Arunaya Organics Limited, a prominent player in the manufacturing and trading of various types of dyes and dye intermediates, has launched its IPO to raise ₹33.99 Crores. The IPO includes a Fresh Issue of 52.6 lakh shares worth ₹30.50 Crores and an Offer for Sale of 6 lakh shares totaling ₹3.48 Crores. The subscription period for this issue opened on April 29, 2025, and closed on May 2, 2025. The allotment is expected to be finalized on May 5, 2025, with the listing set for May 7, 2025, on the NSE SME.

IPO Details:

• Share Price Band: ₹55 to ₹58 per share.

• Market Capitalisation at ₹58: ₹101.72 Crores.

• Lot Size: 2,000 shares, with a minimum investment of ₹1,16,000 for retail investors.

• Key Figures: The pre-issue P/E ratio is 14.68x, and the post-issue P/E ratio is 25.07x. The company’s ROCE stands at 36.27%, and the ROE for FY24 is 44.15%, indicating strong profitability.

Company Overview:

Arunaya Organics, headed by first-generation entrepreneur Vinod Agrawal, manufactures and trades in a wide array of dyes including reactive, acid, direct, basic, and solvent dyes. Additionally, they provide specialty chemicals for paper and textile dyeing industries. The company has shown consistent revenue growth, with revenue from operations amounting to ₹5,820.52 Lakh for FY24, indicating robust financial stability.

Financial Performance:

Arunaya Organics has reported a steady increase in EBITDA and profit after tax (PAT), with PAT for FY24 reaching ₹359.78 Lakh, up from ₹173.44 Lakh in FY23. Their financial track record reflects a steady growth trajectory, with consistent earnings and strong margins. The IPO’s pricing seems reasonable with a P/E ratio significantly below the industry average (77x), suggesting the IPO is attractively priced for long-term investors.

Grey Market Premium (GMP):

As of the latest update, the Grey Market Premium (GMP) for Arunaya Organics is ₹0, which implies no significant expected listing gains. This means that the company is not currently generating strong speculative interest in the grey market, which could signal a lukewarm reception post-listing. However, investors should be cautious as the GMP does not provide a reliable indicator of the true value of the stock after listing, especially since the Grey Market is an unregulated and speculative market.

Objectives of the IPO:

The primary use of the proceeds from the IPO is as follows:

1. ₹1,178.95 Lakh will be used to set up a new manufacturing facility in Gujarat (Greenfield Project).

2. ₹900.00 Lakh will fund the company’s working capital requirements.

3. The remaining funds will be used for general corporate purposes.

Subscription Status:

As of May 2, 2025, the IPO has been subscribed 1.52 times, indicating a moderate interest from investors on the final day of the subscription period.

Expert Opinion:

Based on Arunaya Organics' consistent financial growth, the company’s stable market positioning, and the fact that it is reasonably priced compared to the industry average, the IPO could be considered a decent long-term investment, but not necessarily an opportunity for quick listing gains. The Grey Market Premium (GMP) of ₹0 further reflects that there are no immediate gains expected post-listing.

For investors looking for a stable growth opportunity in the dye manufacturing industry, Arunaya Organics could be a good pick. However, given the lack of significant interest in the Grey Market, we recommend avoiding the IPO for listing gains but consider it for long-term investment if the company shows strong post-listing performance.

Note: Investors should assess their own risk tolerance and consult with a financial advisor before proceeding with any investment decision.

Allotment and Subscription:

For those who have applied for the IPO, allotment status will be available from May 5, 2025, on the registrar’s website. Investors can check their allotment status by entering their application number, PAN, or DP Client ID.

This IPO presents an interesting opportunity but requires careful consideration of the company’s future potential and market conditions.

The Upcoming IPOs in this week and coming weeks are Srigee DLM, Manoj Jewellers.

The Current active IPO are Wagons Learning, Kenrik Industries, Arunaya Organics.

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