Prasol Chemicals

Prasol Chemicals

By Geetanjali Kedia
about 4 days ago

IPO Size: Rs. 500 cr

  • Fresh Issue of Rs. 80 cr (2% dilution) to repay Rs. 60 cr of Rs. 116 cr gross debt as of 15.7.26
  • Offer for Sale (OFS) of Rs. 420 cr, mainly by promoter (89% stake to drop to 78% post IPO)

Price band: Rs. 643-676 per share

M cap: Rs. 4,001 cr (IPO is 12.5% of m cap)

IPO Date: Tue 8th Sep to Thu 10th Sep 2026, Listing Wed 16th Sep 2026

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

 

Specialty Chemicals Maker

Prasol Chemicals is a 33 year old Thane-based forward integrated specialty chemicals manufacturer of (i) acetone based (ii) phosphorous based (iii) customized surfactants, performance additives, ethers, esters, polymers, acids. Rs. 1,200 cr revenue of FY26 was split 43:38:18 among these three product categories, with exports, mainly to Europe and Asia Pacific countries, accounts for 1/4th topline. Company has 2 plants in Maharashtra with total capacity of 98,644 MTPA, of which 73% utilized in FY26.

 

Mediocre Financials

FY26 revenue of Rs. 1,232 cr rose 22% YoY with EBITDA excluding other income at Rs. 139 cr, leading to 11% margin. On PAT of Rs. 83 cr, net margin was 6.7%, leading to an EPS of Rs. 14.3, on equity of Rs. 11.6 cr (FV Rs. 2 each). Thus, margin are not very superior vis-à-vis 15-30% EBITDA margin seen for some specialty chemicals stocks, despite customization of products for end-user.

 

Some Concerns

  • Last year, a show-cause notice received under Factories Act in Aug 2025 for alleged safety violation at one of the manufacturing facilities
  • Auditor issuing an ‘emphasis of matter’ on internal controls related to inventory and allocation of overheads
  • Company imports feedstock acetone and phosphorus from overseas, with FY26 imported raw material being Rs. 550 cr. As against this, exports stands close to Rs. 350 cr, exposing to a sizeable forex risk of ~Rs. 200 cr.

 

Expensive Pricing

M Cap of Rs. 4,001 cr and Enterprise value of Rs. 4,033 cr lead to a PE multiple of 39x on FY27E estimated EPS of Rs. 17, on a post dilution basis. This makes the IPO fully priced for average fundamentals of 11% EBITDA margin, 6.7% net margin, ~19% RoE.