Mehul Colours IPO: Steady Financials, Solid GMP and Strong Investor Response Signal Promising Listing

Mehul Colours, a masterbatch solution provider with a focus on the plastic manufacturing industry, has come out with its Book Built Issue IPO worth ₹21.66 Crores. The offering consists entirely of a fresh issue of 30.08 lakh equity shares, with a price band of ₹68 to ₹72 per share.

The company specializes in blending pigments, additives, and resins to create customized plastic solutions for industries like packaging, automotive, and construction. Their products are designed to enhance colour vibrancy, UV resistance, and specific material properties, backed by their state-of-the-art manufacturing units.

IPO Details and Market Capitalisation

The IPO opened on July 30, 2025, and closed on August 1, 2025. The shares are expected to be listed on the BSE SME platform on or around August 6, 2025. With the upper band at ₹72, the company's market capitalization is estimated at ₹75.95 Crores. The lot size is 1,600 shares, and investors were required to apply for at least 2 lots (3,200 shares), translating to an investment of ₹2,30,400.

Seren Capital Private Limited is the Book Running Lead Manager (BRLM) for the issue. BIGSHARE SERVICES PVT LTD serves as the Registrar, while Asnani Stock Broker Private Limited is the Market Maker.

Grey Market Premium (GMP) Indicates Listing Gains

The Grey Market Premium (GMP) for Mehul Colours IPO stood at ₹11 as of July 28, 2025, implying an expected listing price of ₹83, which reflects a potential 15.92% gain over the IPO price of ₹72. It is important to note that GMP is unofficial and speculative, based on unregulated trading in the secondary market.

Still, the positive GMP suggests investor confidence, although real trading data and stock exchange listing will be the true benchmark of the IPO’s success.

Live Subscription Status

On the final day of the IPO, as of 12:00 PM on August 1, 2025, the Mehul Colours IPO was subscribed 1.86 times. This subscription level indicates healthy interest, especially in the retail and HNI segments, though it is not an over-subscribed IPO by SME standards.

Anchor Investors: ₹6.15 Cr Raised

Mehul Colours successfully raised ₹6.15 Crores from Anchor Investors prior to the IPO. These funds were raised at the upper band price of ₹72, indicating strong institutional confidence. A total of 8,54,400 shares were allocated to Anchor Investors.

This allocation was done in consultation with the BRLM, and was deducted from the Qualified Institutional Buyers (QIBs) portion.

Objectives of the Issue

The company has outlined three main objectives for the utilization of IPO proceeds:

1. ₹1,463.48 Lakh for setting up a new manufacturing facility

2. ₹400.00 Lakh for working capital requirements

3. Remaining amount for general corporate purposes

These investments aim to scale operations, meet growing market demands, and enhance the company’s production capabilities.

Financial Performance: Steady Growth

Mehul Colours has shown consistent revenue growth over the last three fiscal years:

• FY 2023-24: ₹2,371.29 Lakh

• FY 2022-23: ₹2,265.67 Lakh

• FY 2021-22: ₹2,136.60 Lakh

Similarly, EBITDA and PAT (Profit After Tax) have shown upward movement:

• EBITDA FY24: ₹778.18 Lakh | PAT FY24: ₹550.30 Lakh

• EBITDA FY23: ₹469.47 Lakh | PAT FY23: ₹321.82 Lakh

• EBITDA FY22: ₹437.19 Lakh | PAT FY22: ₹293.96 Lakh

This indicates robust financial health, profitability, and business scalability.

Valuation Metrics

The key performance indicators as per FY24 suggest:

• Pre-Issue EPS: ₹7.3 | Post-Issue EPS: ₹5.2

• Pre-Issue P/E: 9.86x | Post-Issue P/E: 13.80x

• Industry Average P/E: 27x

• ROCE: 43.53%

• ROE: 38.46%

• RoNW: 32.26%

These valuation metrics suggest that Mehul Colours IPO is fairly priced, particularly when benchmarked against the industry average.

Leadership & Promoters

The company is led by its experienced promoters and directors — Mehul Pravinchandra Joshi and Bhakti Mehul Joshi. Their deep understanding of the masterbatch and pigment industry has played a pivotal role in the company’s growth trajectory. Their vision is backed by a seasoned management team focused on customization, quality, and innovation.

Business Model and Innovation

At the core of Mehul Colours' operations lies a commitment to sustainability and innovation. The company’s masterbatch solutions improve the aesthetic and functional properties of plastic materials across diverse sectors.

Their facility is equipped with modern machinery, and the company maintains stringent quality controls to ensure consistency across products. The product portfolio includes:

• Colour Masterbatches

• Additive Masterbatches

• Special Effects Masterbatches

Their solutions offer UV resistance, thermal stability, and anti-oxidant properties, tailored to meet specific customer needs.

Listing & Allotment Timeline

The IPO allotment date is set for August 4, 2025. Investors can check their status on the registrar’s website using their PAN, application number, or DP ID.

Steps to check allotment status:

• Visit the Registrar Website

• Choose Mehul Colours IPO from the list

• Enter PAN/Application Number/DP Client ID

• Submit to view allotment status

Listing of shares is expected around August 6, 2025 on BSE SME.

Recommendation

Given the:

• Stable financials

• Fair valuations

• Anchor investor support

• Reasonable GMP

...the Mehul Colours IPO is considered a moderately safe bet for listing gains.

However, it is more suited for risk-tolerant investors, as SME IPOs carry higher volatility and liquidity risks compared to mainboard issues.

Conclusion

Mehul Colours Limited IPO reflects a well-managed business, strong revenue track record, and a focus on innovation within the plastics industry. While not heavily oversubscribed, the presence of anchor investors and GMP of ₹11 suggests that listing could be profitable for short-term traders, provided broader market sentiment remains supportive.

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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