Paramount Dye Tec Limited IPO: A Deep Dive into Sustainable Textile Investment

Table of Contents

Background of Paramount Dye Tec Limited

Paramount Dye Tec Limited founded in 2014, having its headquarters in Ludhiana, Punjab, primarily caters to the textile industry by transforming sustainability across the business. Paramount Dye Tec is a consistent exhibitor of quality B2B, with an excellence certification of ISO 9001:2015 and GMP on quality products. The company follows its journey toward sustainability with match-up requirements of the world toward environmental requirements but integrates it well to being a leader within textile recycling technology.

Paramount Dye Tec Limited: Company Overview

Paramount Dye Tec Limited IPO Issue Details

IPO Dates: The issue opens from September 30, 2024 and closes on October 3, 2024.

Here’s a table to highlight the key dates for the Paramount Dye Tec Limited IPO:

Event	Date
IPO Opening Date	September 30, 2024
IPO Closing Date	October 3, 2024
Allotment Date	October 4, 2024
Refunds Initiation	October 7, 2024
Shares Credited to Demat	October 7, 2024
IPO Listing Date	October 8, 2024

Issue Amount: It comprises a fresh issue of Equity shares 2,430,000 in number at a price which is approximately ₹28.43 crores by Paramount Dye Tec

Price Band: The shares issued have a price band of ₹111 to ₹117.
The funds will be used to expand their manufacturing capacity, repayment of debts, and other general corporate purposes; this also shows growth as well as operational stability.

Here’s the updated table for the Paramount Dye Tec Limited IPO with the addition of the minimum investment amount:

IPO Details	Information
Company Name	Paramount Dye Tec Limited
IPO Size	₹28.43 crore
Fresh Issue	24 lakh shares
Price Band	₹111 to ₹117 per share
Face Value	₹10 per share
Listing Exchange	NSE SME
Minimum Bid Lot	1200 shares
Minimum Investment	₹1,33,200 (at ₹111 per share)
Issue Type	Book Built Issue IPO
Issue Category	SME IPO
QIB Allocation	50% of the issue
NII Allocation	15% of the issue
Retail Allocation	35% of the issue
Listing Gain Potential	Based on sector trends
Company Sector	Textile & Chemical (Recycling)
Use of IPO Proceeds	Working capital and general expenses
Promoter Holding Pre-IPO	70%

Paramount Dye Tec Limited Financials

The financial health of Paramount Dye Tec reveals healthy growth, while revenue is at ₹23.68 crores and profit after tax at ₹3.54 crores for the fiscal year ending March 2024. The pattern of performance, particularly at the level of the profit margin, seems to indicate a business model that’s sound in approach but yet financially productive, presumably quite apt for eco-sensitive investors.

Financial Metric	Period Ended 31 Mar 2024	Period Ended 31 Jan 2024	Change
Assets (₹ Lakhs)	5,549.65	3,490.07	+59%
Revenue (₹ Lakhs)	2,367.9	2,955.91	-20%
Profit After Tax (PAT) (₹ Lakhs)	354.09	278.65	+27%
Net Worth (₹ Lakhs)	3,032.06	Not Provided	N/A
Reserves & Surplus (₹ Lakhs)	3,029.81	Not Provided	N/A
Total Borrowing (₹ Lakhs)	1,627.37	2,247.76	-27.6%

This comparison of the two periods reflects interesting trends in the financial difference for Paramount Dye Tec Limited:

Assets: The total assets increase by approximately 59%. One can consider this as a significant increase and could probably reflect investments in new machinery or facilities, whereby they could be gearing up for an expansion or technological improvement, which seems to fit well with their IPO goals.
Revenues: A 20% decline in revenues could raise red flags: seasonality, broader market condition impacting the textiles industry or strategic decisions that choke short-term revenues
Profit After Tax: PAT growth up 27%. This suggests that although revenues are down, the company costed better, improved margins, and/or booked one-time benefits not described above.
Total Borrowing A negative 27.6% change in borrowing by the company may well be a strategic move toward improving the financial health of the company before the issue, thereby reducing interest expenses and making the balance sheet more attractive to investors.
The net worth for March 31, 2024 is at ₹3,032.06 lakhs; however, comparison with January 31 cannot be done since data for the same is not given for comparison. Nevertheless, the fact that a steady net worth and reserves indicate that equities are stable.

The bottom line of the above performance of the above financial statement for the IPO investors and prospective customers interested in investing in Paramount Dye Tec presents a mixed picture. While an increase in assets and reduced borrowings are encouraging, the drop in revenue does warrant careful observation. PAT increasing at a time when revenue is declining may be due to maximum operational efficiency or tactful management of finances that would be helpful if it is continued beyond IPO. May be cause for concern as stakeholders too need to examine the reason for revenue decline so that it did not point towards issues going forward.

