1. At a Glance
Mehul Colours is bringing a ₹21.66 crore SME IPO to BSE SME, fully a fresh issue of 30.08 lakh shares at ₹68–₹72. Retail investors need to shell out ₹2.18 lakh (2 lots) to enter. The IPO opens July 30, closes August 1, with listing expected August 6. Anchors already took a ₹6.15 Cr bite.
2. Introduction
A company that literally sells colours now wants to paint your portfolio. With PAT margins at a rare 24% and EBITDA margin above 30%, it looks shiny. But the revenue growth is just 5% in FY25. Is this brilliance sustainable or just a glossy coat?
3. Business Model – WTF Do They Even Do?
Mehul Colours manufactures masterbatches and pigments used to colour plastics. Offerings:
- White, black, colour & additive masterbatches
- UV-resistant, flame-retardant, anti-static additives
- Organic & inorganic pigments
Two plants in Vasai, Mumbai. Products are used in packaging, automotive, construction, and more. They supply the colour behind the scenes.
4. Financials Overview
FY25:
- Revenue: ₹23.7 Cr (+5%)
- PAT: ₹5.5 Cr (+71%)
- EBITDA: ₹6.9 Cr
- Net Worth: ₹17.1 Cr
Profit spike with flat revenue—margin magic or cost control masterstroke?
5. What’s This Stock Worth?
- Pre-IPO P/E: 9.9x (EPS ₹7.30)
- Post-IPO P/E: 13.8x (EPS ₹5.22)
- Fair Value Range: ₹65–₹80
Edu Punchline: Priced reasonably, but growth must keep up with the glossy numbers.
6. What-If Scenarios
| Scenario | Outcome |
|---|---|
| Listing hype | 15–20% gain possible |
| Flat market | Trades near ₹72 |
| Margins fade | Stock dulls fast |
7. What’s Cooking (SWOT)
Strengths – High margins, niche products, experienced promoters.
Weaknesses – Low revenue growth, concentrated customer base.
Opportunities – New plant to boost capacity, export potential.
Threats – Raw material price swings, competition in masterbatches.
8. Balance Sheet 💰
| (₹ Cr) | FY25 |
|---|---|
| Assets | 18.95 |
| Liabilities | 1.89 |
| Net Worth | 17.06 |
| Borrowings | Negligible |
Debt-free & clean—colour us impressed.
9. Cash Flow (FY23–FY25)
| FY | Ops | Investing | Financing |
|---|---|---|---|
| 23 | Stable | Low capex | Minimal debt |
| 24 | Positive | Maintenance | Low finance |
| 25 | Strong | Expansion prep | IPO to fund |
Cash flows healthy, expansion capex incoming.
10. Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROE | 38.5% |
| ROCE | 43.5% |
| PAT Margin | 24.1% |
| EBITDA Margin | 30.2% |
| D/E | 0.0 |
Margins glow like a new paint job.
11. P&L Breakdown – Show Me the Money
| FY | Revenue | EBITDA | PAT |
|---|---|---|---|
| 23 | 21.4 | 4.0 | 2.9 |
| 24 | 22.7 | 4.2 | 3.2 |
| 25 | 23.7 | 6.9 | 5.5 |
Flat topline, bottom line partying.
12. Peer Comparison
| Company | P/E | ROE | Margin |
|---|---|---|---|
| Mehul Colours (Post) | 13.8x | 32% | 24% |
| Typical SME Chemical | 12–14x | 20% | 10–15% |
Margins lead, valuation fair.
13. EduInvesting Verdict™
Mehul Colours IPO offers debt-free operations, high ROE, and fat margins. The only concern: revenue growth is dull. If the new plant scales, the story brightens.
Final Take: Attractive and fairly priced, but needs volume growth to justify the shine.
Written by EduInvesting Team | July 27, 2025
Tags: Mehul Colours IPO, SME IPO, ₹21.66 Cr, Masterbatch Manufacturing, EduInvesting Premium
