Mehul Colours Lists with 18% Premium, Reflecting Positive Market Response

The masterbatch manufacturer, Mehul Colours Limited, made a positive debut on BSE SME on August 6, 2025. After closing its IPO bidding between July 30 - August 1, 2025, the company commenced trading with an 18% premium at ₹85, reflecting investor confidence in the specialty chemicals sector despite modest subscription response and strong fundamentals in the masterbatch manufacturing business.

 Mehul Colours Listing Details

Mehul Colours Limited launched its IPO at ₹72 per share with a minimum investment of 3,200 shares costing ₹2,30,400. The IPO received moderate response with a subscription of 7.98 times - QIB leading at 13.54 times, NII at 10.91 times, whilst individual investor participation remained subdued at 3.56 times, indicating selective interest in the specialty chemicals manufacturing business model.

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First-Day Trading Performance Outlook

Listing Price: The Mehul Colours share price opened at ₹85 on BSE SME, representing a premium of 18% from the issue price of ₹72, delivering gains of approximately ₹4,160 per lot for investors and highlighting market optimism about specialty chemicals sector fundamentals and growth prospects.

Growth Drivers and Challenges

Growth Drivers:

Strong Financial Performance: Revenue grew 5% to ₹23.71 crore in FY25 with PAT surging 71% to ₹5.50 crore, reflecting exceptional profitability improvement with PAT margin of 24.11% and EBITDA margin of 30.17%.

Diversified Product Portfolio: Comprehensive range including white, black, color, and additive masterbatches catering to various applications in plastics, rubbers, and elastomers across multiple industry verticals.

Integrated Manufacturing Capabilities: In-house manufacturing facilities with integrated testing and R&D capabilities operating from two facilities in Mumbai with combined capacity of 12.84 lakh kg annually.

Well-Established Client Relationships: Long-term relationships with diversified customer base spread across various industries and geographies providing stable revenue streams and repeat business opportunities.
 

Challenges:

Scale Limitations: Relatively small revenue base of ₹23.71 crore compared to larger chemical companies potentially limiting competitive positioning and bargaining power with suppliers and customers.

Competitive Market Environment: Operating in highly competitive and fragmented masterbatch manufacturing segment with numerous established players and pricing pressures affecting margins.

Raw Material Dependencies: Dependency on pigment and polymer supplies exposing the company to input cost fluctuations and supply chain disruptions affecting profitability.

Limited Geographic Presence: Concentrated operations in Mumbai region with limited geographic diversification potentially restricting market reach and growth opportunities.
 

Utilisation of IPO Proceeds

Manufacturing Expansion: ₹14.63 crore for capital expenditure towards setup of new manufacturing facility supporting capacity expansion and meeting growing demand for masterbatch products.

Working Capital Funding: ₹4 crore for funding working capital requirements supporting inventory management and business operations in the manufacturing sector.

General Corporate Purposes: Remaining funds allocated for general corporate purposes supporting business expansion and strategic initiatives in the specialty chemicals sector.
 

Financial Performance of Mehul Colours

Revenue: ₹23.71 crore for FY25, showing steady 5% growth from ₹22.66 crore in FY24, reflecting consistent demand growth and market expansion in the masterbatch manufacturing segment.

Net Profit: ₹5.50 crore in FY25, representing exceptional 71% growth from ₹3.22 crore in FY24, indicating substantial operational efficiency improvements and margin expansion in the specialty chemicals business.