Paradeep Phosphates IPO: How good is it?

In our previous part of Paradeep Phosphates IPO story, we read about the key details of the IPO along with important information about the complex fertilisers manufacturer. Here we will answer some questions about Paradeep Phosphates and evaluate it on parameters like management, financials, valuations, etc. IPO questions The company/business 1) Are the company's earnings before tax more than Rs 50 crore in the last 12 months? Yes. The company's profit before tax for FY21 was Rs 367 crore. 2) Will Paradeep Phospates be able to scale up its business? Yes. With the purchase of its Goa facility from ZACL, the company's production capacity will increase by 0.8 MT and it will also get access to new markets. 3) Does Paradeep Phosphates have recognisable brands truly valued by its customers? Yes. The company's brands 'Jai Kisaan - Navratna' and 'Navratna' are well recognised among the farmers. 4) Does Paradeep Phospates have high repeat customer usage? Yes. Farmers purchase fertiliser each year and even multiple times depending upon need. Since the company is a leader in non-urea fertilisers, it is safe to say that it has a high repeat customer usage. 5) Does the company have a credible moat? No. Although Paradeep Phosphates is a leader in non-urea fertiliser segment, it does not have a solid moat. 6) Is the company sufficiently robust to major regulatory or geopolitical risks? No. The company highly depends upon import of raw materials. In FY21, imported raw materials accounted for 97.7 per cent of the total raw materials consumed. Thus any geopolitical tension can affect the company. 7) Is the business of the company immune to easy replication by ne