Prasol Chemicals Limited has filed a fresh DRHP with SEBI for a ₹500 crore IPO, aiming to deleverage modestly while showcasing differentiated chemistries and export breadth; the offer comprises a ₹80 crore fresh issue and a ₹420 crore OFS, with face value ₹2, retail at 35%, and DAM Capital as sole BRLM.
Overview
Prasol is a leading integrated maker of acetone and phosphorous‑based specialty chemicals, and is cited as India’s only isophorone manufacturer; the firm offers 150+ products to 1,107 customers and exports to 69 countries, supporting diversified demand across pharma, agrochem, home & personal care, and performance materials. This filing revives a shelved 2022 plan (₹700–800 crore) with a right‑sized raise aligned to improved profitability and a focused use of proceeds centred on debt reduction and general corporate purposes.
Offer snapshot
- Size and mix: ₹500 crore total; fresh ₹80 crore and OFS ₹420 crore; FV ₹2; retail quota at 35% per standard allocation norms.
- Use of proceeds: About ₹60 crore from the fresh tranche to repay/prepay debt; remainder for general corporate purposes, improving interest coverage alongside earnings recovery.
- Intermediaries: DAM Capital Advisors as sole book‑runner.
Financials
- FY24: Revenue ₹887.6 crore; PAT ₹18.1 crore, reflecting a softer base year.
- FY25: Revenue ₹1,015.5 crore; PAT ₹43.6 crore, indicating margin and mix improvement.
- Q1 FY26: Revenue ₹320.4 crore; PAT ₹24.3 crore, suggesting continued operating leverage into FY26 if sustained.
Business highlights
- Differentiated portfolio: Integrated acetone/phosphorous chains plus isophorone leadership enable margin‑accretive niches across coatings, adhesives, and intermediates.
- Export footprint: 69‑country reach and 1,107 customers spread concentration risk; export share near 30% in FY25, per news summaries.
- Facilities: Khopoli and Mahad plants with aggregate installed capacity near 87,914 MTPA, enabling scale and product variety.
Risks
- Feedstock and pricing: Acetone/phosphorous input volatility and pass‑through lags can compress spreads; FX swings add uncertainty on export realizations.
- Working capital intensity: Export‑driven receivables/inventory cycles can weigh on cash conversion in downcycles.
- Limited primary raise: With only ₹80 crore fresh, deleveraging impact is modest; growth depends more on mix upgrades, debottlenecking, and operating leverage than large capex.
What to watch next
- RHP specifics: Final debt profile, top‑customer concentration, pricing mechanisms, and hedging policies will clarify earnings durability.
- Capex and utilisation: Visibility on FY26–27 debottlenecking and utilisation targets to validate growth without heavy primary capex.
- Valuation band: Implied EV/EBITDA and P/E versus Indian specialty peers; mid‑cycle margins should guide prudent pricing given cyclicality.
FAQs
- What’s the IPO structure? ₹80 crore fresh issue plus ₹420 crore OFS, total ₹500 crore; face value ₹2; 35% retail reservation.
- How will proceeds be used? Around ₹60 crore to repay debt; the rest for general corporate purposes.
- What differentiates Prasol? Integrated acetone/phosphorous chains and the only isophorone line in India, with 150+ products and exports to 69 countries.
- Are finances improving? FY25 PAT more than doubled to ₹43.6 crore and Q1 FY26 PAT was ₹24.3 crore, indicating better margins and mix.
- Key risks to monitor? Feedstock/FX volatility, working capital stretch, and modest deleveraging due to the small primary tranche.
Blog comment creationInteresting to see Prasol Chemicals reviving its IPO plans with a smaller, more targeted issue this time. The focus on debt reduction and improved profitability makes sense given their stronger FY25 numbers and margin recovery. If they can sustain the Q1 FY26 momentum, this could mark a more disciplined growth phase for the company compared to their earlier attempt in 2022.