Introduction:
Small and Medium-sized Enterprises (SMEs) issue Initial Public Offerings (IPOs) to raise funds from public investors when they can no longer meet their financial requirements through private financing. Like mainboard IPOs, SME IPOs offer investment opportunities to make decent gains from the primary markets.
Paragon Fine and Specialty Chemical Limited IPO is an SME IPO that closes for public subscription on Monday, 30 October 2023. The issuing company plans to raise approximately Rs. 52 crores through this public issue. Continue reading to learn more about Paragon Fine and Specialty Chemical IPO, including the minimum investment amount, basis of allotment, tentative listing date, and more.
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About Paragon Fine and Specialty Chemical Ltd.
Paragon Fine and Specialty Chemical Ltd. is engaged in the business of manufacturing speciality chemical intermediates and custom synthesis. The product portfolio includes Pharma Intermediates, AGRO Intermediates, Cosmetics Intermediates, Dye Intermediates, and Pigment Intermediates. The company was incorporated in 2004.
The company has its manufacturing unit in Viramgam District, Ahmedabad, Gujarat. It caters to a diverse client base spread across India and the world. Through its Research and Development (R&D) team, the company has expanded its portfolio to approximately 140 products as of FY23.
Key Strengths of the Company
Below are the key strengths of Paragon Fine and Specialty Chemical Ltd. as highlighted in its Draft Red Herring Prospectus (DRHP):
- Boasts a robust R&D team
- Caters to a vast clientele through a wide range of products
- Ability to leverage technology and natural chemistry to produce varied specialty chemicals
- Long-standing relationship with global clients
- State-of-the-art manufacturing facility equipped with the latest technology and systems
- Its clients are fairly diversified across India and 12 other countries
- Highly experienced promoters and management team
Exciting opportunities ahead: Don’t forget to apply for Upcoming IPOs!
Key Risks or Weaknesses Highlighted
The key risks or weaknesses associated with Paragon Fine and Specialty Chemical Ltd. include:
- A significant portion of the revenue comes from a limited number of clients
- Absence of long-term contracts with its clients
- Production is dependent only on a single manufacturing facility
- The manufacturing process of chemicals involves the use of hazardous substances
- Required high working capital to continue business operations
- Business is subject to risks associated with international trade and currency risk fluctuations
- Operates in a highly competitive and regulated industry
Core Financials of the Company
A company’s financials play a major role in influencing the decision of its IPO investors. The table below depicts the core financials of Paragon Fine and Specialty Chemical Ltd. as per the RHP dated 18 October 2023 on the Securities and Exchange Board of India (SEBI) website:
| Particulars |
For Period Ended June 30, 2023 |
As of and for FY Ended March 31 |
| 2023 |
2022 |
2021 |
| Share Capital |
4 |
4 |
0.1 |
0.1 |
| Net Worth |
26 |
22 |
12 |
8 |
| Total Borrowings |
27 |
25 |
21 |
22 |
| Revenue From Operations |
29 |
102 |
83 |
83 |
| EBITDA Adjusted |
5 |
13 |
6 |
6 |
| Profit After Tax |
4 |
10 |
4 |
4 |
| Earnings Per Share (Diluted) |
- |
7 |
3 |
3 |
| Return on Equity |
- |
57% |
44% |
109% |
*Amount in Crores
As you can see, the company’s net worth has expanded exponentially from Rs. 8 crores to Rs. 22 crores between FY21 and FY23. The revenues, however, have remained stable. Increased profit after tax (PAT) and ROE for FY23 reflect the company’s growing prowess.
Details of the IPO
Paragon Fine and Specialty Chemical IPO opened for public subscription on Thursday, 26 October 2023 and closes on Monday, 30 October 2023. Through its IPO comprising a fresh issue of 5,166,000 equity shares, the company plans to raise Rs. 51.66 crores. The price band for the IPO has been fixed at Rs. 95 to Rs. 100 per share.
Investors can apply for a minimum of 1200 shares (one lot) and in multiples thereof. The minimum investment required is Rs. 1.14 lakhs.
The objectives of the IPO include:
- Fund capital expenditure for civil construction work in the Viramgam manufacturing facility
- Fund capital expenditure for the installation of additional machinery at the facility
- Repay a part of the availed borrowings
- Meet working capital requirements
- General corporate purposes
Other details of the IPO are mentioned in the table below:
| IPO Date |
26 October to 30 October 2023 |
| Basis of Allotment |
02-Nov-23 |
| Listing Date |
07-Nov-23 |
| Face Value |
Rs. 10 per share |
| Price Band |
Rs. 95 to Rs. 100 |
| Lot Size |
1,200 shares |
| Total Issue Size |
5,166,000 equity shares (aggregating up to Rs. 51.66 crores) |
| Offer for Sale |
5,166,000 equity shares (aggregating up to Rs. 51.66 crores) |
| Issue Type |
Book Built Issue |
| Listing At |
NSE SME, BSE SME |
To conclude
You can invest in Paragon Fine and Specialty Chemical IPO for decent listing gains. As of 28 October 2023, the issue was subscribed 48.37 times. Before investing, you must analyse the company’s financials, associated risks, and your investment goals carefully. If you need a Demat account to invest in the IPO, you can open it for free with Motilal Oswal.
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