Balaji Phosphates Ltd, a manufacturer of NPK Granulated & Mixed Fertilizers and Zinc Sulfate, made a strong debut on the NSE SME platform on March 7, 2025. The company’s shares listed at ₹75, marking a 7% premium over its issue price of ₹70. Balaji Phosphates successfully raised ₹50.11 crore through its IPO, which was subscribed 1.26 times.

The company specializes in Single Super Phosphate (SSP) and other phosphate-based fertilizers, such as NPK Granulated & Mixed Fertilizers and Zinc Sulfate (21%). The manufacturing facility, located in Dewas, Madhya Pradesh, has an installed capacity of 120,000 MTPA for SSP and 3,300 MTPA for Zinc Sulfate, with SSP as its primary revenue driver.

The IPO consisted of a fresh issue of ₹41.58 crore and an offer for sale of ₹8.53 crore. The price band for the IPO was set between ₹66 and ₹70 per share. The lot size was set at 2,000 shares, with a minimum investment requirement for retail investors of ₹1,40,000 and for high-net-worth individuals (HNIs) at ₹2,80,000.

Arihant Capital Markets Limited served as the book-running lead manager, with Skyline Financial Services as the registrar. Nnm Securities acted as the market maker for the IPO.

Despite a Grey Market Premium (GMP) of ₹0, the shares debuted positively, reflecting a strong subscription status. As of the final day of the subscription period on March 4, 2025, the IPO was subscribed 1.33 times.

Business Overview:

Balaji Phosphates Ltd. produces Single Super Phosphate (SSP) and a variety of phosphate-based fertilizers, including NPK Granulated Fertilizers and Zinc Sulfate. The company markets its products under the RATNAM and BPPL brands, catering to agricultural regions across Madhya Pradesh, Chhattisgarh, Maharashtra, Andhra Pradesh, and Telangana.

With an annual production capacity of 120,000 MT for SSP and 3,300 MT for Zinc Sulfate, the company maintains a strong distribution network that serves retailers, wholesalers, government cooperatives, and farmers. However, the current capacity utilization is only 58.5% for SSP, leaving significant room for future growth.

Financial Performance:

For the financial year 2024, the company reported revenues from operations of ₹5,484.66 lakh, with EBITDA of ₹572.55 lakh and net profit of ₹414.65 lakh. This marks a steady growth trajectory, supported by a strong management team with over two decades of experience in the fertilizer industry.

The company’s pre-issue EPS stood at ₹3.39, while the post-issue EPS is ₹2.54, with a pre-issue P/E ratio of 20.65x. Despite the fully priced IPO, the company is poised for growth, with a ROCE of 16.7% and a ROE of 18.89% for FY24.

Market Position:

Balaji Phosphates has a strategic advantage in its low-cost manufacturing setup in Dewas, Madhya Pradesh, which helps it maintain competitive pricing in the fertilizer market. The company is actively working on expanding its market share by strengthening its distribution network and exploring opportunities for product diversification.

Risk Factors:

Several key risks affect the company's future, including its reliance on the agricultural sector’s performance, volatility in raw material prices, regulatory compliance issues, and competition from large industry players like Coromandel International and Chambal Fertilizers. Additionally, its sales concentration in a few states exposes the company to regional economic fluctuations and climatic risks.

The company aims to mitigate these risks by focusing on capacity expansion, product innovation, and technology upgradation to ensure continued growth and stability in the highly competitive fertilizer industry.

Conclusion:

While the Balaji Phosphates IPO offers an opportunity for investors to tap into the growing Indian fertilizer sector, the risks tied to market concentration and regulatory dependencies should be carefully evaluated. The strong debut on the NSE SME platform signals potential growth, but investors should consider the company’s long-term strategy and market conditions before making investment decisions.

The Upcoming IPOs in this week and coming weeks are Super Iron Foundry.

The Current active IPO is NAPS Global.

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