Paragon Fine And Speciality Chemicals Limited IPO

Apply 0
Avoid 0

1. Core Business Activity: The primary focus of the business is custom synthesis and manufacturing of specialty chemical intermediates. This involves creating chemical compounds with complex and differentiated chemistry to meet the specific needs of customers.

2. Business Evolution: The business started as a partnership firm in 2004 and has evolved over the years to specialize in the custom synthesis and manufacturing of various types of intermediates, including Pharma Intermediates, AGRO intermediates, Cosmetics Intermediates, Pigment Intermediates, and Dye Intermediates.

3. Diverse Customer Base: The company serves a diverse customer base that includes both Indian and global customers. This diversity extends across industries such as pharmaceuticals, agrochemicals, cosmetics, pigments, and dyes.

4. Technology and Systems Approach: The company’s approach is centered on the fusion of chemistry with technology and systems. This approach is aimed at facilitating sustained product development.

5. Manufacturing Facility: The business operates from a manufacturing facility located in Viramgam District, Ahmedabad, Gujarat. This facility covers approximately 7000 square meters and is equipped with reactors capable of producing a wide range of products.

6. Research and Development (R&D): They have in-house R&D facility, recognized by the Department of Scientific and Industrial Research, focuses on catalytic processes and new chemical screening. This has enabled them to diversify their product portfolio and achieve operational efficiencies. From Fiscal 2021 to 2023, the R&D team expanded the commercial offerings from 100 to 140 products. As of March 31, 2023, the team comprises 14 technocrats with degrees in science and engineering.

7. Product Portfolio: The company has a diversified product portfolio due to its R&D and technological capabilities. As of the given fiscal year, they have around 140 different products.

8. Global Export: The business has earned a One Star Export House status and exports its products to various countries, including the USA, Israel, Spain, United Kingdom, China, Switzerland, Taiwan, Thailand, Mexico, Japan, Russia, France, Indonesia, Latvia, Germany, and more.

9. Revenue Concentration: The company’s revenue is derived from the sale of its various products. The revenue distribution is not evenly spread across products; some products contribute significantly more to the company’s total revenue than others.

Objects of the Paragon Fine And Speciality Chemicals Limited IPO:

The company intends to utilize the proceeds of the Issue to meet the following objectives: - 1. Funding capital expenditure towards civil construction work in the existing premises of the factory 2. Funding capital expenditure towards civil construction work in Plot No 10/A, Situated at Survey No. 1359, 1360 Village-Viramgam Taluka- Viramgam, District-Ahmedabad-382150, Gujarat. 3. Repayment in full or in part, of certain of our outstanding borrowings; 4. Funding Capital Expenditure towards the installation of additional plant and machinery for Expansion. 5. Funding to meet working capital requirements 6. General Corporate Purpose.
DRHP of Paragon Fine And Speciality Chemicals Limited IPO
RHP of Paragon Fine And Speciality Chemicals Limited IPO

Paragon Fine And Speciality Chemicals Limited IPO Details:

Open Date: Oct 26 2023
Close Date: Oct 30 2023
Total Shares: 5,166,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Building
Issue Size: 51.66 Cr.
Lot Size: 1200 Shares
Issue Price: ₹ 95 - 100 Per Equity Share
Listing At: NSE Emerge
Listing Date: Nov 07 2023

Promoters And Management:

i. Dr. Pravinchandra Jasmat Vasolia aged 57 years is the Managing Director and promoter of the Company. He has been on the Board of Directors since incorporation. He has completed Ph. D in law in the year 2009 from Saurashtra University. He has completed LLM in the year 2002 from Saurashtra University and has also completed B.com in the year 1986 from N.P Arts and Commerce College, Saurashtra University and has an overall experience of around 32 years in the chemical industry and in the field of finance and law. He looks after the legal and financial activities of the company and played a significant role in the growth of the company. ii. Kishorkumar Panchabhai Patolia aged 54 years is the Whole Time Director and promoter of the Company. He has been associated with the company since incorporation. He has completed master of science in Pathology and Microbiology in the year 1995 form M.P Shah Medical College. He has an experience of around 30 years and has gained technical expertise in the field of chemistry and pathology, marketing and management. Currently he looks after marketing activities of the company. He is also appointed member of Central Advisory Board of Specialty Chemicals World Expo 2024. iii. Vallabh Ratanji Savalia aged 60 years is the Whole Time Director and promoter of the Company. He has been on the Board of Directors since incorporation. He has completed B.E in Chemical Engineering in the year 1987 from Bangalore University. He has a work experience of around 35 years in the chemical industry. He looks after production, planning and procurement activities of the company.

