO Details with GMP	Profit Calculation As Per Min Bid
Share/Quantity	1200
Price	100
Total	1,20,000/-
GMP	99
Estimate Price	199
Est. Listing Percentage (%)	99.00%
Estimate Profit	Around 1,20,000/-
Result (Profit/Loss)	Profit
Recommendations	May Apply

 

Paragon Fine and Speciality Chemicals Limited IPO 2023 Financial Information (Restated)

Paragon Fine and Speciality Chemicals Limited IPO 2023 witnessed a notable growth in its revenue, which surged by 24.16%, while its profit after tax (PAT) saw an impressive rise of 120.3% between the financial years ending on March 31, 2023, and March 31, 2022. This remarkable financial performance reflects the company’s strong and sustained progress.

 

Result Timeline	30/06/2023	31/03/2023	31/03/2022
Assets (In Rs.)	7412.19	7097.84	5750.53
Revenue (In Rs.)	2900.43	10501.19	8457.92
Profit After Tax (In Rs.)	362.16	989.21	449.02
Net Worth (In Rs.)	2595.67	2233.52	1244.31
Reserves and Surplus (In Rs.)	2235.67	1873.52	1234.31
Total Borrowing (In Rs.)	2709.67	2521.03	2068.16
For more Information : BSE India

 

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Paragon Fine and Speciality Chemicals Limited IPO Lead Manager(s)

Hem Securities Limited

Contact Details: Paragon Fine and Speciality Chemicals Limited IPO 2023

Paragon Fine And Speciality Chemicals Limited
1001/1, Parshwa Tower, Near Pakvan Hotel
S.G. Highway, Bodakdev
Ahmedabad, 380054
Phone: +917935335483
Email: cs@paragonind.com

Website: https://www.paragonind.com/

Paragon Fine and Speciality Chemicals Limited Financial Information (Restated)

Paragon Fine and Speciality Chemicals Limited’s revenue increased by 24.16% and profit after tax (PAT) rose by 120.3% between the financial year ending with March 31, 2023 and March 31, 2022.

Paragon Fine and Speciality Chemicals IPO Promoter Holding

• The promoters of the company are Dr. Pravinchandra Jasmat Vasolia, Kishorkumar Panchabhai Patolia, Vallabh Ratanji Savaliya, Rutesh Vallabhbhai Savalia and Shivam Kishorbhai Patolia.
• Share Holding Pre Issue: 100%
• Share Holding Post Issue: 73.60%

 

About Paragon Fine and Speciality Chemicals Limited

Incorporated in 2004, the company is involved in the business of custom synthesis and manufacturing of speciality chemical intermediates involving complex and differentiated chemistry. The company manufactures Pharma Intermediates, AGRO intermediates, Cosmetics Intermediates, Pigment Intermediates and Dye Intermediates for a diverse Indian and Global customer base.

The company’s manufacturing unit is located in Viramgam District, Ahmedabad, Gujarat covering approximately 7000 square meters of area, equipped with high-end reactors to carry out research for developing new products.

The company’s R&D team has successfully carried out the multi-step synthesis and developed multiple new molecules in the area of specialty intermediates and as a result, enhanced their product portfolio to around 140 products in Fiscal 2023. As of March 31, 2023, we have a team of 14 technocrats who are engaged in Research and development.

Paragon Fine and Speciality Chemicals IPO Review (May apply)

Paragon Fine and Speciality Chemical Ltd. (PFSCL) is engaged in the business of custom synthesis and manufacturing of speciality chemical intermediates involving complex and differentiated chemistry. It commenced business as a partnership firm in the year 2004 and has, over the years, evolved into custom synthesis and manufacturing of Pharma Intermediates, AGRO intermediates, Cosmetics Intermediates, Pigment Intermediates and Dye Intermediates, etc. for a diverse base of Indian and global customers.

The company works with an approach towards chemistry combined with technology and systems that would lead to sustained product development. Its diverse range of products finds applications across various industries, including pharma, agrochemicals, cosmetics, pigments and dyes. It uses various chemistry compositions like: Acetylation, Amination, Catalytic hydrogenation, Chlorosulfonation, Methoxylation, Nitration, Amidation, Ethoxylation, Sulphonation, etc. which enables it to cater to niche and advanced intermediate requirements of a wider range of end-products and applications.

Its product portfolio increased from around 100 products in Fiscal 2021 to around 140 products in Fiscal 2023. As of March 31, 2023, it had a team of 14 technocrats. It is a One Star Export House exporting in countries like: USA, Israel, Spain, United Kingdom, China, Switzerland, Taiwan, Thailand, Mexico, Japan, Russia, France, Indonesia, Latvia, Germany etc. As of June 30, 2023, it had 61 employees (including 5 contractual workers) on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden book building route IPO of 5166000 equity shares of Rs. 10 each. It has announced a price band of Rs.95 – Rs. 100 and mulls mobilizing Rs. 51.66 cr. at the upper cap. The issue opens for subscription on October 26, 2023, and will close on October 30, 2023. The minimum application to be made is for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge.

The issue constitutes 26.40% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO process, the company will utilize Rs. 1.00 cr. for civil construction in the existing factory premises, Rs. 12.90 cr. for repayment of certain borrowings, Rs. 7.87 cr. for capex for installation of additional plant and machinery, Rs. 13.00 cr. for working capital and the balance for general corporate purposes.

After earmarking 261600 shares for the market maker, the company has allocated not more than 50% for QIBs, not less than 15% for HNIs and not less than 35% for Retail investors.

Hem Securities Ltd. is the sole lead manager and Bigshare Services Pvt. Ltd. is the registrar of the issue. HEM Group’s Hem Finlease Pvt. Ltd. is the market maker for the company.

