Paradeep Phosphates IPO: Issue booked 21% so far on Day 1; what should investors do? Here is what Anil Singhvi, brokerages recommend

Paradeep Phosphates IPO review: The initial public offer (IPO) of Paradeep Phosphates opened for subscription on Tuesday, Amy 17, 2022. The three-day public offering of the second largest private sector manufacturer of non-urea fertilizers in India will closed May 19, 2022. The fertilizer company has kept the price band at Rs 39-42 per share for this IPO.  

The company is primarily engaged in manufacturing, trading, distribution and sales of a variety of complex fertilizers such as DAP, three grades of Nitrogen-Phosphorus-Potassium (NPK) (namely NPK-10, NPK-12 and NP-20), Zypmite, Phospho-gypsum and Hydroflorosilicic Acid (HFSA).  

They are also engaged in the trading, distribution and sales of Muriate of Potash (MOP), Ammonia, Speciality Plant Nutrients (SPN) and City compost. The fertilizers are marketed under the brand names ‘Jai Kisaan – Navratna’ and ‘Navratna’. 

#IPOAlert

आज खुलेगा पारादीप फॉस्फेट्स का IPO, प्राइस बैंड ₹39-42/शेयर

कंपनी में क्या है पॉजिटिव और कहां पर जोखिम?

लॉन्ग टर्म इन्वेस्टर्स के लिए पैसे लगाने का मौका?

इश्यू को सब्सक्राइब करें या छोड़ दें?

जानिए अनिल सिंघवी की राय..#ParadeepPhosphatesIPO @AnilSinghvi_ pic.twitter.com/nsRAKBZGNY

— Zee Business (@ZeeBusiness) May 17, 2022

What should Investors do?  

As Paradeep Phosphates IPO opened today, Zee Business Managing Editor Anil Singhvi was of the view that the company has strong growth prospects. "It boasts of a good financial track record and is a profit-making company. Besides, it comes at reasonable valuations.," he said.  

Speaking of negatives, he said the company is dependent on import of raw material and also depends more on government policies and subsidies.  

Considering all the said factors, Zee Business Managing editor suggested to subscribe the IPO with long-term view.  

Meanwhile, many brokerages and analysts too recommended it a good play in the long run.  

Marwadi Financial Services 

We assign “Subscribe” rating to this IPO as the company is the second largest private sector manufacturer of Phosphatic fertilizers in India and is well-positioned to capture favorable dynamics of the Indian fertilizer industry. Also, it is available at reasonable valuation as compared to its peers.   

Geojit Financial services 

Incorporated in 1981, PPL is a joint venture of Zuari Agro Chemicals Limited (ZACL) and OCP Group S.A. (OCP), which currently holds 80.45% of the equity share capital of the Company, with the balance being held by the Government of India.  

The domestic demand for fertilizers is expected to reach 66 million tonnes by FY26, growing at a CAGR of 2.9%-3.1% and the Phosphatic fertilizers segment is expected to grow at a CAGR of 4.2%-4.4% between FY22 to FY26. PPL is well-positioned to capture favourable Indian fertilizer industry dynamics supported by conducive government regulations, driving raw material efficiency through backward integration of facilities and effective sourcing and established brand name. 

Considering PPL’s expansion plans, deepening the presence in western and southern regions of India, we assign a ‘Subscribe’ rating for the issue on a short to medium basis 

Reliance Securities 

Owing to its strong financial track record, established brand name, sales and distribution reach, massive storage and material handling capabilities and capacity expansion, we recommend SUBSCRIBE to the issue 

Hem Securities 

A company with an established brand name backed by an extensive sales and distribution network has strong parentage, experienced management team and prominent shareholders is looking decent investment avenue for long term investment. Hence, we recommend “Subscribe” on issue for long term. 

BP Wealth 

At the upper end of the price band, the issue is valued at a P/E of 7x based on FY22 annualized earnings, which we believe is reasonably priced. Hence, we recommend a "SUBSCRIBE" rating on this issue for the long term. 

Meanwhile, Paradeep Phosphates ipo was subscribed 21% around 1.45 pm on the first day of opening of the issue on Tuesday, showed NSE IPO bidding details. Against 26,86,76,858 reserved shares, the IPO received bids for 5,55,63,550 shares. Quota of shares reserved for retail investors saw 41% bidding around the same time.