Neptune Petrochemicals Limited, engaged in the manufacturing and trading of bitumen products, recently launched its SME IPO with a total issue size of ₹73.2 crores, which was entirely a fresh issue of 60 lakh shares. The IPO, which was opened for subscription from May 28 to May 30, 2025, has garnered significant investor attention and was subscribed 3.89 times by the final day of bidding. Despite this strong demand, the Grey Market Premium (GMP) remained at ₹0, indicating no expected listing gains as per market observers.

The price band for this book-built issue was set between ₹115 to ₹122 per equity share, and the minimum lot size was 1,000 shares, amounting to a retail investment of ₹1,22,000. High-Net-Worth Individuals (HNIs) were required to apply for a minimum of two lots, or ₹2,44,000. The tentative listing date on the BSE SME platform is set for June 04, 2025, with allotment scheduled for June 02, 2025.

Despite a flat GMP trend, the IPO saw anchor investment participation, raising ₹20.84 crores from anchor investors at the upper price band of ₹122 per share. This was done in consultation with the Book Running Lead Manager (BRLM), Beeline Capital Advisors Private Limited. MUFG Intime India Private Limited acted as the registrar, while Spread X Securities Pvt. Ltd. served as the market maker for the issue.

Neptune Petrochemicals Limited caters to the construction and industrial sectors with a diverse product portfolio that includes bitumen emulsions, polymer-modified bitumen, crumb rubber modified bitumen, and various bituminous oils. The company has positioned itself as a reliable supplier in the infrastructure and road construction industry, which continues to see government-driven demand.

From a financial standpoint, Neptune Petrochemicals has reported steady growth:

• Revenue from Operations for FY 2024 stood at ₹67,596.79 lakh, compared to ₹70,930.85 lakh in FY 2023 and ₹8,216.32 lakh in FY 2022.

• EBITDA for FY 2024 was ₹2,867.83 lakh, versus ₹1,453.43 lakh in FY 2023 and just ₹96.01 lakh in FY 2022.

• Profit After Tax (PAT) rose to ₹2,081.56 lakh in FY 2024, up from ₹1,039.13 lakh in FY 2023 and ₹68.29 lakh in FY 2022.

This upward financial trend is reflective of the company’s scaling operations and strategic management. The Managing Director Mr. Pareshkumar Subodhchandra Shah and Whole-time Director Mr. Sanjaykumar Subodhchandra Shah have 20 and 15 years of industry experience respectively, which has significantly contributed to this growth.

However, the valuation metrics present a mixed picture for potential investors. The pre-issue EPS for FY24 stands at ₹13.87, while the post-issue EPS drops to ₹9.19. The pre-issue P/E ratio is 8.80x, and the post-issue P/E ratio is 13.28x, which is below the industry average P/E of 18x. Other indicators include:

• ROCE (Return on Capital Employed): 117.86%

• ROE (Return on Equity): 96.85%

• RoNW (Return on Net Worth): 65.25%

• Annualised EPS (latest): ₹16.34, resulting in a P/E ratio of 7.46x

While these ratios suggest financial efficiency, analysts are cautious due to the flat GMP, indicating no speculative premium in the secondary market. Listing gains appear unlikely, which makes this IPO less attractive for short-term investors.

The objectives of the IPO are clearly outlined by the company:

1. ₹515.10 lakh will be used for capital expenditure towards installing additional plant and machinery.

2. ₹1,474.58 lakh is earmarked for purchasing office space.

3. ₹4,200 lakh will go towards working capital requirements.

4. The rest will be used for general corporate purposes.

While the intentions are in place to improve infrastructure and scale operations, concerns around valuation and market sentiment may overshadow these positives in the short term.

Furthermore, Neptune Petrochemicals did not see any speculative buying in the grey market, where the premium has remained at ₹0 across multiple days. This trend typically reflects limited interest in listing gains, although it doesn’t necessarily imply poor long-term potential.

Here's a look at the day-wise GMP trend:

Despite solid financial fundamentals, the absence of grey market momentum and conservative IPO pricing have led analysts to advise caution. Investors seeking short-term profits may be disappointed by the muted listing expectations.

To check the allotment status, investors can follow these simple steps starting June 02, 2025:

• Visit the registrar’s website.

• Select Neptune Petrochemicals Limited IPO from the dropdown menu.

• Enter your Application Number, PAN, or DP Client ID.

• Submit the information to know if shares have been allotted.

In conclusion, Neptune Petrochemicals IPO demonstrates a financially strong and operationally sound company with a diverse product range serving critical infrastructure needs. However, with a flat grey market premium, limited speculative interest, and modest valuation metrics, investors are advised to avoid this IPO for listing gains. Long-term investors who believe in the growth of India's infrastructure and road construction sector may consider entering post-listing based on market performance.

As always, due diligence and consultation with a financial advisor are recommended before making investment decisions in IPOs, especially in SME segments, where liquidity and market behaviour can vary significantly.

The Upcoming IPOs in this week and coming weeks are Ganga Bath Fittings, Victory Electric Vehicles International, Wagons Learning.

The Current active IPO are 3B Films

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