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Indian Emulsifier Limited IPO Review



Indian Emulsifier Limited IPO Review


Indian Emulsifier Limited, a name that has become increasingly prominent in the specialty chemicals manufacturing sector, was established with a clear vision and purpose. The company was incorporated on December 5, 2020, as "Indian Emulsifier Private Limited" under the Companies Act of 2013. It was a strategic move to enter the burgeoning chemical industry, which is projected to grow significantly in the coming years.


The company was promoted by Yash Tikekar, who holds a substantial 65.25% of the promoter holding. The Tikekar family's involvement suggests a strong leadership foundation, which is often a positive indicator for potential investors and stakeholders.


Indian Emulsifier Limited has its roots in Ratnagiri, Maharashtra, a city known for its industrial growth and strategic location. The manufacturing plant, located at Plot No. E-10 MIDC, Lote Parshuram, Tal. Khed, Ratnagiri, is equipped with state-of-the-art facilities capable of producing a wide range of specialty chemicals.


The inception of Indian Emulsifier Limited was driven by the objective to manufacture and supply a diverse range of specialty chemicals, including Esters, Amphoterics, Phosphate Esters, Imidazolines, Wax Emulsions, SMO & PIBSA Emulsifiers. These chemicals find applications across various industries such as mining, textile, cleaning, PVC/rubber, personal care, and food, reflecting the company's commitment to serving a wide market spectrum.


Indian Emulsifier Limited stands as a testament to the potential of the Indian chemical industry and the entrepreneurial spirit. With a strong promoter background, strategic location, and a clear business purpose, the company is well-positioned to capitalize on the industry's growth and contribute to the broader economic development. As it continues to evolve and expand, Indian Emulsifier Limited is likely to remain a company to watch in the specialty chemicals manufacturing space.



Competitive Strengths


Indian Emulsifier Limited is a testament to innovation, sustainability, and performance in the specialty chemicals industry. With a core ideology centered on becoming a pioneer in the field, the company has carved out a niche for itself by manufacturing, supplying, and marketing a diverse range of specialty chemicals catering to a multitude of industries.


Revenue, Sales, and Profit



Indian Emulsifier Limited, a company specializing in the manufacturing of specialty chemicals, has shown a robust financial performance in recent times. For the period ending December 2023, the company reported a revenue of Rs 48.7 crore, reflecting its strong market presence and operational efficiency. The sales figures are indicative of the company's growth trajectory and its ability to capitalize on the demand for specialty chemicals across various industries. Furthermore, the company achieved a net profit of Rs 6.75 crore, demonstrating its financial health and profitability. This profit margin is a testament to the company's strategic planning and cost management. Indian Emulsifier Limited's financial growth is a reflection of its strong position in the specialty chemicals industry and its commitment to delivering high-quality products.


Distribution Network and Geographical Reach


Indian Emulsifier Limited has established a robust distribution network and geographical reach that caters to a diverse range of industries. The company specializes in the manufacture and supply of specialty chemicals, serving sectors such as mining, textile, cleaning industry, PVC/rubber, personal care, food, and other industries. With a focus on esters, phosphate esters, imidazolines, succinimides, sulfosuccinates, specialty emulsifiers, and formulated products, Indian Emulsifier Limited has positioned itself as a key player in the specialty chemicals industry. The company's commitment to quality and customer service has enabled it to build a strong presence in the market, leveraging its distribution network to effectively meet the demands of its clientele across various regions. The strategic placement of its distribution centers ensures timely delivery and accessibility, enhancing its reach and influence within the industry. Indian Emulsifier Limited's geographical reach extends across multiple regions, reflecting its capacity to adapt and respond to the dynamic needs of the global market.


