Unilex Colours and Chemicals IPO will be open for subscription from September 25 to September 27, 2024. With an issue size of ₹31.32 crore, this IPO offers an opportunity for investors to enter the pigments and chemicals manufacturing industry, where Unilex Colours has carved a niche with its diverse product range and expanding customer base.
About Unilex Colours and Chemicals
Established in 2001, Unilex Colours and Chemicals is involved in the manufacturing and trading of pigments, chemicals, and food colours. Their products cater to a variety of industries, including plastics, rubber, textiles, printing inks, paints, and coatings. The company’s product range includes:
- Pigments such as Pigment green 7, ultramarine blue, and azo pigments.
- Food colours like tartrazine, sunset yellow, and allura red.
While Unilex manufactures some pigments in-house, it also sources additional products from third-party manufacturers to cater to client demands.
Strengths and Competitive Advantages
- Well-Equipped Manufacturing Facility: Unilex’s manufacturing unit is equipped with modern machinery, including ball mills, reaction vessels, dryers, and air classifiers. This ensures efficient production and quality control.
- ISO Certification: The company’s manufacturing facility is ISO 9001:2015 certified, which speaks to its adherence to high-quality manufacturing standards.
- R&D Investment: Unilex continues to invest in research and development (R&D) to enhance product quality and maintain competitiveness in a highly dynamic market.
- Diverse Product Offerings: While the company manufactures its own pigments, it also sources a wide range of pigments and chemicals from other suppliers, enabling it to meet the diverse needs of its clients across different industries.
- Financial Growth: Unilex has shown consistent profit growth, with PAT increasing from ₹4.71 crore in FY22 to ₹6.17 crore in FY24, demonstrating improved profitability even though revenue has fluctuated.
Risks and Challenges
While Unilex Colours and Chemicals offers many strengths, there are some key risks associated with the business:
- Concentration of Revenue: A significant portion of the company’s revenue comes from its top five products, which contributed 79.94% of revenue in FY24. Any reduction in demand for these key products could impact overall performance.
- Dependency on Manufacturing Facility: The company’s entire manufacturing operation is dependent on its facility in Palghar, Maharashtra. Any disruption to this facility could severely impact production and revenue.
- Customer Concentration: The top 10 customers account for 34.08% of the company’s revenue. Losing any major customer could have a significant adverse impact, as Unilex does not have long-term contracts with these clients.
- High Export Dependency: The majority of Unilex’s revenue is derived from exports (79.44% in FY24). Any changes in global political or economic conditions could affect export demand, leading to financial volatility.
- Legal Proceedings: The company is involved in ongoing legal tax proceedings. Adverse judgments could impact its financial position and future prospects.
Financial Overview
Unilex Colours and Chemicals has reported steady profitability in recent years, even though revenue has shown minor fluctuations.
Financial Metric | FY22 | FY23 | FY24 |
---|---|---|---|
Revenue (₹ Cr) | 145 | 139 | 144 |
Total Assets (₹ Cr) | 76.70 | 70.72 | 90.68 |
Profit After Tax (₹ Cr) | 4.71 | 4.97 | 6.17 |
Key Performance Indicators
Metric | Value |
---|---|
Return on Equity (ROE) | 17.93% |
Return on Capital Employed (ROCE) | 6.32% |
Debt/Equity Ratio | 0.59 |
Profit After Tax Margin | 4.29% |
IPO Application Details
Investors can apply for the IPO in the following price band:
Application Type | Price Band | Apply Upto |
---|---|---|
Regular | ₹82 – ₹87 | ₹2 Lakh |
High Networth Individual (HNI) | ₹82 – ₹87 | ₹2 – 5 Lakh |
IPO Specifications
IPO Date | September 25, 2024 – September 27, 2024 |
---|---|
Face Value | ₹10 per share |
Price Band | ₹82 to ₹87 per share |
Lot Size | 1,600 Shares |
Total Issue Size | 3,600,000 shares |
Issue Size | ₹31.32 crore |
Listing At | NSE SME |
Promoter Holdings
The company’s promoters—Purushottam Brijlal Sharma, Narendra Parameswarappa Kotehall, and others—will see their stake reduced post-issue from 100.00% to 73.56%.
IPO Reservation
Investor Category | Shares Offered |
---|---|
QIB | 6,81,600 (18.93%) |
NII (HNI) | 5,12,000 (14.22%) |
Retail Investors | 11,93,600 (33.16%) |
Anchor Investor | 10,20,800 (28.36%) |
Lot Size and Investment Limits
Application Type | Lots | Shares | Amount |
---|---|---|---|
Retail (Min) | 1 | 1,600 | ₹139,200 |
HNI (Min) | 2 | 3,200 | ₹278,400 |
IPO Objectives
The company plans to use the proceeds from the IPO for the following purposes:
- Working capital requirements
- Repayment of borrowings
- General corporate purposes
Analyst Review
According to Dilip Davda, Unilex Colours and Chemicals operates in a competitive and fragmented segment, which poses challenges. The company has shown growth in profitability, especially in FY24, although its top line has seen inconsistency. Based on its FY24 earnings, the IPO is considered fully priced, but informed investors may find it suitable for medium-term investment.
Conclusion
Unilex Colours and Chemicals IPO offers investors exposure to a niche market in the pigments and chemicals sector. With a focus on exports and a wide range of products, the company has potential for growth, but it faces risks related to its dependence on key products and top customers. Investors looking for a moderate-risk, medium-term investment opportunity may find this IPO appealing.
For more details, contact the IPO registrar:
Link Intime India Private Ltd
Phone: +91-22-4918 6270
Email: unilex.smeipo@linkintime.co.in
Website: Link Intime IPO Services