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Dorf-Ketal Chemicals has decided to raise Rs 5,000 crore through IPO, which will further strengthen the specialty chemicals sector.
Dorf-Ketel Chemicals India, a leading company in specialty chemicals manufacturing, has taken a big step to raise capital. The company has filed a draft red herring prospectus (DRHP) with SEBI for an IPO (initial public offering) of Rs 5,000 crore. This IPO will be based on new equity shares worth Rs 1,500 crore and Offer for Sale (OFS) worth Rs 3,500 crore. Under the OFS, the shares will be sold by the promoter Menon Family Holdings Trust.
Apart from this, the company is also considering raising Rs 300 crore under the pre-IPO round. If this happens, the size of issuance of new shares in the IPO may reduce.
Use of IPO funds
A large part of the income received through IPO will be used to repay the company’s debt. The company said Rs 1,162 crore will be used mainly to extinguish its debt and that of its subsidiary Dorf-Ketel Chemicals FZE. Furthermore, the remaining amount will be spent for general corporate purposes.
Loan Status:
The company’s books had total borrowings of Rs 3,540.8 crore on a consolidated basis till October 2024.
Introduction and global presence of Dorf-Kettel Chemicals
Established in 1992, Mumbai-based Dorf-Ketel Chemicals is a well-known specialty chemicals company. The company has 16 manufacturing facilities in four countries, of which 8 plants are located in India.
Product Categories:
Dorf-Ketel manufactures products in two main categories:
- Specialty Chemicals for Hydrocarbons
- Industrial Specialty Chemicals
In the first half of the current financial year 2025, the contribution of these categories to the total revenue of the company was as follows:
- 81% Hydrocarbon Specialty Chemicals
- 19% Industrial Specialty Chemicals
Strong partnerships with big companies
Dorf-Kettel Chemicals has built strong relationships with many national and international companies. Their major customers include:
- Reliance Industries
- Indian Oil Corporation
- PETRONAS
- PPG Industries
- Clariant
- Vedanta
As of the end of September 2024, the company had a total of 1,322 customers.
Financial performance: Strong profit growth in FY24
Dorf-Ketel Chemicals reported strong financial performance in FY2024.
- Profit: Rs 602 crore, up 33.4% YoY.
- Revenue: up 41.7% to Rs 5,479.5 crore.
- FY25 (April-September 2024): Profit stood at Rs 231.6 crore and revenue at Rs 2,961.4 crore.
This performance of the company reflects its rapidly growing business and increasing demand among customers.
IPO process and appointed merchant banker
Dorf-Ketel Chemicals has appointed 6 merchant bankers for the IPO, who will handle the process. These banks are:
- JM Financial
- Citigroup Global Markets India
- HSBC Securities and Capital Markets (India)
- JP Morgan India
- Morgan Stanley India Company
- Motilal Oswal Investment Advisors
What are the market’s expectations from Dorf-Ketel’s IPO?
Dorf-Ketel is a leading player in the specialty chemicals sector. Investors and the market have high expectations from its IPO.
Market Attractiveness:
- The company’s global presence and diverse product portfolio make it a strong player.
- Investor confidence has increased due to financial performance and long-term relationships with customers.
- The specialty chemicals market in India is growing rapidly, which makes this IPO more attractive.
Dorf-Ketel’s future and growth prospects
The future looks promising for Dorf-Ketel Chemicals. The company’s international reach, financial strength, and ever-increasing demand provide it with the opportunity to grow further.
Impact of IPO:
The funds raised from the IPO will help in reducing debt and increasing operational efficiency. This will further strengthen the financial position of the company.