Mehul Colours Limited, an Indian company engaged in manufacturing colour and additive masterbatches for plastic applications, is launching its ₹21.66 crore Initial Public Offering (IPO) on the BSE SME platform. The offering is a complete fresh issue comprising 30.08 lakh equity shares with a face value of ₹10 each. The price band for the IPO is set at ₹68 to ₹72 per share.
The IPO is open for subscription from July 30 to August 1, 2025, with listing expected on August 6, 2025.
IPO Lot Size and Retail Investment
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Minimum lot size: 1 lot = 1,600 shares
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Retail minimum application: 2 lots = 3,200 shares
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Investment at upper band: ₹2,30,400
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Listing exchange: BSE SME
Grey Market Premium (GMP) and Listing Estimate
As of July 30, 2025, the Grey Market Premium (GMP) for Mehul Colours stands at ₹0 per share. This implies that the estimated listing price is expected to be at the upper issue price of ₹72, providing no listing gains for investors.
| Date | Issue Price | GMP | Est. Listing Price | Est. Gain |
|---|---|---|---|---|
| July 24–30 | ₹72 | ₹0 | ₹72 | 0% |
Company Background
Founded in 1996, Mehul Colours has decades of experience in the production of masterbatches and specialty compounds used to colour plastic products. The company serves various sectors, including:
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Packaging
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Agriculture
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Stationery
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Textiles
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Automobile interiors
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Plastic household items
Mehul Colours serves over 500 clients across 10+ industries, with a diverse product portfolio that includes white, black, colour, additive, and filler masterbatches.
The company operates from its manufacturing facility located in Daman, with plans to set up a second, larger unit at Saykha Industrial Estate, Bharuch, Gujarat.
IPO Objectives
The net proceeds from the IPO will be used for the following purposes:
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Setting up new manufacturing facility: Approx. ₹14.63 crore will go toward establishing a state-of-the-art factory with higher automation and capacity in Gujarat.
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Working capital requirements: Around ₹4.00 crore is allocated to support raw material procurement and operations.
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General corporate purposes: Remaining funds to be used for administrative, branding, and contingency expenses.
Financial Performance
Key Financial Indicators (Standalone):
| FY | Revenue (₹ Cr) | PAT (₹ Cr) | EPS (₹) | RoNW (%) | ROCE (%) |
|---|---|---|---|---|---|
| FY24 | ₹22.66 | ₹3.22 | ₹4.27 | ~23% | ~34% |
| FY25* | ₹23.71 | ₹5.50 | ₹7.30 | ~32% | ~43% |
(*FY25 is based on restated figures for the period ending March 2025)
Valuation Ratios (Pre-IPO):
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EPS: ₹7.30
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P/E Ratio: 9.86x at upper price band
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Book Value per share: ₹22.59
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P/B Ratio: ~3.2x
Valuation Ratios (Post-IPO, fully diluted):
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Estimated EPS: ₹5.22
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P/E Ratio: 13.78x
Peer Comparison
Compared to other listed SMEs in the plastics and masterbatch sector, Mehul Colours appears attractively valued:
| Company | EPS | P/E | RoNW |
|---|---|---|---|
| Mehul Colours (pre-IPO) | ₹7.30 | 9.86x | 32% |
| Deep Polymers Ltd. | ₹2.15 | ~25x | ~6% |
| Polylink Polymers | ₹0.96 | ~28x | ~7% |
Despite its SME status, Mehul Colours shows superior margins and return ratios, though peers benefit from greater market visibility and listing history.
Strengths of Mehul Colours
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Experienced Promoters: The promoters have over 20 years of experience in the masterbatch industry.
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Integrated Manufacturing: In-house R&D and production facilities allow better quality control and product innovation.
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Strong Client Base: More than 500 recurring customers across various industries and geographies.
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Consistent Financials: Profitability has improved steadily over the past 2–3 years, with stable margins and healthy cash flows.
Risk Factors
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Customer Concentration: The top 10 customers contribute a significant portion of revenue, which can pose a risk in case of attrition.
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Raw Material Dependence: The company lacks long-term contracts with raw material suppliers, making it vulnerable to price volatility.
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Regulatory & Legal: A few proceedings involving directors and company-related matters are pending.
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SME Segment Risk: Lower trading volumes and illiquidity risks are inherent in SME stocks post-listing.
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No Firm Contracts: Most customer relationships are transactional and not based on long-term contracts, making revenue visibility weaker.
IPO Allotment and Listing Timeline
| Event | Date |
|---|---|
| IPO Opens | July 30, 2025 |
| IPO Closes | August 1, 2025 |
| Basis of Allotment | August 4, 2025 |
| Refunds Initiated | August 5, 2025 |
| Credit to Demat Accounts | August 5, 2025 |
| Listing on BSE SME | August 6, 2025 |
Investor Outlook
At a pre-issue P/E ratio of just under 10 and healthy margins, Mehul Colours looks reasonably valued. However, with a GMP of ₹0, the market currently anticipates no listing gain. This makes the IPO more suitable for:
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Long-term investors seeking steady growth from SME manufacturing
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Industry-specific portfolios looking to diversify into polymer and plastic solutions
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Risk-tolerant investors familiar with SME segment volatility
Short-term or listing-gain seekers may want to wait for the post-listing performance and secondary market pricing.
