Gujarat Polysol Chemicals IPO – Why do you invest? – Know the risk factors.

Gujarat Polysol Chemicals IPO
Gujarat Polysol Chemicals IPO

Gujarat Polysol Chemicals IPO – Company Overview

Gujarat Polysol chemicals IPO – The company filed a Draft Red Herring Prospectus (DRHP) for INR 414 crores that include fresh issues and an offer for sale (OFS). Mr. Shaileshkumar Balvantrai Desai is the promoter, chairman, and managing Director of Gujarat Polysol chemicals since its incorporation. Mr. Umang Shailesh Desai is one of the promoters and the whole-time director of the company.

  • Gujarat Polysol Chemicals is one of the important players in the specialty chemical industry in India.
  • The company has 3 Manufacturing Facilities, located in Vapi and Sarigam in the State of Gujarat and a unit located in the Union Territory of Dadra & Nagar Haveli and Daman and Diu.
  • The company has a clientele of over 600 with a strong manufacturing capacity of 130,400 MT per annum across the 3 Manufacturing Facilities.

Gujarat Polysol Chemicals IPO – focus on niche chemicals products

Gujarat Polysol chemicals manufactures various chemicals that can be classified based on end-user industries. The products mainly cater to or are categorized by end-user applications as below.

  • Infra-tech (construction) chemicals
  • Agro-chemicals – pesticide formulations
  • Dyes, pigments, and textile chemicals
  • Leather chemicals.

Read the complete company insights in the article – “Gujarat Polysol Chemicals Limited”

Gujarat Polysol Chemicals IPO – Financial Analysis

The total income has declined from INR 4,397.98 million in FY 2019 to INR 3,804.32 million in FY 2021. However, profit has increased from INR 128.00 million in FY 2019 to INR 398.39 million in FY 2021 which is a growth of CAGR of 76.42% between the Fiscals 2019 and 2021.  Read complete Financial Analysis and Valuation – “Gujarat Polysol Chemicals Limited”.

Gujarat Polysol Chemicals IPO issue size

Gujarat Polysol Chemicals filed DRHP for INR 87 crores of fresh issue and offer for sale (OFS) of INR 327 Crores by the Promoter and selling shareholders at a face value of INR 10 each. Both the promoters such as Shaileshkumar Balvantrai Desai and Umang Shailesh Desai are selling their stake worth INR 183 crores and INR 38 crores respectively.

Book Running Lead Managers and registrar of this IPO are

  • The registrar for this IPO is LINK INTIME INDIA PRIVATE LIMITED. 

Share Reservations among QIBS (Qualified Institutional Buyers), NIBS (Non-Institutional Bidders), AND RIBS (Retail Individual Bidders)

  • No more than 50% of the Offer is available for the QIB portion
  • The company may allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis
  • 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only
  • No less than 15% of the Offer will be allocated to NIBs
  • Not less than 35% of the Net Offer shall be available for allocation to retail individual bidders (RIBs)

Utilization of Net Proceeds from Gujarat Polysol Chemicals IPO

Gujarat Polysol chemicals will not receive any amount from the offer for sale. However, Gujarat Polysol Chemicals Limited is proposing below to utilize the net proceeds from the fresh issue of the IPO.

  • The company is planning to repay/ prepay in full or part of certain borrowings. INR 65 Crores is allocated to this purpose.
  • Gujarat Polysol chemicals had total outstanding borrowings of INR 87.25 crores including current maturities of long-term borrowings and current borrowings, as of Feb 28, 2022.
  • The rest of the amount will be allocated to meet general corporate purposes.

Related Reading on company insights Prasol Chemicals Limited, Concord Biotech Limited, Sah Polymers Company

Risk Factors in Investing in Gujarat Polysol Chemicals IPO

  • Top 10 customers contributing over 49% of the total revenue in FY 2021. Withdrawing any one client or a few major clients will significantly affect its top line.
  • Promoters are selling their stake and net proceeds from the fresh issue will be used only to reduce debt.
  • The company does not have a long-term contract with its raw material suppliers. Any changes in the cost of raw materials will affect its performance.
  • Finally, the end-user industry of the products is vulnerable to any economic slowdown.

Why Invest in Gujarat Polysol Chemicals Limited IPO?

  • Gujarat Polysol Chemicals Limited has significantly expanded its business and scale of operations since incorporation.
  • Planning to repay outstanding borrowings out of the fresh issue. The debt-to-equity ratio is 0.54 which is negligible. After reducing the outstanding borrowing, the debt-to-equity ratio will further down.
  • The company has strong financial performance in terms of ROE, ROCE, net profit, EPS, etc. over the years.
  • The company is also expanding manufacturing and product capabilities across India.
  • Again, the opportunities after China’s slowdown and the government of India’s push for “make in India” in the chemical industry will further benefit the company’s future growth prospects.
  • The valuation of the company remains to be seen before investing.

Gujarat Polysol Chemicals Limited IPO Details

Gujarat Polysol Chemicals LimitedIPO details
Subscription DatesComing soon
Anchor Investor Bidding DateComing soon
BID/OFFER Opens OnComing soon
BID/OFFER Closes OnComing soon
Price BandComing soon
Fresh IssueINR 87 Crores
Offer for saleINR 327 Crores
Equity Shares outstanding before the Issue20,154,750 Equity Shares
Minimum bid (lot size)Coming soon
Face ValueINR 10 Per Equity Share
Listed onBSE & NSE