Fine Organic Industries IPO Subscribed Nearly Nine Times On The Last Day Of Issue

NDTV Profit Team

22 Jun 2018, 05:16 PM IST

The company plans to raise 25 percent of its share capital at a price band of Rs 780-Rs 783

Fine Organic Industries opened its initial public offering (IPO) on Wednesday. On the third and the last day of Fine Organic Industries IPO, the issue was subscribed nearly nine times. By 5 pm, Fine Organic Industries received 4.68 crore bids against the total issue size of 53.65 lakh, the NSE data revealed. Founded in 1970, Fine Organics was the brainchild of Ramesh Shah, a Mumbai-based businessman with experience in chemical trading and Prakash Kamat, a skilled technocrat from Institution of Chemical Technology. Fine Organics is a producer of specialty additives for foods, plastics, rubbers, paints, inks, cosmetics, coatings, textile auxiliaries, lubes and several other specialty applications.

The company plans to raise 25 percent of its share capital via public issue at a price band of Rs 780 to Rs 783. Though the company's profitability is high as shown by the earnings per share of Rs 26.24 on the basis of fiscal 2017 earnings.

However, the company faces a barrage of challenges and risks. One of the major risks of company's profitability is the increase in the cost of raw materials as a percentage of revenue from operations could have a material adverse effect on results of operations and financial conditions. The company's largest expense is raw material. The primary raw materials are derived from vegetable oils, including rapseed oil, palm oil, sunflower oil among others.

Fine Organic Industries IPO. Five Things To Know

1. Price Band: The price band of public issue is Rs 780 and Rs 783 per share. Bids can be made for a minimum of 19 equity shares and in multiples of 19 equity shares thereafter.

2. Public Issue: The book running lead managers are JM Financial Limited and Edelweiss Financial Services Limited. The issue comprises 25 percent of post-issue paid up capital.

3. Price/Earnings Ratio (P/E ratio): The price earnings (P/E) ratio of IPO-bound Fine Organic Industries (on the basis of EPS of fiscal 2017 earnings) is 29.73 (lower band) and 29.84 (upper band). The floor price is 156 times the face value of the equity share and the cap Price is 156.6 times the face value of the equity.

4. Earnings Per Share (EPS): The earnings per share of Fine Organic Industries is Rs 26.24 for the fiscal 2017. For the preceding two fiscals, the EPS ratio was 25.26 and 19.09 for fiscal 2016 and fiscal 2015, respectively.

5. Risk Factors: Fine Organic Industries highlights that it is dependent on two of its suppliers for key raw materials and any disruption in supply could have a material adverse effect on results of operations and financial conditions. One of the major risks of company's profitability is the increase in the cost of raw materials as a percentage of revenue from operations could have a material adverse effect on results of operations and financial conditions. The company's largest expense is raw material. The primary raw materials are derived from vegetable oils, including rapseed oil, palm oil, sunflower oil among others.