Ushanti Colour Chemical Limited IPO

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(i) Ushanti Colour Chemical Limited IPO was incorporated in 1993, Gujarat based Ushanti Colour-Chem Limited is a company engaged in the business of manufacturing and trading of Dyestuffs.

(ii) The Company manufactures Reactive and Direct Dyestuffs also known as Synthetic Organic Dyes. It also manufactures Copper Phthalocyanine, Blue Crude which is one of the major raw materials used for manufacturing of Dyestuffs. The pigment and dyestuffs manufactured by the company cater to the raw material requirement of textile, garment, cotton, leather, nylon, paper, wool, ink, wood, plastic and paint industries.

(iii) Ushanti Colour Chemical Limited concentrates on manufacturing “Turquoise Blue” Dyestuffs and Pigments. The company has 3 manufacturing facilities situated together at Vatva GIDC in Gujarat. The facilities are spread over 2,739 sq. meters in total area. It also has its own Ice generation machinery, further, it recovers Ammonium Carbonate from its effluent stream which is reused in the plant as well as sold to the Soda Ash Industry reducing wastage giving us incremental revenue.

(iv) The company currently has a production capacity of approx. 2,520 tons per annum. Ushanti generates approx. 41% of its Revenue from Operation from the Domestic market while approx. 59% of Revenue is generated by its export operations. Currently, it offers its products through traders. The company manufactures dyes and are sold as per the orders received by parties either directly from manufacturers or traders.

(v) Application of Ushanti Colour Chemicals

Sr. No Product of the Company Industry usage
    1 Ushanti Reactive Cotton, Nylon
    2 Ushanti Direct Wool & Leather
    3 Ushanti Pigment Ink & Paper
    4 Ushanti Intermediates Wood & Palstic
    5 Ushanti Acid Paint

 

Ushanti Colour Chemical Limited IPO Stock Quote & Charts

63.00

+0.96%

  • Open: 63.00
  • High - Low: 63.00 - 63.00
  • Previous Close: 62.40
  • Total Traded Volume: 2000
  • Updated On: 17-Oct-2018

Objects of the Ushanti Colour Chemical Limited IPO:

Objective of

Ushanti Colour Chemical Limited IPO

are: 1. To finance setting up of Vinyl Sulphone manufacturing facility at GIDC Saykha Industrial Estate, Bharuch 2. Repayment/pre-payment of certain secured borrowings availed by the Company 3. General corporate purposes

Ushanti Colour Chemical Limited IPO Details:

Open Date: Jul 23 2018
Close Date: Jul 25 2018
Total Shares: 1,926,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue
Issue Size: 11.56 Cr.
Lot Size: 2000 Shares
Issue Price: ₹ 60 Per Equity Share
Listing At: NSE Emerge
Listing Date: Aug 02 2018

Promoters And Management:

Promoters of Ushanti Colour Chemmical Limited Company are: Mr Maunal Gandhi Mr Minku Gandhi

Capital Structure:

(i) Authorized Share Capital 1,00,00,000  shares at FV@10) 10 Cr
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue (53,75,700 Shares at FV@10) 5.375 Cr
(iii) Present Issue (   19,26,000 Shares at FV@10) 1.926 Cr
(iv) Reservation for Market Maker [98000] Shares at FV@10) 9.8 Lacs
(v) Reservation for QIB & HNI [9,14,000] Shares at FV@10) 50%
(vi) Reservation for Retail  [9,14,000] Shares at FV@10) 50%
(vii) Paid Up Share Capital after the issue 7.301 Cr

Financials of Ushanti Colour Chemical Limited IPO:

1. Assets and Liabilities Key Parameters
Year Asset(lacs) Liabilities(lacs) Net Worth(lacs) Book Value D/E [<1.5] RONW Receivable days
FY13 1,315.76 1,064.74 251.02 51 4.2 20% 56
FY14 1,889.78 1,416.76 473.02 97 3.0 47% 60
FY15 2,022.31 1,522.68 499.63 102 3.0 6% 60
FY16 2,238.70 1,712.85 525.85 108 3.3 5% 71
FY17 2,273.94 1,620.36 653.58 134 2.5 20% 63
9MFY18 2,702.27 1,865.68 836.59 171 2.2 22% 61
Post Issue 1942.02 26 1.0 13%
2. Profit n Loss Key Parameters
Year Revenue(lacs) PAT(lacs) EBITDA Margins Profit Margins Outstanding Shares(lacs EPS
FY13 2414.66 51.01 8% 2% 4.87 10.47
FY14 3541.98 222 12% 6% 4.87 45.59
FY15 2970.96 28.36 9% 1% 4.87 5.82
FY16 2511.31 26.22 9% 1% 4.87 5.38
FY17 2962.1 127.73 13% 4% 4.87 26.23
9MFY18 2742.6 183.01 15% 7% 4.87 37.58
Post Issue 73.017 3.34
3. Cash Flow Statement(all figures in lacs)
Particulars FY17 FY16 FY15 FY14 FY13
(i) Net Cash Generated from Operation 412.25 191.87 309.64 113.59 303.52
(ii) Net Cash Generated from Investment -171.66 -155.97 -570.83 -165.11 -125.61
(iii) Net Cash Generated from Financing Activity -368.72 99.45 189.09 111.21 -170.56
(iv) Total[ (i)+(ii)+(iii) ] -128.13 135.35 -72.10 59.69 7.35
(v) Cash and Cash Equivalents at the Beginning of the Year 142.67 7.32 79.42 19.73 12.39
(vi) Cash and Cash Equivalents at the end of the Year 14.54 142.67 7.32 79.42 19.74
Key Notes: a) The Revenue is growing at CAGR of 5.25% from FY13 to FY17. b) The PAT is growing at CAGR of 25.62% from FY13 to FY17. c) The Annualized EPS(post issue) would be 3.34 d) P/E(post issue)= 17.96 at Cutoff price of 60 e) P/B(post issue)= 2.30 at cutoff price of 60. f) The Company has total debt of around 8Cr[long term debt= 6.13 Cr & Short term Debt is 3.6 Cr] as on 31st Dec 2017. However, out of total Proceed of 11.56 Cr from the IPO the company has envisages to use 5.80 Cr to reduced debt which will reduce the finance cost going forward and will improve the margins. g) Mcap/Sales(ideally <2)=  M.Cap(post issue) would be 43.18 Cr and if we take sales of 29.36 Cr of FY17 , then M.Cap/Sales would be 1.47- Reasonably priced. h) The Company’s EBITDA margins has improved from 8% in FY13 to 15% in FY17.- Good Sign i) The Company is generating positive cash flows from operations in last 5 years- Big Positive.