Unique Features


Indian Emulsifier Limited (IEL) is a specialty chemicals manufacturer with a focus on producing a diverse range of chemicals such as Esters, Amphoterics, Phosphate Esters, Imidazolines, Wax Emulsions, SMO & PIBSA Emulsifiers. The company operates a manufacturing plant with a capacity of 4,800 metric tons per annum, equipped with innovative R&D centers, Quality Control, and Application Laboratories. IEL's facility boasts multiple high-pressure stainless-steel reactors that offer flexibility in production, capable of delivering yields from 100 Kg to 8,000 kg per batch. These reactors can operate at a wide range of temperatures and pressures, facilitating various chemical reactions. IEL serves industries like Mining, Textile, Cleaning Industry, PVC/Rubber, Personal Care, Food, and others, showcasing its versatility in the specialty chemicals market. The company's commitment to quality and innovation, along with its strategic manufacturing capabilities, positions it as a pioneer in the specialty chemicals sector.


Investment in Research and Development


Indian Emulsifier Limited (IEL) has demonstrated a commitment to innovation and quality through its investments in Research and Development (R&D). The company's manufacturing plant, located at MIDC, Lote Parshuram, Maharashtra, is equipped with an innovative R&D center, which is integral to its operations. This facility is designed to foster the development of specialty chemicals, such as Esters, Amphoterics, and Phosphate Esters, which are supplied to a diverse range of industries including mining, textile, and personal care. The R&D center is equipped with multiple high-pressure stainless-steel reactors that allow for a wide range of reactions, essential for creating high-quality, specialized products. As part of its recent Initial Public Offering (IPO), IEL allocated a significant portion of the net proceeds towards capital expenditure, which includes the purchase of plant and machinery, civil work, and installation, with a focus on enhancing R&D capabilities. This investment reflects the company's vision to become a pioneer in the specialty chemicals manufacturing sector and its dedication to maintaining a competitive edge through continuous innovation. The strategic allocation of funds towards R&D not only underscores the company's commitment to growth but also its resolve to contribute to the broader chemical sector's expansion in India. Indian Emulsifier Limited's approach to R&D investment is a testament to its forward-thinking ethos and its role in shaping the future of specialty chemicals manufacturing.



Indian Emulsifier Limited IPO Details


  • Issue Date: The Issue Date in an Initial Public Offering (IPO) refers to the specific day when a company's shares are first made available for public purchase on the stock market. This date is a critical milestone in the IPO process, marking a company's transition from private to public status and allowing investors to buy shares directly from the company for the first time. (Issue Date: May 13, 2024 to May 16, 2024).


  • Listing Date: The listing date refers to the day when the company's shares are officially listed and begin trading on a stock exchange. This is typically several business days (3-6 days) after the issue date after processes like share allotment and finalization are completed. On this date, investors who were allotted shares during the IPO can begin selling them, and new investors can start purchasing them on the exchange at the prevailing market price. (Listing Date: Wednesday, May 22, 2024).


  • Face Value of Shares: The face value of shares in an Initial Public Offering (IPO) refers to the original cost of the shares as determined by the company going public. It represents the nominal value and is often set at a lower figure, such as Rs. 10 or Rs. 100, which remains constant irrespective of the market price of the share after the company is listed on the stock exchange. When a company launches an IPO, the shares are typically offered at a price that includes this face value plus an additional premium, which reflects the current market valuation of the company. The premium over the face value is determined by the company's financial performance and future growth prospects as assessed by the investment bankers managing the IPO. (Face Value: ₹10 per share).


  • Price Band: A price band of an IPO is the range of prices within which the investors can bid for the shares of a company that is going public. The price band is set by the issuer and the lead managers of the IPO, based on various factors such as the demand and supply of the shares, the financial performance and valuation of the company, and the market conditions. (IPO Price: ₹125-₹132 per share).


  • Lot Size: In the context of an Initial Public Offering (IPO), the term "lot size" refers to a fixed number of shares that the issuing company sets as the minimum quantity that investors can apply for. This lot size is predetermined before the IPO and is mentioned in the application forms. The lot size varies from one company to another and is an important factor for investors to consider when applying for an IPO. (Lot Size: 1000 Shares).


