Paramesu Biotech Plans to Raise ₹600 Crore via IPO: FIiles Draft Papers

Andhra Pradesh-based Paramesu Biotech is all set to go public, filing preliminary papers with SEBI to raise ₹600 crore through an Initial Public Offering (IPO). The offering will consist of a fresh issue of equity shares worth ₹520 crore and an offer-for-sale (OFS) of ₹80 crore by its primary promoter, Unimark Business Solutions. Currently, the promoter holds a substantial 92.19% stake in the company, while public shareholders hold the remaining 7.81%.

Pre-IPO Fundraising and Potential Adjustments

Paramesu Biotech may raise an additional ₹90 crore through a pre-IPO placement to optimise its funding. If the company completes this pre-IPO round before filing the red herring prospectus with the Registrar of Companies (RoC), the amount will be adjusted against the fresh issue component, reducing the overall issuance size accordingly.

Growth, Expansion, and Product Expertise

Paramesu Biotech, a major player in India’s maize-based speciality products sector, operates a production facility in Devarapalli, Andhra Pradesh, with an installed capacity of 800 tonnes per day (TPD). The company specialises in various modified starch products, such as dextrin, pre-gelatinized starch, thin-boiled starch, cationic starch, oxidised starch, and spray starch. Their product line caters to a diverse clientele, including well-known names like Emami Paper Mills, Tunav Food Products, and PT Torabika Eka Semesta.

IPO Proceeds: New Facility, Debt Repayment, and Corporate Goals

Paramesu Biotech intends to use ₹330 crore from the fresh issue proceeds to set up a new manufacturing plant with a capacity of 1,200 TPD in Narmadapuram, Madhya Pradesh. The company will allocate ₹85 crore to repay its existing debt, which stood at ₹216.2 crore as of September 2024. The remaining funds will be used for general corporate purposes.

Financial Performance and Industry Competition

Despite flat revenue growth of just 0.6%, Paramesu recorded a robust 24% increase in net profit, reaching ₹40.3 crore in FY24. This growth was attributed to improved operating efficiency, with EBITDA rising by 35% to ₹76.5 crore and a significant margin expansion to 12.2%. For the first half of FY25, the company reported a net profit of ₹26.85 crore on a revenue of ₹407.6 crore.

Pantomath Capital Advisors is managing the IPO, and Bigshare Services is acting as the registrar. Competing against listed firms like Gujarat Ambuja Exports and Sukhjit Starch and Chemicals, Paramesu Biotech aims to leverage this IPO to strengthen its market position and expand its production capabilities.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.