Indian Phosphate Limited is mainly engaged in the production of Linear Alkylbenzene Sulphonic Acid LABSA 90%, popularly known as LABSA, is an anionic surfactant and it is used in the formulation of all types of detergent powders, cakes, toilet cleaners and liquid detergents. They are also engaged in the manufacturing of 'Single Super Phosphate' (SSP) fertilizer and 'Granules Single Super Phosphate' (GSSP) Fertilizer which is manufactured and supplied as per the standards of Fertilizer Control Order of India in powder and granulated form as well as fortified with zinc and boron. The company operates from its manufacturing facility located at Umarda, Girwa district, Udaipur, Rajasthan which is in the close proximity of supply of both the raw materials (a) Sulphuric Acid 98% (b) Rock Phosphate used in manufacturing of the products. The other major raw material Linear Alkylbenzene (LAB) is sourced from IOCL, Vadodara, Nirma Ltd., Vadodara and Reliance Industries Ltd., Patalganga. The company, with a view to increasing its business presence in South Indian Markets and also as a part of business strategy they are setting up manufacturing plant of Sulphuric Acid which is backward integration plant for manufacturing of LABSA 90%. The Company, has acquired a Plot admeasuring area of 8.25 acres on lease basis at SIPCOT Industrial Park, Cuddalore District, Tamilnadu for Sulphuric acid with installed capacity of 200 MT/ day including manufacturing of LABSA 90% with installed capacity of 100 MT/ day & Magnesium Sulphate with installed capacity of 60 MT/day. Also, the company intends to expand the operations and supply of SSP fertilizer, they have already acquired 1,00,000 square meter land on lease from the Maharashtra Industrial Development Corporation, situated at Plot No. T-22, Nardana MIDC Phase – II, Tal. Sindkheda & Dist. Dhule, Maharashtra, for the establishment of a manufacturing facility for the production of SSP fertilizer. The company has already received CTE (Consent to Establish) from Maharashtra Pollution Control Board. The company has already spent approx. Rs. 3 crores towards purchase of land, development of site and electricity / water connection from MIDC, Dhule. The Company has a presence in the major states like, Punjab, Bihar, Gujarat, Haryana, Madhya Pradesh, Maharashtra, Rajasthan, Uttar Pradesh, Himachal Pradesh, West Bengal and Uttarakhand. As per financial performance, Indian Phosphate Limited has posted total income / net profits of Rs 558.39 Cr / Rs 16.17 Cr (FY22), Rs 770.93 Cr / Rs 16.60 Cr (FY23) and Rs 717.58 Cr / Rs 12.10 Cr (FY24). So as per previous financials data, company has shown zig-zag results. Company has posted an average EPS of Rs 8.23 and average RoNW of 16.63% for last three fiscals. Issue is priced at a P/BV of 2.22 as per NAV of 44.54 as on 31.03.24. If we attribute latest earnings of FY22, FY23 and FY24 on fully diluted equity post issue, then asking price is at a P/E of around 15.30, 14.91 and 18.36 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Beeline Capital Advisors Private Limited is associated with this SME IPO and handled 46 SME IPOs in last 3 years. From last 10 IPOs, all opened above or at par on the day of listing. As of now from last 10 IPOs, two are trading below issue price and remaining are trading above issue price as on today. ( As on 20.08.24 ) As per financials, Indian Phosphate Limited has shown zig-zag results, RoNW is 21.80% and P/E is respectively 15.30, 14.91 and 18.36 as per FY22, FY23 and FY24 earnings. So, issue looks fully priced. Company is engaged in the business of manufacturing and supplying Single Super Phosphate (SSP) fertilizer and Linear Alkylbenzene Sulphonic Acid LABSA 90%, which is highly fragmented and competitive business segment. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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