Balaji Phosphates Ltd is all set to launch its Initial Public Offering (IPO) for the year 2025. The company specializes in the production of NPK Granulated and Mixed Fertilizers and Zinc Sulfate (21%), with a significant focus on Phosphate Fertilizers. Their primary product, Single Super Phosphate (SSP), is available in both powder and granulated forms and complies with the Fertilizer Control Order of India standards.

The company is located in Dewas, Madhya Pradesh, and has a robust manufacturing facility with an installed capacity of 120,000 MTPA for SSP and 3,300 MTPA for Zinc Sulfate. The SSP product is the major revenue driver for the company. With the upcoming IPO, Balaji Phosphates aims to raise ₹50.11 Crores, comprising a fresh issue of 59.40 Lakh shares worth ₹41.58 Crores and an Offer for Sale (OFS) of 12.18 Lakh shares amounting to ₹8.53 Crores.

IPO Subscription Dates and Price Band

The IPO subscription period for Balaji Phosphates is set to open on February 28, 2025, and will close on March 4, 2025. The shares will be listed on the NSE SME platform, with the listing date expected to be around March 7, 2025. The price band for the IPO has been set at ₹66 to ₹70 per equity share, offering a market capitalization of approximately ₹166.44 Crores at the upper end of the price band.

Lot Size and Investment Requirements

For retail investors, the minimum investment is ₹1,40,000 for one lot of 2,000 shares, while High-Net-Worth Individuals (HNIs) must invest in a minimum of 2 lots (4,000 shares), which will amount to ₹2,80,000. This presents an exciting opportunity for retail and institutional investors to participate in the company’s growth journey.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for Balaji Phosphates IPO has been ₹0 as of now. While the Grey Market Premium is not a reliable indicator of listing gains, it provides an informal idea of demand and supply for the IPO. The absence of any significant GMP implies that there is little to no speculative demand in the unregulated market.

Anchor Investors and Market Maker

The company has raised ₹8.57 Crores from Anchor Investors, subscribing to shares at the upper price band of ₹70 per share. Arihant Capital Markets Limited is the Book Running Lead Manager, while Skyline Financial Services Private Limited is the registrar for the issue. Nnm Securities Private Limited serves as the market maker for the Balaji Phosphates IPO.

Financial Performance

Balaji Phosphates has demonstrated strong growth in revenue and profitability over the past few years. For the fiscal year ending August 31, 2024, the company reported a revenue of ₹5,484.66 Lakh with an EBITDA of ₹572.55 Lakh and a Profit After Tax of ₹414.65 Lakh. These figures indicate a stable financial performance, which is expected to continue post-IPO.

Objectives of the IPO

The net proceeds from the IPO will be utilized for several purposes, including:

1. ₹1,287.90 Lakhs for capital expenditure to expand manufacturing capacity.
2. ₹1,900.00 Lakhs to meet the working capital requirements.
3. General corporate purposes to support the company's future growth.

Valuation and Future Outlook

The pre-issue Earnings Per Share (EPS) is ₹3.39, with a post-issue EPS of ₹2.54 for FY24. The pre-issue P/E ratio stands at 20.65x, and the post-issue ratio is 27.56x, compared to the industry’s average of 15x. While the company has shown good growth metrics with a Return on Capital Employed (ROCE) of 16.70% and a Return on Equity (ROE) of 18.89%, the IPO is priced at a premium, making it potentially expensive for long-term investors.

The Listing Gain for the IPO is currently uncertain with the GMP showing no premium, and the financials indicate a fully priced IPO. As such, investors may want to approach this IPO cautiously.

In conclusion, while the IPO offers an opportunity for participation in the fertilizer sector, potential investors are advised to weigh the risks and rewards before making their decisions. Given the GMP, the valuation, and financials, the IPO might not offer immediate listing gains, but it may be a good option for long-term investors who believe in the growth prospects of the fertilizer sector in India.

The Upcoming IPOs in this week and coming weeks are Balaji Phosphates, NAPS Global.

The Current active IPO are Shreenath Paper, Nukleus Office.

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