The Balaji Phosphates Limited IPO has garnered significant attention due to its focus on NPK Granulated and Mixed Fertilizers and Zinc Sulfate (21%) production, particularly in the phosphate fertilizers sector. The company manufactures Single Super Phosphate (SSP), available in both powder and granulated forms, adhering to the Fertilizer Control Order of India. Balaji Phosphates has an installed capacity of 120,000 MTPA for SSP and 3,300 MTPA for Zinc Sulfate. The company's manufacturing plant is located in Dewas, Madhya Pradesh, which serves as the backbone for its production.

The IPO details for Balaji Phosphates involve a book built issue amounting to ₹50.11 Crores, with 59.40 Lakh Fresh Issue shares worth ₹41.58 Crores and an Offer for Sale of 12.18 Lakh shares totaling ₹8.53 Crores. The IPO subscription period runs from February 28, 2025, to March 4, 2025, with the allotment date set for March 5, 2025. The tentative listing date is March 7, 2025, on the NSE SME platform.

Price Band and Market Capitalization

The price band for the Balaji Phosphates IPO is set between ₹66 to ₹70 per equity share, and the market capitalization at the upper price band will be ₹166.44 Crores. The lot size for the IPO is 2,000 shares, requiring a minimum investment of ₹1,40,000 for retail investors, while HNIs are expected to invest in multiples of 4,000 shares, totaling ₹2,80,000.

Grey Market Premium (GMP)

As of now, the Grey Market Premium (GMP) for the Balaji Phosphates IPO stands at ₹0, indicating no expected listing gains. The GMP typically reflects market sentiment and demand for the IPO shares in the unorganized market before the official listing. However, a ₹0 GMP suggests a lack of demand, making the listing price discovery uncertain. This trend is a significant consideration for potential investors.

Subscription and Allotment Details

The IPO subscription status on its final day of subscription (March 4, 2025) shows a 1.33 times subscription rate. This indicates modest investor interest, but the overall subscription was not overly strong. Anchor Investors have contributed ₹8.57 Crores, securing 12,24,000 equity shares at ₹70 per share.

The IPO allotment date is confirmed as March 5, 2025, and investors can check their allotment status online by entering their application number, PAN, or DP Client ID on the registrar’s website.

Financial Overview and Valuation

Balaji Phosphates has shown steady financial growth, with revenues increasing from ₹12,411.72 Lakh in FY 2022 to ₹15,168.02 Lakh in FY 2023, and further to ₹5,484.66 Lakh for the period ending August 31, 2024. The EBITDA for FY 2024 stands at ₹572.55 Lakh, reflecting a downward trend from previous years, which may affect the company's valuation.

The pre-issue EPS is ₹3.39, and the post-issue EPS is ₹2.54 for FY 2024. With a P/E ratio of 20.65x pre-issue and 27.56x post-issue, compared to the industry P/E of 15x, the IPO is considered fully priced. The ROCE stands at 16.70%, and ROE at 18.89% for FY24, indicating moderate profitability.

IPO Objectives

Balaji Phosphates intends to utilize the net proceeds for:

1. ₹1,287.90 Lakhs towards capital expenditure.
2. ₹1,900.00 Lakhs for working capital requirements.
3. General corporate purposes.

IPO Review

Despite the steady growth in revenues and profits, the IPO faces challenges, with the Grey Market Premium indicating limited demand. The company's pricing appears fully valued, and the subscription status shows only moderate investor interest. The financial performance of the company, though improving, may not justify the premium pricing of the issue.

Considering the weak GMP and high P/E ratio relative to industry peers, it is recommended to avoid the Balaji Phosphates IPO for listing gains or long-term investment. Investors should exercise caution before committing their funds to this offering.

The Current active IPO is NAPS Global.

The Closed IPOs is Balaji Phosphates.

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