Having issued initial equity shares at par, the company also issued bonus shares in the ratio of 35 for 1 in July 2022 and 3 for 1 in July 2023. The average cost of acquisition of shares by the promoters is Rs. 0.00, Rs.0.13, and Rs. 051 per share.

Post-IPO, company’s current paid-up capital of Rs. 14.40 cr. will stand enhanced to Rs. 19.57 cr. Based on the upper cap of the price band, the company is looking for a market cap of Rs. 195.66 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, PFSCL has posted total income/net profit of Rs. 84.37 cr. / Rs. 4.40 cr. (FY21), Rs. 84.58 cr. / Rs. 4.49 cr. (FY22), and Rs. 105.01 cr. / Rs. 9.89 cr. (FY23). For Q1 of FY24 ended on June 30, 2023, it earned a net profit of Rs. 3.62 cr. on a total income of Rs. 29.00 cr. The sudden boost in its bottom lines for FY23 and Q1-FY24 not only raise eyebrows, but also concern over the sustainability of such margins going forward. Its other income is on the rise as seen from FY21 to FY23.

For the last three fiscals, the company has reported an average EPS of Rs. 4.98, and an average RoNW of 43.39%. The issue is priced at a P/BV of 5.55 based on its NAV of Rs. 18.03 as of June 30, 2023, and at a P/BV of 2.64 based on its post-IPO NAV of Rs. 37.82 per share at the upper cap.

If we attribute annualized super earnings of FY24 on post-IPO fully diluted paid-up equity capital of the company, then the asking price is at a P/E of 13.51. Based on FY23 earnings, the P/E stands at 19.76. The issue appears fully priced discounting all near term positives.

For the reported period of 39 months, the company has posted a PAT Margins of 5.28% (FY21), 5.42% (FY22), 9.67% (FY23), and 12.58% (Q1-FY24), and RoCE margins of 33.44%, 24.90%, 38.86%, and 12.25% for the corresponding periods. The sudden boost in bottom lines remains major concern going forward.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Aether Ind., Anupam Rasayan, Bodal Chem, and Deepak Nitrite as their listed peers. They are trading at a P/E of 90.90, 54.92, 62.42, and 60.14 (as of October 23, 2023). However, they are not comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
This is the 32nd mandate from Hem Securities in the last three fiscals (including the ongoing one). Out of the last 10 listings, all listed with premiums ranging from 10.57% to 90% on the day of listing.

Conclusion / Investment Strategy

PFSCL is engaged in the business of speciality chemical compounds. After static performance for FY21 and FY22, it posted bumper bottom lines on static top line. The sudden boost in its bottom lines for the past 15 months raises eyebrows as well as concern over the sustainability going forward. Based on annualized super earnings of FY24, the issue appears fully priced, discounting all near term positives. Well-informed investors may park moderate funds for medium to long term rewards.

Review By Dilip Davda on October 24, 2023

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans.

Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness.

However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: dilip_davda@rediffmail.com ).

What is Initial Public Offerings (IPO) ? 

The Capital market represents the “Primary Market” and the “Secondary Market. The capital market has two interdependent and inseparable segments, the new issuers (the primary market) and stock (secondary) market. The primary market is used by issuers for raising fresh capital from the investors by making initial public offers or rights issues or offers for sale of equity or debt. An active secondary market promotes the growth of the primary market and capital formation, since the investors in the primary market are assured of a continuous market where they have an option to liquidate their investments.

A corporate may raise capital in the primary market by way of an initial public offer, rights issue or private placement. An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is the largest source of funds with long or indefinite maturity for the company.

An IPO is an important step in the growth of a business. It provides a company access to funds through the public capital market. An IPO also greatly increases the credibility and publicity that a business receives. In many cases, an IPO is the only way to finance quick growth and expansion. In terms of the economy, when a large number of IPOs are issued, it is a sign of a healthy stock market and economy.

When the company makes its first IPO to the public, the relationship is directly between the company and investors, and the money flows to the Company as its “Share Capital”. Shareholders thus become owners of the Company through their participation in the Company’s IPO and have ownership rights over the company. This is the largest source of funds for a company, which enables the company to create “Fixed Assets” which will be employed in the course of the business. The shareholders of the Company are free to exit their investment through the secondary market.

What is Book Building?

SEBI guidelines defines Book Building as “a process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and built-up and the price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice, circular, advertisement, document or information memoranda or offer document”.

Book Building is basically a process used in Initial Public Offer (IPO) for efficient price discovery. It is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date.

Difference between Book Building Issue and Fixed Price Issue

In Book Building securities are offered at prices above or equal to the floor prices, whereas securities are offered at a fixed price in case of a public issue. In case of Book Building, the demand can be known everyday as the book is built. But in case of the public issue the demand is known at the close of the issue.

Paragon Fine And Speciality Chemicals Limited IPO 2023 FAQs

• Why Paragon Fine and Speciality Chemicals IPO 2023?

The initial public offer (IPO) of Paragon Fine and Speciality Chemicals Limited offers an early investment opportunity in Paragon Fine and Speciality Chemicals Limited. A stock market investor can buy Paragon Fine and Speciality Chemicals IPO shares by applying in IPO before Paragon Fine and Speciality Chemicals Limited shares get listed at the stock exchanges. An investor could invest in Paragon Fine and Speciality Chemicals IPO for short term listing gain or a long term.

• How is Paragon Fine and Speciality Chemicals IPO 2023?

Read the Paragon Fine and Speciality Chemicals IPO 2023 recommendations by the leading analyst and leading stock brokers.

• Paragon Fine and Speciality Chemicals IPO 2023 what should investors do?

Paragon Fine and Speciality Chemicals IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Paragon Fine and Speciality Chemicals IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

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