Technichem Organics IPO: issue dates, price, and lot size

As the beginning of the new year approaches, Technichem Organics Limited is stepping into the spotlight with an ambitious ₹25.25 crore IPO, releasing 45.90 lakh fresh shares to fuel its next phase of growth. The chemical manufacturer's market debut comes at an interesting time, with a tight three-day subscription window spanning New Year's Eve through January 2, 2025, setting the stage for what could be one of the first exciting SME listings of the new year.

For investors seeking to kick off 2025 with a fresh addition to their portfolio, Technichem's offering presents an accessible entry point - equity shares priced between ₹52 to ₹55, bundled in 2,000-share lots. With retail investors able to join in at ₹110,000 per lot and HNIs at ₹220,000 for two lots, the swift timeline from subscription close to BSE SME listing on January 7 means early birds might want to mark their calendars and start their due diligence before the year-end festivities begin.

Technichem Organics IPO details

Technichem Organics Limited IPO is a fundraise worth ₹25.25 crores comprising purely of a fresh issue with 252,000 shares reserved for the market maker Shreni SHares Limited. Qualified Institutional Buyers are being offered not more than 50% of the net issue, retail investors are being offered not less than 35% of the net issue and Non-Institutional Investors (NIIs) / High Net-worth Individuals (HNIs) are being offered not less than 15% of the net issue. The IPO will be available for subscription from December 31, 2024, to January 2, 2025, providing an opportunity for investors looking to gain a stake in the chemical sector.

Technichem Organics IPO timeline

The Technichem Organics Limited IPO opens for subscription on December 31, 2024, and closes on January 2, 2025, with allotment scheduled for January 3, 2025.

Technichem Organics IPO review

With roots dating back to 1996, Technichem Organics Limited has established itself as a versatile chemical manufacturer, specializing in specialty chemicals, pigment and dye intermediates, and air oxidation chemistry. Operating from a sprawling 26,079-square-meter facility housing three plants with an annual capacity of 950,000 kg, the company has built a global footprint across 11 countries, with China emerging as a significant export destination. Their comprehensive approach to quality management, coupled with a strong focus on environmental and safety standards, underpins their operations across all business processes, from manufacturing to final delivery.

At the heart of Technichem's business model lies a three-pronged strategy: manufacturing specialty chemicals for diverse sectors including agrochemicals and pharmaceuticals, offering custom manufacturing services, and providing contract manufacturing under confidentiality agreements. With a workforce of 72 employees as of June 2024, the company has positioned itself as a flexible partner capable of delivering both standardized and customized chemical solutions. This versatility in manufacturing capabilities, combined with their commitment to in-house production and quality control, positions them uniquely in the specialty chemicals market as they prepare for their public market debut.

Technichem Organics plans to strategically channel its IPO proceeds into three key areas that align with its growth ambitions: the establishment of a new manufacturing facility dubbed "Plant 4," the reduction of its debt burden through repayment or prepayment of various institutional borrowings, and funding general corporate initiatives. This allocation reflects the company's focus on expanding its production capabilities while simultaneously strengthening its financial position in the competitive specialty chemicals market.

Technichem Organics IPO financials

Technichem Organics Limited reported an annual dip of 8% in its revenue while seeing a 173% yearly increase in the Profit After Tax (PAT), during the financial year ended March 31, 2024. 

As of March 31, 2024, the key performance indicators reflect the company's financial health with a Return on Equity (RoE) of 27.39%, Return on Capital Employed (RoCE) of 22.57% and a Debt-to-Equity ratio of 0.90. The Return on Net-Worth (RoNW) stands at 24.09%, and the PAT Margin was 10.19%. The Price to Book Value was 3.57. The company’s market capitalisation is ₹95.27 crore.

Amount in ₹ crores

The pre-IPO EPS is at ₹3.71 while the post-IPO EPS will be ₹2.73. Similarly, the pre-IPO Price to Earnings ratio is 14.81 and will become 20.15 post-IPO.

Technichem Organics IPO strengths

Technichem Organics has built a formidable foundation with its multi-product manufacturing capabilities, operating an integrated facility that produces 950,000 kg annually across speciality chemicals, pigments, and dye intermediates. Their infrastructure supports cost-efficient production processes, backed by consistent investments in R&D and complex chemistry development, enabling them to serve diverse industries from pharmaceuticals to agriculture. 

The company's operational excellence is further reinforced by their unwavering focus on quality, environment, health, and safety standards. This is complemented by an experienced management team that has cultivated long-standing relationships with customers across 11 countries, with particularly strong ties in China. Their robust supply chain efficiency and versatile manufacturing capabilities allow them to maintain high customer satisfaction while adapting to market demands.

Technichem Organics IPO weaknesses

A significant vulnerability in Technichem's business model lies in its customer concentration, with 36-47% of revenue generated from just their top five clients - a risk magnified by the absence of long-term contracts. This revenue dependency is further complicated by their reliance on a single supplier for raw materials, again without long-term agreements, potentially exposing them to supply chain disruptions and cost fluctuations.

The company faces additional challenges including the lack of patent protection for their processes, leaving their intellectual property vulnerable to competition. Their operations are geographically concentrated in specific Indian states (Gujarat, Maharashtra, Telangana, and Haryana), and they've experienced negative cash flows in previous years. Operational continuity concerns also exist, from manufacturing facility risks to the fact that their registered office operates under a rental agreement, potentially impacting their long-term stability.

Should you invest in the Technichem Organics IPO?

Being among the early public investors in Technichem Organics Limited could present an opportunity to participate in the company's growth trajectory in the space of chemical manufacturing. However, investors should carefully assess factors such as the company's operational track record, financial health, sector dynamics, and growth strategy, while also considering their own investment objectives and risk appetite before making an investment decision. It's recommended to review the offer document and seek professional advice if needed to make an informed choice about participating in this IPO.

FAQs

What is the Technichem Organics Limited IPO?

The Technichem Organics Limited IPO is a BSE SME offering consisting of 45.90 lakh equity shares with a face value of ₹10, aiming to raise to ₹25.25 crore. The price band has been set between ₹52 to ₹55 per share, with a minimum order quantity of 2,000 shares. This IPO will be open for subscription from December 31, 2024, to January 2, 2025. Shreni Shares Limited is the book-running lead manager and the market maker for the IPO while Bigshare Services Private Limited is the registrar.

When will the Technichem Organics Limited IPO open?

The Technichem Organics Limited IPO will open for subscription on December 31, 2024, and will close on January 2, 2025.

When is the Technichem Organics Limited IPO listing date?

The tentative listing date for the Technichem Organics Limited IPO is Tuesday, January 7, 2025.