  • Total Issue Size: The total issue size represents the total number of shares the company is offering to raise capital through the IPO. This number is determined by the company and its advisors, considering factors like their funding needs and the expected investor demand. The total issue size is then divided by the lot size to determine the total number of lots available for purchase by investors. (Total Issue Size: 3,211,000 shares (aggregating up to ₹42.39 Cr)).


  • Fresh Issue: A Fresh Issue in the context of an Initial Public Offering (IPO) refers to the creation and sale of new shares by a company to the public. Unlike an Offer for Sale, where existing shareholders sell their shares, a Fresh Issue results in the generation of new capital for the company. This capital is typically used for growth initiatives such as expansion, research and development, or debt repayment. (Fresh Issue: 3,211,000 shares (aggregating up to ₹42.39 Cr)).


  • Issue Type: The type of an IPO can vary depending on the market and regulatory conditions. Some of the common types of IPOs are, Fixed priced IPO, Auction IPO, Book Building IPO, and Hybrid IPO. (Issue Type: Book Build Issue IPO).


  • Listing At: An integral part of the IPO process is the listing. This refers to the day the company's shares officially begin trading on a stock exchange, such as the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE) in India. Once listed, anyone with a brokerage account can buy and sell the company's shares on the exchange. (Listing at: NSE SME).


  • Retail Shares Offered: Retail shares offered in an IPO refer to the portion of shares that are specifically allocated for individual investors, as opposed to institutional investors. These shares are part of the public offering where companies going public aim to raise capital by selling shares. Retail investors are typically allocated a certain percentage of the total shares available for the IPO. The allotment process for retail investors is designed to be fair and transparent, ensuring that all investors have an equal chance of receiving shares based on their application and market conditions. (Retail Shares Offered: 1,070,000 (33.32%)).


  • Market Makers Shares Offered: Market Maker Shares in an IPO refer to the shares that are allocated to market makers, who are responsible for improving the liquidity and facilitating better price discovery of the stock post-IPO. Market makers are registered members of the stock exchange and provide two-way quotes, buying and selling shares at predetermined prices. This system is particularly important for SME (Small and Medium-sized Enterprises) IPOs, where market makers play a crucial role in ensuring that there is enough trading activity and stability in the stock's price. (Market Maker Shares Offered: 161,000 (5.01%)).


  • QIB Shares Offered: QIBs are institutional investors such as banks, mutual funds, insurance companies, pension funds, etc., who have expertise and financial resources to invest in the securities market. They are considered as informed and sophisticated investors who can assess the risks and returns of an IPO. QIBs can bid for up to 50% of the total shares offered in an IPO via the profitability route, or up to 75% of the total shares offered in an IPO via the QIB route. QIBs have to pay only 10% of the bid amount at the time of application, and the rest after the finalization of the basis of allotment. (QIB Shares Offered: 610,000 (19.00%)).


  • NII (HNI) Shares Offered: NII stands for Non-Institutional Investors, which includes High Net-worth Individuals (HNIs) who bid for shares worth more than ₹200,000. The NII category is reserved for investors who do not fall under the retail or Qualified Institutional Buyers (QIBs) categories. Typically, a certain percentage of the IPO, usually around 15%, is allocated for NIIs to ensure a wider distribution of shares. HNIs within the NII category often have a higher chance of allotment compared to retail investors, making it an attractive option for those looking to invest larger sums in an IPO. (NII (HNI) Shares Offered: 460,000 (14.33%)).


  • Anchor Investor Shares Offered: Anchor investor shares in an IPO refer to a portion of shares reserved for Qualified Institutional Buyers (QIBs) who commit to purchasing the shares before the IPO is open to the public. These investors, often including banks, mutual funds, and pension funds, are seen as a vote of confidence in the IPO, as they typically conduct thorough research before investing. They help in price discovery and can stabilize the share price post-listing by agreeing to a lock-in period, where they cannot sell their shares immediately. (Anchor Investor Shares Offered: 910,000 (28.34%)).


Competitors of Indian Emulsifier Limited


Indian Emulsifier Limited (IEL) is a notable entity in the specialty chemicals manufacturing sector, focusing on a range of products including esters, phosphate esters, imidazolines, succinimides, sulfosuccinates, and specialty emulsifiers. These products find applications across diverse industries such as mining, textiles, cleaning, PVC/rubber, personal care, and food industries.


