Accent Microcell IPO: Key Insights

Accent Microcell Overview

Accent Microcell Ltd, founded in 2012, specializes in producing top-notch cellulose-based ingredients for pharmaceuticals, nutraceuticals, food, and cosmetics. With advanced facilities in Ahmedabad and Dahej SEZ, the company has built a comprehensive system, serving customers in over 45 countries, including the US, Canada, Germany, the UK, Japan, China, and more.

The company primarily focuses on Microcrystalline Cellulose (MCC), a purified, odorless, fine white powder derived from highly purified wood pulp. MCC serves various purposes, including texturizing, anticaking, lubrication, binding, and bulking in pharmaceuticals, nutraceuticals, food, and cosmetics. Accent Microcell Ltd offers 22 grades of MCC with particle sizes ranging from 20 to 180 microns.

The company's promoters include Paritosh Kumar, Ashish Garg, Megha Garg, Ayush Capital & Financial Services Private Limited, Garg Family Trust, Paritosh Kumar Garg (HUF), and Ashish Garg & Sons (HUF). As of now, the promoters collectively hold an 88.24% stake in the company. However, following the IPO, their ownership will decrease to 73.05%.

Financial Performance of Accent Microcell

Accent Microcell Limited saw a 23.53% increase in revenue and a 120.77% rise in profit after tax (PAT) from March 31, 2022, to March 31, 2023.

(Amount in ₹Lakhs)

Accent Microcell Revenue Product wise

As of June 30 in FY 23, Accent Microcell Limited's sales breakdown is 73% Pharmaceuticals, 11% Nutraceuticals, and 17% Food. These proportions remain steady from the previous fiscal year (FY 22) to the current FY 23.

( In %)

Source DRHP

Accent Microcell Revenue Geographical Wise

As of June 30 in FY 23, Accent Microcell Limited's sales are 38.42% Domestic and 61.58% Export. In FY 22, it was 34.68% Domestic and 65.32% Export.

( In %)

Source DRHP

Strengths of Accent Microcell

Rapid Market Expansion: The company has achieved swift growth in both domestic and international markets, showcasing a strong potential for future expansion.

Global Presence: With a presence in over 45 countries, Accent Microcell Ltd. has established a broad and diverse customer base, enhancing its global market reach.

Diversified Revenue Streams: The company's revenue streams are well-diversified, with a focus on various industries such as pharmaceuticals, nutraceuticals, and food, contributing to a resilient business model.

Leading MCC Producer: Accent Microcell Ltd. holds a prominent position as one of the largest producers of Microcrystalline Cellulose (MCC) worldwide, indicating a competitive edge in its core product offerings.

Stable Supply Chain: Long-term contracts with reliable raw material suppliers provide a stable supply chain, ensuring consistent production and operational continuity.

Quality Assurance: The company is recognized for maintaining high product quality and service standards, evident through the attainment of quality certifications from both government and private agencies.

Risks or Weaknesses of Accent Microcell

Legal Challenge: Active legal proceedings against the company.

Industry Dependency: Heavily reliant on the pharmaceutical sector for revenue.

Market Vulnerability: Sales and revenues are exposed to uncertainties in international markets.

Supplier Dependency: Heavy reliance on a limited number of suppliers for raw materials.

Accent Microcell Vs Listed Peers

Accent Microcell Limited has a face value of ₹10 per share, a P/E ratio of 13.92, and an EPS of ₹10.06, while its peer, Sigachi Industries Limited, has a face value of ₹10 per share, a P/E ratio of 16.70, and an EPS of Rs.13.52.

Conclusion

Accent Microcell made a remarkable debut on the NSE SME today, with its share price opening at ₹300, a substantial 114.3% increase from the issue price of ₹140. As the company is now officially listed, the forthcoming quarterly results will be closely watched, influencing the company's valuation and shaping investor sentiment. This dynamic period post-listing is expected to reflect the market's response to Accent Microcell's performance and potential for growth.