Paramount Dye Tec Limited GMP and Subscription

Now, let us assume to break down the data given to us while analyzing the subscription status and Grey Market Premium of Paramount Dye Tec Limited’s IPO:

Subscription Data Breakdown

Non-Institutional Buyers:
0.43 times subscribed, with 1,50,000 shares out of 3,46,800 allotted, which accounted for 1.755% of the total issue.
Retail Investors:
2.74 times subscribed, with 22,12,800 shares out of 8,08,800 allotted, which accounted for 25.890% of the total issue.
Total Subscription:
Thus, the subscription problem was subscribed 1.46 times, with an aggregate of 23,62,800 shares subscribed out of 16,16,400 offered shares, summing up to a 27.645 % percentage subscription.

Grey Market Premium (GMP)

You said the GMP is 0. The GMP refers to an unofficial figure, being a very common estimate among investors of listing gains or losses that an IPO would make before it is listed on the stock exchange. A GMP of 0 could reflect that grey market investors do not have much expectation of a price hike more than the issue price in the market now, or it could simply mean that grey market investors are either unsure or uninterested.

Critical Analysis

Low Institutional Interest: This may be reflected in the form of low Qualified Institutions subscription which may be an indicator of skepticism or lack of interest from institutional investors who usually have better resources to commit towards due diligence.
Retail Dominance: The subscription at 2.74 times by retail investors reflects high retail interest. It may be attributed to a host of factors such as brand recognition, market trends, and speculative buying.
GMP at 0: It could also be interpreted to mean
Uncertainty: Investors would feel uncertain about the future stock trend.
Expectations Are Neutral: The markets can expect the stock for listing at or around issue price.
Least Amount of Speculations: There is least speculation and interest related to the grey market trading about this IPO.

Points to Consider for Interested Investors

Market Sentiment: From the subscription figures, retail investors appear more bullish or even speculative regarding the outlook of the stock compared to institutional investors.
Listing Performance: In this regard, with a GMP of 0, listing would be rather conservative unless, of course, there is some change in investor sentiments or market conditions last minute.
Research: Given the mixed signals (strong retail interest but no institutional interest), prospective investors should research carefully or seek professional advice before investing.

This analysis represents a general overview based on subscription and GMP data. All investment decisions should account for more encompassing market conditions, company fundamentals, and other economic factors.

Paramount Dye Tec Limited EPS and PE Ratio

From the data of September 30, 2024, it can be summarized that the EPS and P/E ratio for Paramount Dye Tec Limited are as under:

EPS: The company had posted a PAT of ₹354.09 lakhs in the fiscal March 31, 2024. For the calculation of EPS, the number would usually be divided by the total outstanding shares. However, without knowing how many shares are outstanding, you cannot compute an exact EPS figure. However, for example, using the post-IPO scenario with the shares offered in the IPO and assuming no other additional shares beyond that for simplicity, you may approximate an EPS. For instance, taking the total issue size to be 2,430,000 shares as a representative for total shares (which is a very extreme simplification since this does not include existing shares), then: EPS = PAT / Total Shares = ₹354.09 lakhs / 24.3 lakhs shares = ₹14.57 per share if all shares were being accounted for in the determination of EPS-which they are not in the actual EPS since existing shares are ignored.
P/E Ratio: The P/E ratio typically calculates the current market price of a stock per share in comparison to its EPS. From the IPO, the price band was fixed between ₹111 and ₹117 per share. Utilizing the upper end of the price band, at ₹117 along with the calculated EPS above for illustrative purposes only-though not actual-at all times:

P/E Ratio = Share Price / EPS = ₹117 / ₹14.57 ≈ 8.03 (again, since the used EPS is an oversimplified one, P/E is also an incorrect calculation in actuality.

But from the data provided:

Actual P/E Ratio: From web sources, Paramount Dye Tec’s P/E was reported as 14.91 based on a comparison to another IPO. This is how the market prices its stock based on earnings, meaning investors are willing to pay about 14.91 times the earnings per share for the company.
PEG Ratio Insight: Not directly asked, if growth aspects are taken into consideration (which were not articulated in the financials), a PEG ratio would give some insight into the P price justified by earnings growth. Given the P/E ratio and if there was growth data, application of the PEG ratio will reflect a clearer picture of valuation in terms of growth.

With the calculated P/E ratio on the basis of the data provided, the IPO pricing of Paramount Dye Tec Limited creates an image of where its market valuation stands for earnings. However, to get an exact EPS or P/E, the number of outstanding shares and perhaps more up-to-date information on its earnings or stock price post-IPO would be required. This is also something that impacts valuation but in a completely indirect way, through investor attention on how the company is putting much focus on sustainability and on recycling of textiles, unrelated to direct financial ratio measurement.

Conclusion

From a green investment perspective, an initial public offering in the form of Paramount Dye Tec may be seen as one step toward an environmentally friendly textile future. On the returns side, though the rates may indicate caution through the subscription avenues, the sustainability and growth prospects underpinning the business model may hold long-term benefits.

However, like any investments, especially in SMEs, there are risks. Market competition, the cyclical nature of the textile industry, and broader economic conditions could impact returns. Thus, potential investors should weigh these factors against their investment horizon, risk tolerance, and belief in the sustainable textile sector’s growth.

For those considering Paramount Dye Tec Limited IPO, it is all about the potential returns in hand while supporting a sustainable future. If for short-term benefits or long-term environmental sustainability purposes, this IPO presents a case study into modern investment trends where ethics meet economics.