Mehul Colours India Ltd, a company engaged in the business of organic pigments and dye intermediates, made a strong debut on the BSE SME platform, with its shares listing at ₹85 — an 18% premium over the IPO price of ₹72. The listing was closely aligned with the grey market premium (GMP) of around 16%, indicating a well-anticipated and steady market response.

Impressive Debut for Niche Chemical Player

The IPO had garnered healthy traction among retail and high-net-worth individuals (HNIs). Despite being an SME issue, the offering stood out due to:

• Strong presence in colourants and pigment intermediates

• Steady financial growth in recent years

• Sectoral tailwinds in the specialty chemical and export segment

The ₹39.6 crore IPO was entirely a fresh issue of shares. The proceeds will be used for:

• Working capital requirements

• General corporate purposes

• Technological upgradation and capex

About Mehul Colours

Headquartered in Mumbai, Mehul Colours manufactures and exports a wide range of organic pigment powders used in:

• Textiles

• Inks

• Plastics

• Paints and coatings

With ISO certifications and export approvals, the company supplies to clients in domestic and international markets, including customers in Asia, Europe, and the Middle East.

Its manufacturing facility in Vapi, Gujarat, is equipped with modern processing and quality control systems.

Financial Highlights

In FY24, Mehul Colours reported:

• Revenue: ₹80.2 crore

• Net profit: ₹7.3 crore

• EBITDA margin: ~16%

• Return on Net Worth (RoNW): 24.5%

The financials reflected consistent growth in sales and profitability, with increasing demand from the printing and dyeing industries. The company also benefits from growing global demand for eco-friendly pigments.

Investor Sentiment and GMP Tracking

The IPO was well-received, with oversubscription in the retail category, and the GMP (Grey Market Premium) hovered around ₹11–12 per share ahead of listing — predicting a listing in the ₹83–85 range.

The actual debut at ₹85 matched this, showing:

• Efficient IPO pricing by the lead managers

• Reliable grey market sentiment forecasting

• Limited speculative froth in pricing

This also signals a shift in investor discipline, with fewer cases of irrational bidding in SME IPOs.

Analyst Commentary

Market watchers see this as a fair listing, neither overhyped nor undervalued.

• Arihant Capital: “Mehul Colours' listing validates its fundamentals and the market's appreciation for chemical SMEs with global reach.”

• Hem Securities: “18% gain is a healthy outcome in this environment. The issue was priced right and well-supported by demand.”

• Independent analyst Shreyas Jain: “A stock that lists exactly near GMP reflects a strong alignment between valuation and sentiment.”

What Should Investors Do Now?

For those allotted shares:

• Long-term investors can hold the stock, as the company operates in a growth-ready niche with export potential.

• Short-term traders might look for volatility post-listing to book profits or average out, depending on price movement.

• New investors are advised to wait for consolidation before entering, as SME stocks tend to be illiquid and volatile.

The company's next quarterly performance and execution of IPO objectives will be critical for sustaining interest.

Conclusion

Mehul Colours' ₹85 debut with 18% premium is a positive signal for SME investors, especially in the chemical and specialty manufacturing space. The IPO's success lies in stable demand, transparent pricing, and predictable GMP performance, rather than hype or speculation.

With solid financials, consistent export growth, and a scalable product portfolio, the company is well-positioned for steady progress. However, investors must be cautious of SME segment volatility, and make fundamentals-led decisions moving forward.

Disclaimer
This article is for educational and informational purposes only and does not constitute financial advice. Investment decisions should be based on individual risk tolerance and consultation with SEBI-registered advisors. Market conditions are volatile and subject to change. Neither the author nor the platform is responsible for losses arising from use of this information.

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