Balaji Speciality Chemicals files for IPO: All you need to know

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Balaji Speciality Chemical IPO

Balaji Speciality Chemicals Limited, a renowned producer of chemical formulations, is getting ready to launch its Initial Public Offering (IPO) for investor subscriptions in the near future. The IPO price bracket and allocation volume will be updated and announced soon.

Balaji Speciality Chemicals IPO: About the firm

Incorporated in 2010, Balaji Speciality Chemicals Limited is a subsidiary of Balaji Amines Limited (BAL).

The company makes specific, unique chemicals, like Ethylenediamine and Piperazine, using a method called the MonoethanolAmine (or "MEA") process. 

These chemicals are made locally, so businesses can use them instead of having to buy similar products from other countries. These chemicals are used in a variety of industries, including making special kinds of chemicals, farm-related products, and medicines.

Situated in Solapur, Maharashtra, the manufacturing hub of Balaji Speciality Chemicals occupies an expansive area of 41,920 square meters. As of March 31, 2022, the factory was set up to be able to make 30,000 metric tons of chemicals every year.

In Fiscal 2022, the company had a customer base of 182, up from 45 in Fiscal 2020. The company's clients include notable companies like Nanjing Union Chemical, Korea India Limited, UPL Limited, Dr. Reddy's Laboratories, and Aarti Drugs Limited. A diverse customer base, spanning specialty chemicals, agrochemicals, pharmaceuticals, and distributors, helps safeguard businesses from industry-specific disruptions.

Balaji Speciality Chemicals IPO: Industry Overview

India’s specialty chemicals industry is expected to grow at a CAGR of 6.5%, according to a report by Crisil. The global market for these products is presently valued at US$ 2.2 billion and is expected to grow at 6.9% CAGR to US$ 3.3 to 3.4 billion by Fiscal 2028.

The recent downturn in China's specialty chemicals industry presents an opportunity for Indian manufacturers, who enjoy a cost advantage. Due to changes in Chinese regulations, reduced government support, geopolitical issues, and COVID-19 impacts, global companies are diversifying their supply chains. 

This boosts export opportunities for Indian players, as few nations match India's scale, technology, resources, skilled labor, IP protection, and government support.

IPO Details:

IPO Open and Close Dateupcoming
IPO price rangeupcoming
Lot Sizeupcoming
IPO sizeupcoming
Face Value₹2 per share
Fresh Issue[.] shares
 (aggregating up to ₹250.00 Cr)
Offer for Sale26,000,000 shares of ₹2
Listing AtBSE, NSE

Balaji Speciality Chemicals IPO Reservation

QIB Shares OfferedNot more than 50% of the Net Offer
NII (HNI) Shares OfferedNot less than 15% of the Net Offer
Retail Shares OfferedNot less than 35% of the Net Offer

(Source: DRHP)

The IPO is scheduled to open for subscription on the upcoming dates.

HDFC Bank Limited and JM Financial Limited  Ltd have been appointed as the book-running lead managers for the Balaji Speciality Chemicals IPO, while Link Intime India Private Limited will serve as the registrar of the issue. The shares of the bank are expected to be listed on both the BSE and NSE.

The objective of the issue:

The company plans to allocate the net revenue generated from this issue to finance the following specific objectives:

  • Repayment/prepayment, in full or in part, of certain outstanding borrowings availed by the company,
  • Funding working capital requirements and general corporate purposes.

Further, the company expects that the listing of equity will enhance visibility and brand image among existing and potential customers and create a public market for equity shares.

Financial Analysis:

Particulars31 Mar 202331 Mar 202231 Mar 2021
Operations Revenue791.22514.28174.40
Profit After Tax178.1310910.398

(in Crores)

(Source: DRHP)

The Assets have increased from Rs 401.61 Crores in March 2022 to Rs  480.97 Crores in March 2023, with a significant increase of 19.76% indicating overall Asset performance.

In terms of revenue, the Company has experienced significant growth in operations revenue, rising from Rs. 514.28 Crores in FY22 to Rs. 791.22 Crores in FY23, with a significant increase of 53.85%. Moreover,  Net profits have also seen a notable increase, going up from Rs. 109 Crores in FY22 to Rs. 178.13 Crores in FY23, with a significant increase of  663.42% over the past year.

Balaji Speciality Chemicals IPO: Strengths of the company

  • India's exclusive producer of specialty chemicals, such as Ethylenediamine and Piperazine (Anhydrous), with substantial export potential.
  • Well-positioned to take advantage of positive industry trends.
  • Rapidly grew a wide mix of customers from around the world, including India.
  • Ability to leverage research and development capabilities and strategic guidance from Balaji Amines Limited
  • A factory that follows strict rules and steps to ensure high-quality products.
  • The company has improved its profitability and enhanced market shares in the past three fiscal years .
  • Professional management team with over three decades of experience in the chemical industry.

Balaji Speciality Chemicals: Risks

  • A good relationship with customers. No long-term contracts with customers and any loss of one or more customers would adversely affect the operations, financial conditions, and cash flow.
  • Any unscheduled, unplanned, or prolonged disruption in manufacturing operations could adversely affect our business, as it largely depended on manufacturing.
  • Company does not  enter into long-term agreements with suppliers for our raw materials and an increase in the cost of, or a shortfall in the availability or quality of such raw materials, in a timely manner, could have an adverse effect
  • Restrictions on the import of raw materials and an increase in shipment cost may adversely impact the business and results of operations
  •   Mostly dependent on the sale of a few kinds of specialty chemicals, and in particular on the sale of Ethylenediamine. Any reduction in demand for these chemicals may have an adverse effect on business

Balaji Speciality Chemicals IPO Peer Comparison:

Company NameTotal Revenue (in ₹Crores)PAT (in ₹Crores)P/E (x)
Balaji Speciality Chemicals Limited798.74178.1381.91
Clean Science and Technology Limited (C)229.4980.53434.93
Alkyl Amines Chemicals Limited(S)414.5148.6425.24
Tatva Chintan Pharma Chem Limited(C)125.3616.95430.01
Neogen Chemicals Limited(C)205.6514.3114.34

(As of 31/02/2023)

(Source: DRHP)