Snehaa Organics Makes Flat Debut with Minimal Gains, Meeting Cautious Market Expectations

Snehaa Organics Limited, the solvent recovery and recycling company, made a flat debut on NSE SME on September 5, 2025. After closing its IPO bidding between August 29 - September 2, 2025, the company commenced trading at ₹122, matching the issue price exactly, later declining to ₹115.90 (5% loss), reflecting cautious investor sentiment towards the solvent recovery sector.

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Snehaa Organics Listing Details

Snehaa Organics IPO launched at ₹122 per share with a minimum investment of 2,000 shares costing ₹2,44,000. The IPO received a strong response with a subscription of 27.75 times - QIB leading at 42.19 times, individual investors at 37.75 times, and NII at 16.23 times, indicating solid investor interest across all categories in the solvent recovery business.

First-Day Trading Performance Outlook

Listing Price: The Snehaa Organics share price opened at ₹122 on NSE SME, matching the issue price exactly, later declining to ₹115.90 representing a 5% loss, delivering no initial gains for investors and reflecting market uncertainty about the business model.

Growth Drivers and Challenges

Growth Drivers:

• Outstanding Profitability Metrics: Exceptional ROE of 49.66%, impressive ROCE of 50.38%, outstanding PAT margin of 27.98%, and remarkable EBITDA margin of 43.52% indicating superior operational efficiency and market positioning.
• Strong Financial Performance: PAT more than doubled by 101% to ₹7.34 crore in FY25 despite modest 10% revenue growth, reflecting significant margin expansion and operational improvements.
• Sustainable Business Model: Solvent recovery and recycling services provide environmental benefits with recurring revenue from pharmaceutical and chemical industries requiring solvent reprocessing.
• Attractive Valuation Metrics: Price to Book Value of only 0.83 indicating reasonable valuation despite strong financial performance and growth prospects.

Challenges:

• Profit Sustainability Concerns: Sudden doubling of profits in FY25 raises questions about consistency and sustainability of such exceptional margins in the competitive solvent recovery market.
• Limited Scale Operations: Small revenue base of ₹26.29 crore and compact 3,300 sq ft facility potentially restricting growth opportunities and competitive positioning against larger players.
• Fragmented Market Environment: Operating in highly competitive and fragmented solvent recovery segment with pricing pressures and technology advancement requirements.
• Debt Burden: Debt-to-equity ratio of 0.61 with borrowings of ₹9.09 crore creating moderate financial leverage concerns affecting expansion capabilities.

Utilisation of IPO Proceeds

• Working Capital Requirements: ₹23.94 crore for working capital needs supporting solvent recovery operations and business expansion in the recycling sector.
• Debt Reduction: ₹3.50 crore for loan repayment improving capital structure and reducing financial leverage burden.
• General Corporate Purposes: ₹1.97 crore for general corporate purposes supporting business operations and strategic initiatives.
• Issue Expenses: ₹3.27 crore for IPO-related expenses and regulatory compliance costs.

Financial Performance of Snehaa Organics

Revenue: ₹26.29 crore for FY25, showing modest growth of 10% from ₹23.80 crore in FY24, reflecting steady demand for solvent recovery services. Net Profit: ₹7.34 crore in FY25, representing exceptional growth of 101% from ₹3.66 crore in FY24, indicating substantial margin improvements though raising sustainability questions. Financial Metrics: Outstanding ROE of 49.66%, impressive ROCE of 50.38%, moderate debt-to-equity ratio of 0.61, strong RoNW of 49.66%, exceptional PAT margin of 27.98%, remarkable EBITDA margin of 43.52%, attractive Price to Book Value of 0.83, and market capitalisation of ₹124.18 crore.