Comparison With Peers:

Name of the Company P/E Sales(cr) EPS Mcap/sales RONW
Ushanti Colour Chem Limited 17.96 36 3.34 1.47 13.00%
Aksharchem (India) Limited 15.55 271 36.6 1.7 22.56%
Kiri Indus 13.96 904 33.7 1.6 42.32%
Camex Limited 14.84 122.78 2.1 0.3 8.78%
Meghmani Organics Limited 28.76 1286 3.0 1.7 12.17%

Recommendation on Ushanti Colour Chemical Limited IPO:

Review and Recommendation of

Ushanti Colour Chemical Limited IPO

from our side is: Rating: 4/10. 1-5: Fair 5-7: Good 7-10: Excellent . Check Next Mainline IPO => HDFC AMC IPO

Lead Manager of Ushanti Colour Chemical Limited IPO:

  1. Pantomath Capital Advisors Private Limited

Registrar of Ushanti Colour Chemical Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Ushanti Colour Chemical Limited 88/6, 88/7, 88/8, Phase - 1, GIDC, Vatwa, Ahmedabad - 382445 Phone: 079-25833315 Email: admin@ushanti.com Website: www.ushanti.com

25th Sep 2018 - 27th Sep 2018 => Aavas Financiers IPO

Bid Details of Ushanti Colour Chemical Limited IPO as on
25-Jul-2018 17:00:01 IST

Category No.of shares offered No. of shares bid
914,000 5,266,000
914,000 6,148,000
98,000 98,000
1,926,000 11,512,000
QIBs Yes
QIBs+HNIs Subscription 5.76X
Retail Subscription 6.73X
Total Subscription 6.24X

Discussion on Ushanti Colour Chemical Limited IPO:

    congratulation to people who got allotment in this sme.
    It holds potential to be a multibagger. When its commerical activity will increase in 2020 there its good potential of stock moving very high

    Allotment status is available inside INVESTORZONE Android application. 👍

    The company has acquired land in Bharuch, Gujarat. It will commence operation bt 2020-21 in 2 phases.
    considering reasonable valuation, good client base, demand for product increasing, experience management.
    Apply this for the long-term view.

    As per new SEBI guidelines, the Minimum size of anchor investor has been reduced from 10 cr to 2 cr in SME IPOs. This will lead to more participants in pre-IPO placement. This is a good move as generally the issue size of SME IPOs ranges from 5 Cr to 70 Cr.

    The company has reasonable valuation and good business model. Looks a good IPO to apply.

    Though company export 59% of the their products to International market but till date they do not have any office offshore.

    The major issue with the Dye chemical business is the use of numerous toxic acids and its related chemical components. Usage of such intermediates is hazardous to the environment as a whole. This leads to excessive government focus and regulations to be followed in such business model. We have already seen how in China such companies have already been closed. So Environment fear will always be there with such companies going forward. and as a investor you are bound to take such risk .

    As per #23 DRHP
    At present, the Companies manufacturing facility is operating at more than 90% of its installed capacity. So to enhance the production, the company is setting up a new manufacturing facility spread over an area of 75,060 sq. meters with an annual production capacity of approx. 16,140 tons including dye intermediates and dyestuffs while the permitted capacity is approx. 32,800 tons p.a. For this Company has received approval from Gujarat Pollution Control Board (GPCB) for their consent to establish this facility with the list of intermediates. This going forward will be the key driver for company’s growth both in terms of revenue and PAT.

    India and China are the only two countries in the world where Dye manufacturing business is carried out. The Ushanti Colour Chemical Limited faces tough competition from China as they have a competitive advantage of manufacturing dyestuffs at lower cost. However, recently there have been environmental concerns on dye companies in China which has led to shut down of many such companies. So this might be a good opportunity for the company to cash in future.

    Though Company has variety of products under their portfolio but they have been focusing only on production of Blue dyestuffs. Their percentage revenue in F.Y. 2016-17 for Blue Dyestuffs was around 90% in F.Y. 2016-17. The Company being a specialised player in Blue Reactive Dyes, the focus of the company has remained intact in this segment in future as well.

    Ushanti Colour Chemicals LImited has a good clients base in International market. They exports their products to UK ,Bangladesh,USA,Pakistan,Argentina, Brazil, Uruguay, Greece, Mexico, Portugal, Indonesia,Belgium, Korea, Turkey, China, and Vietnam. Their 59% revenue comes from export.