The Nexxus Petro Industries IPO is set to open for subscription from September 26, 2024, to September 30, 2024. As an emerging player in the petrochemical sector, Nexxus focuses on manufacturing and trading bitumen, a critical component in infrastructure development, especially in road construction. This blog post delves into the IPO details, the company’s strengths and weaknesses, financial performance, and whether investors should consider applying for this IPO.
Nexxus Petro Industries IPO Details
- Bidding Dates: September 26, 2024 – September 30, 2024
- Minimum Investment: ₹1,26,000
- Lot Size: 1,200 Shares
- Price Range: ₹105 per share
- Issue Size: ₹19.43 Crore
- Listing Date: October 4, 2024
- Face Value: ₹10 per share
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About Nexxus Petro Industries
Established in 2021, Nexxus Petro Industries specializes in petrochemical products, with a primary focus on bitumen. The company sources bitumen through imports from Dubai and local suppliers, processing it at its facilities located in Mundra, Gujarat; Pali, Rajasthan; and Bhopal, Madhya Pradesh.
Nexxus offers various grades of bitumen classified by viscosity and related properties, catering specifically to the needs of the infrastructure sector. The company not only sells processed bitumen but also engages in direct trading to meet customer specifications.
Strengths of Nexxus Petro Industries
- State-of-the-Art Manufacturing Facilities: Nexxus boasts well-equipped processing and manufacturing units that ensure high-quality output. The facilities are supported by modern machinery and essential handling equipment.
- Quality Assurance: The company has a fully equipped testing laboratory at its manufacturing sites, which allows it to conduct essential testing to meet the required industry standards. This commitment to quality is further backed by its ISO 9001:2015 and ISO 14001:2015 certifications.
- Strong Financial Growth: Nexxus has witnessed significant revenue growth:
- Revenue from Operations: ₹48.47 crore in FY22, ₹142.80 crore in FY23, and ₹237.78 crore in FY24.
- Profit After Tax (PAT): Grew from ₹0.54 crore in FY22 to ₹3.48 crore in FY24.
- Market Demand: The increasing demand for bitumen in infrastructure development provides a conducive environment for growth. As government spending on roads and highways continues to rise, Nexxus is well-positioned to capitalize on these opportunities.
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Risks and Challenges
Despite its strengths, Nexxus Petro Industries faces several risks that potential investors should consider:
- Legal Proceedings: The promoters of the company are involved in ongoing legal tax issues. Adverse judgments in these cases could significantly impact the company’s business prospects.
- Safety Concerns: Bitumen, categorized as a hazardous petrochemical, poses safety risks during handling and processing. Any incidents could lead to legal challenges and damage to the company’s reputation.
- Customer Dependency: The top ten customers of Nexxus contributed approximately 41.01%, 49.12%, and 60.28% to the revenue from operations in FY24, FY23, and FY22, respectively. A loss of key customers or failure to retain them can adversely affect the company’s financial health.
- Limited Operating History: With only three years in operation, Nexxus lacks a long track record, making it difficult to predict future growth and stability.
- Financial Leverage: The company has outstanding borrowings totaling ₹21.61 crore. Any difficulty in servicing these loans could lead to a decline in financial performance.
Financial Performance
To understand Nexxus Petro Industries’ financial health, let’s take a closer look at key metrics:
Revenue Growth
| Fiscal Year | Revenue (₹ Cr) | Profit After Tax (₹ Cr) |
|---|---|---|
| FY22 | 48.47 | 0.54 |
| FY23 | 142.80 | 2.01 |
| FY24 | 237.78 | 3.48 |
Total Assets
- FY22: ₹9.33 crore
- FY23: ₹16.45 crore
- FY24: ₹38.92 crore
Application Details
Investors looking to apply for the Nexxus Petro Industries IPO can consider the following details:
- Regular Investors: Minimum application of ₹105 per share for up to ₹2 Lakh.
- High Networth Individuals (HNIs): Can apply for ₹2 – 5 Lakh.
Lot Size Breakdown:
| Application Type | Lots | Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 1200 | ₹126,000 |
| HNI (Min) | 2 | 2400 | ₹252,000 |
Key Performance Indicators (KPI)
As of March 31, 2024, here are the essential KPIs for Nexxus Petro Industries:
- Market Capitalization: ₹72.98 Crore
- Return on Equity (ROE): 61.77%
- Return on Capital Employed (ROCE): 20.81%
- Debt/Equity Ratio: 2.5
- Profit Margin: 1.47%
Objectives of the IPO
The company plans to utilize the net proceeds from the IPO for:
- Funding working capital requirements.
- General corporate purposes.
Should You Apply for the Nexxus Petro Industries IPO?
Investment Verdict: [Avoid]
Dilip Davda advises against applying for this IPO. While Nexxus Petro Industries has shown commendable growth in revenue and profitability, it operates in a highly competitive market with limited historical data. The IPO appears to be aggressively priced, raising concerns about long-term value. Given the current market conditions and the company’s high-risk profile, it may be wise for investors to skip this offering.
Conclusion
The Nexxus Petro Industries IPO presents an intriguing opportunity for investors interested in the petrochemical sector, particularly in bitumen. However, potential investors should weigh the risks carefully against the company’s strengths and growth prospects. As always, conducting thorough research and consulting with a financial advisor is advisable before making investment decisions.
Nexxus Petro Industries IPO Registrar
- Registrar: Kfin Technologies Limited
- Phone: 04067162222, 04079611000
- Email: npil.ipo@kfintech.com
- Website: Kfin Technologies
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