Financials of Paragon Fine And Speciality Chemicals Limited IPO:

Particulars ( In Lakhs )
2021
2022
2023
3M-FY24
Revenue from Operations 8,326 8,283 10,227 2,879
Other Income 111 175 275 22
Total Revenue 8,437 8,458 10,501 2,900
Cost of Material Consumed 5,759 6,212 7,448 1,884
Change in inventories 2 -654 -223 142
Employee benefits expenses 644 653 515 106
Other Expenses 1,298 1,484 1,204 221
EBITDA 733 762 1,558 548
Depreciation & Amortisation 60 70 83 22
Finance Cost 70 75 118 39
EBIT 673 692 1,475 526
OPM (%) 8.69% 9.01% 14.83% 18.88%
PBT 603 617 1357 487
Tax 163 168 367 125
PAT 440 449 989 362
NPM (%) 5.21% 5.31% 9.42% 12.49%
No.of Shares 195.66 195.66 195.66 195.66
EPS 2.24 2.29 5.05 1.85

Comparison With Peers:

 
Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Paragon Fine And Speciality Chemical Limited 102 10 5.05 19.8 100 196
Aether Industries Limited 651 130 10.47 90.8 890 11,799
Anupam Rasayan India Ltd 1,602 217 16.84 50.7 845 9,106
Bodal Chemicals Ltd 1,574 38 3.03 53.1 74.6 941
Deepak Nitrite Ltd 7,972 852 62.47 35.9 2,020 27,544
* All the data is as per FY23.

Recommendation on Paragon Fine And Speciality Chemicals Limited IPO:

Review and Recommendation of Paragon Fine and Specialty Chemicals SME IPO is 4/10 Paragaon Speciality is gearing up for an SME IPO. Specializing in the production of specialty chemicals, the company has a diverse portfolio serving industries such as Agro, Dyes, and Cosmetics. This report aims to provide a detailed analysis of the company's business model, financial performance, and future prospects, thereby aiding in investment decision-making.

A) Business Overview

Core Competencies Paragaon Speciality primarily manufactures specialty chemicals, focusing on serving the Agro, Dyes, and Cosmetic industries. The contribution from these sectors in FY23 is as follows: a) Agro Sector: Approximately 9% b) Dyes Sector: Approximately 69% c) Cosmetic Sector: Approximately 6% d) Others: The remaining percentage

B) Operational Infrastructure

The company operates from a 7,000 square meter manufacturing facility in Viramgam District, Ahmedabad, Gujarat. This facility is well-equipped with reactors capable of producing a broad range of products. As of FY23, the capacity utilization is at 75%, up from 55.92% in FY21.

C) Research & Development

Paragaon Speciality invests in an in-house R&D facility, focusing on catalytic process development, new chemical screening, and engineering. This plays a pivotal role in improving efficiencies from the conceptual stage to the commercialization of products.

D) Financial Performance

a) Revenue and Profit The company has shown significant growth in revenue and profit, with revenue increasing from INR 80 Cr in FY21 to INR 100 Cr in FY23. Similarly, Profit After Tax (PAT) has doubled from INR 4.4 Cr in FY21 to INR 9 Cr in FY23. b) Debt and Net Worth As of June 30, 2023, the company holds a debt of ~INR 26 Cr, with a net worth of INR 25 Cr, resulting in a Debt-to-Equity ratio of 1. c) Cash Flow and Capex Despite the growth in revenue and profit, the cash generated from operations has been negative at -INR 6 Cr. The total capital expenditure (Capex) stands at INR 7 Cr, indicating weak cash flow management. d) Return on Equity (ROE) The company boasts an impressive ROE of 40% in FY23.

E) Market Reach

The product portfolio is extensive, consisting of around 140 products. Paragaon Speciality serves over 13 global customers across 12 countries and approximately 75 domestic customers. The company has maintained relationships exceeding five years with around seven customers.

F) New Product Pipeline

The company is in the R&D stage for new products like Food Grade Folic Acid and HALQUINOL, both aimed at human and animal consumption.

G) IPO Valuation

The IPO is set to launch at a market capitalization of INR 200 Cr. With a PAT of ~INR 9 Cr in FY23, the P/E ratio stands at approximately 20x, appearing fully priced.

H) Conclusion

Paragaon Speciality's SME IPO presents an intriguing investment opportunity, backed by strong industry presence and financial performance. However, prospective investors should be cautious of the weak cash flows and fully priced IPO.

Lead Manager of Paragon Fine And Speciality Chemicals Limited IPO:

  1. Hem Securities Limited

Registrar of Paragon Fine And Speciality Chemicals Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Paragon Fine And Speciality Chemicals Limited 1001/1, Parshwa Tower, Near Pakvan Hotel S.G. Highway, Bodakdev Ahmedabad, 380054 Phone: +917935335483 Email: cs@paragonind.com Website: https://www.paragonind.com/

Discussion on Paragon Fine And Speciality Chemicals Limited IPO:

1 Comment

    Cordially invited to the Investor Conference Call of Paragon Fine & Speciality Chemical Ltd, a speciality chemical intermediates manufacturer based in Ahmedabad, Gujarat coming up with its SME IPO on NSE Emerge.

    ~ To discuss the basic details about the company

    The virtual call is scheduled to be held on Wednesday, 25th October 2023 at 4:00 pm (IST).

    Please find below Invite to register for the Conference Call – Please click on “Register Here” & you will be redirected to the registration link.

    https://bit.ly/PARAGON_CON_CALL_INVITE

    Reply

Leave a Reply