On January 7, 2025, Technichem Organics Ltd. made its much-anticipated debut on the BSE SME platform. Despite expectations for a bigger listing gain, the stock opened with a 4% premium over the IPO price. For investors, this meant a profit of ₹4,500 per lot, based on a lot size of 2,000 shares and a minimum investment of ₹1,10,000.

Technichem Organics IPO: Key Details and Investor Insights

The Technichem Organics IPO raised ₹25.25 crore and was open for subscription from December 31, 2024 to January 2, 2025. The issue price was set between ₹52 and ₹55 per share, with the upper price band being ₹55, giving the company a market capitalization of ₹95.26 crore at the listing price.

The lot size of the IPO was 2,000 shares, requiring a minimum investment of ₹1,10,000 for retail investors. This means that retail investors who subscribed to the IPO could expect profit per lot of ₹4,500, factoring in the listing premium of ₹2.2 per share. The company has been in the business of manufacturing chemical intermediates for industries like pharmaceuticals, agriculture, pigments, and dyes since its establishment in 1996.

Strong Subscription Demand and Performance Metrics

Technichem Organics attracted strong demand, as reflected in its 392.62x subscription rate by the final day of the offer. This level of demand is a positive sign for investors looking for growth opportunities in SME stocks. The Grey Market Premium (GMP) for the stock was initially pegged at ₹14, indicating potential listing gains of 25.45%, based on the company’s financials. These numbers suggest that Technichem Organics’ stock might perform well in the short term, providing investors with immediate listing gains.

Financial Performance of Technichem Organics

For the fiscal year 2024, the company reported revenue from operations of ₹4,696.84 lakh, which shows a slight dip from ₹5,101.97 lakh in FY 2023. However, it still posted a Profit After Tax (PAT) of ₹472.68 lakh for the fiscal year 2024, further bolstering investor confidence in its steady financial growth.

The Pre-issue P/E ratio for Technichem Organics stood at 14.82x, while the Post-issue P/E ratio was 20.15x, which is lower than the industry average of 93.50x, suggesting that the stock is reasonably priced compared to its peers. Additionally, the company reported strong ROE of 27.39% and ROCE of 22.57%, reflecting efficient use of equity and capital.

Technichem Organics IPO: Pricing and Valuation

With a Pre-issue P/E ratio of 14.82x and a Post-issue P/E ratio of 20.15x, the IPO appears to be reasonably priced, especially in comparison to the industry P/E ratio of 93.50x. This is an indication that the stock offers value for money, making it an attractive option for investors looking for reasonable growth in a steady market environment. The company's financials and metrics such as ROE (27.39%) and ROCE (22.57%) suggest solid performance and potential long-term growth.

Proceeds from the IPO

The net proceeds from the Technichem Organics IPO will be utilized for expanding production capacity and reducing debt:

1. ₹703.82 lakh will go towards setting up a new plant, called “Plant-4”, aimed at expanding its manufacturing capabilities.
2. ₹1,023.51 lakh will be used to repay borrowings from various financial institutions.
3. The remaining proceeds will be utilized for general corporate purposes, allowing the company to further strengthen its market position.

What Lies Ahead for Technichem Organics?

While the 4% premium on listing day might not have matched some market expectations, the stock’s performance on its debut provides an interesting perspective. The company has shown steady growth in revenues and profits, and its reasonable IPO pricing combined with positive Grey Market Premium suggests potential gains for investors over time.

Technichem Organics has strong fundamentals, with a history of stable revenue and profitability. The company’s emphasis on specialty chemicals and pigment intermediates positions it well for future growth, particularly in high-demand industries like pharmaceuticals and agriculture.

With a strong subscription rate, a solid financial foundation, and strategic plans for expanding production, Technichem Organics is one to watch for those interested in SME IPO investments.

The Upcoming IPOs in this week and coming weeks are Sat Kartar Shopping,Barflex Polyfilms.

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