As IEL positions itself in the market, it faces competition from several key players. Notably, the company's listed peers include Fine Organic and Fineotex Chemicals, which are significant entities in the specialty chemicals market. However, it is important to note that these comparisons are not on an apple-to-apple basis due to the varied product offerings and market segments catered by each company.


The broader Indian emulsifiers market includes formidable competitors such as Croda International Plc, Stepan Company, Clariant India Ltd., Kao Chemicals India Private Limited, and BASF India Limited. These companies are recognized for their product quality, innovation, regulatory compliance, and responsiveness to consumer preferences, which drive the competitive dynamics in the market.


Additionally, companies like Galaxy Surfactants Limited and Emulsifiers and Surfactants Company (ESCO) are also major players, contributing to the competitive environment that IEL operates in. The competition is further intensified by factors such as product differentiation, technological advancements, and strategic market positioning.


IEL's approach to navigating this competitive landscape involves continuous innovation and maintaining a robust product portfolio that meets the evolving needs of its customers. With the specialty chemicals industry in India projected to grow significantly, IEL's strategies and market performance will be crucial in determining its standing among these competitors.


Conclusion


In conclusion, the Indian Emulsifier Limited IPO presents a significant event for investors interested in the specialty chemicals sector. With a robust manufacturing infrastructure and a clear growth trajectory in its financials, the company has positioned itself as a noteworthy contender in the market. However, the IPO appears fully priced based on FY24 annualized earnings, indicating that the market has already accounted for the company's growth prospects. Investors are advised to consider their long-term investment strategy and risk appetite, as the specialty chemical segment does not currently attract widespread attention. Those with a deep understanding of the industry may find this IPO a valuable addition to their portfolio, keeping in mind the company's potential and the sector's evolving dynamics.


Disclaimer: This is not an investment advisory. The article above is for information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing securities, that suit your needs. The performance and returns of any equity stock can neither be predicted nor guaranteed.


FAQs


Q: What is an IPO?

An Initial Public Offering (IPO) is a process through which a privately held company offers its shares to the public for the first time and becomes a publicly traded company.

 

Q: How can I apply for an IPO?

You can apply for an IPO through various methods:


ASBA (Application Supported by Blocked Amount): In this method, your application money remains in your bank account until the basis of allotment is finalized.

UPI (Unified Payment Interface): You can authorize the blocking of funds in your bank account using UPI while applying for an IPO.


Q: What is ASBA?

ASBA stands for Application Supported by Blocked Amount. It allows your application money to be blocked in your bank account during the IPO bidding process. You continue to receive interest on the blocked amount.


Q: What is the difference between book building and a normal public issue?

Book building is a process where demand for securities is elicited and the price is assessed based on investor bids. In a normal public issue, the price is fixed by the issuer.


Q: Can I make payments through UPI for IPOs?

Yes, you can use UPI as a payment method for IPOs. The UPI platform blocks the funds for IPO applications after you approve the fund block mandate request.


Q: What is the minimum order quantity for an IPO?

The minimum number of shares you can apply for in an IPO is known as the minimum order quantity. It varies for each IPO.


Q: What is the cut-off price in an IPO?

The cut-off price is the price at which you bid for shares without specifying a particular price. It allows you to participate in the IPO without specifying a specific bid price.


Q: Can I revise my bids during the IPO process?

Yes, you can revise your bids multiple times before the IPO bidding period ends.


Q: Which banks offer the ASBA facility for IPOs?

Several banks, known as Self Certified Syndicate Banks (SCSBs), offer the ASBA facility. Some examples include HDFC Bank, ICICI Bank, Axis Bank, and SBI.


Q: How do I find IPO mandates on UPI apps?

You can check the list of UPI handles supported for IPO payments on the National Payments Corporation of India (NPCI) website. These handles allow you to apply for IPOs using UPI.





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