Prasol Chemicals IPO

Status: Upcoming

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Synopsis

Last Updated: 11 October 2023 6:23 PM by rahul_raskar

Prasol Chemicals, a specialty chemical manufacturer of acetone derivatives and phosphorus derivatives in India, is likely to launch its initial public offering in the coming months. The company submitted a draft DRHP in April 2022 and got the SEBI nod in August 2022.

With this IPO, Prasol Chemicals plans to sell 9,000,000 equity shares from existing investors as an offer for sale (OFS) and issue a fresh lot worth ₹250 cr. As per market sources, the company plans to raise ₹700-800 cr with the public offering. Prasol Chemicals may also decide to issue another batch of equity shares worth around ₹50 cr, which may reduce its total size of fresh equity issue. The share allotment, listing date, price band and lot size are yet to be decided.

JM Financial Limited and DAM Capital Advisors Limited (Formerly IDFC Securities Limited) are likely to be the book-running lead managers for this IPO. KFin Technologies Limited is the registrar.

Objectives Prasol Chemicals IPO:

Prasol Chemicals plans to utilize the raised capital from IPO to:
●   ₹160 crores: Debt repayment
●   ₹30 crores: Capital requirement
●   General corporate purposes

About Prasol Chemicals

Prasol Chemicals Limited was established In January 1992 as Prachi Poly Products Private Limited. However, in 1995, the company underwent a name change to Prasol Chemicals Limited to reflect its venture into the production of phosphorus-based products for agrochemicals and performance chemicals.

Over the years, Prasol Chemicals has experienced substantial growth and expansion, transforming from a small-scale manufacturer into a globally recognized specialty chemical company with diversified operations. The company boasted a portfolio of more than 75 specialty products, with an additional 32 products currently in development as of December 2021.

Prasol Chemicals’ product mix includes a range of acetone and phosphorus derivatives, which find applications in various industries. They are utilized in pharmaceuticals, the synthesis of agrochemical active ingredients (technicals) and formulations, as well as serving as crucial raw materials in the production of home and personal care items such as sunscreens, shampoos, flavours, fragrances, and disinfectants.

Peer Comparison
●   SI Group
●   UPL
●   Arkema
●   Evonik

Prasol Chemicals IPO SWOT Analysis

Strengths

1.   Prasol Chemicals is one of the leading forward-integrated manufacturers of acetone derivatives and phosphorous derivatives in India.
2.   The company has a large product mix with 140 products and 32 under pipeline as of 31st December 2021.
3.   The company greatly focuses on R&D, increasing export and looking for import substitutions.
4.   The company has been consistent with its financial performance.
5.   The company’s revenue is not concentrated over a few clients despite having long-term relationships, which is beneficial in case the client dynamic changes.
6.   Global presence among Asia, North America and the European Union.
7.   The company focuses on sustainability with a "zero" liquid discharge approach, ensuring that no treated effluent produced by our manufacturing processes is released onto the land or into any water bodies, in addition to establishing efficient effluent treatment plants that enable it to fully recycle and reuse water. This will likely help the company in its operational activities with lower power and water consumption. It also attracts customers who prioritize sustainability practices.

Risks

1.   The success of the company depends on customers' products, with end customers directly impacting the demand. A decrease in demand from end customers can have negative consequences for the company’s bottom line.
2.   The business lacks any long-term contracts with suppliers or customers, which means that any loss of one or more of them could have a negative impact on the company.
3.   The smooth operation of the business relies heavily on its manufacturing facilities, so any unforeseen shutdowns or disturbances can have an impact on the business.

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