About the Company:

Incorporated in 1992, The company is a manufacturer of white oils that caters to the consumer and healthcare end industries. As of June 30, 2023, the company offers an extensive range of over 440 products that primarily fall under three categories –

1. Personal care, healthcare and performance oils (PHPO);
2. Lubricants;
3. Process and insulating oils (PIO) - under the brand name Divyol.

The products manufactured by the company are segregated into 3 business verticals, the same are captured in the below table:

The company's products are used by various companies for end products in sectors such as consumer goods, healthcare, automotive, industrial, power, tyre, and rubber, and are used by leading Indian and global companies.

As of June 2023, the company has catered to 100 countries across the globe. The company served over 3500 clients, including Procter & Gamble (P&G), Unilever, Marico, Dabur, Encube, Patanjali Ayurved, Bajaj Consumer Care, Emami, and Amrutanjan Healthcare.

Below is a segmental breakdown of company pro forma consolidated revenue from sale of products:

Industrial Overview:

The global specialty oil market value, estimated at $129.90 billion in 2023, is expected to grow to $154.0 billion by 2028, at a CAGR of 3.5%.

The below graph captures global speciality oil market by region:

To understand the end use segment wise consumption of Global speciality oil market, we can refer the below chart:

The Indian specialty oil market is estimated to be $7.33 billion in 2023 and reach $9.30 billion by 2028, at a CAGR of 4.9%. White oil is expected to be the fastest-growing segment over the forecast period, given the favourable outlook for end-user industries amid rising focus on product safety and awareness about health and hygiene.

IPO Objectives

1. Investment in Texol by way of a loan for financing the repayment/pre-payment of a loan facility availed by Texol from the Bank of Baroda;

2. Capital expenditure through the purchase of equipment and civil work required for
i) Expansion in the capacity of automotive oil at the company's Silvassa Plant
ii) Expansion in the capacity of petroleum jelly and accompanying cosmetic product division at the company's Taloja Plant; and
iii) Expansion in capacity of white oils by installing blending tanks at the company's Taloja Plant;

3. Funding working capital requirements of the Company;

4. General corporate purposes.

Promoters Background:

1) Mr. Ramesh Babulal Parekh is the Promoter, Chairperson and Managing Director of the Company. He holds a bachelor’s degree in commerce from the University of Mumbai. He has been with the Company since its incorporation and has over 31 years of experience in the petroleum and specialty oils industry.

2) Mr. Samir Ramesh Parekh is the Promoter, Vice Chairperson and Joint Managing Director of the Company. He holds a bachelor’s degree in commerce from the University of Mumbai. He has over 19 years of experience in manufacturing and marketing of petroleum and specialty oils industry.

3) Mr. Aslesh Ramesh Parekh is the Promoter and Joint Managing Director of the Company. He holds a bachelor’s degree in science from the University of Mumbai and a post-graduate certificate in e-management and business administration from the MET Asian Management Development Centre. He has over 19 years of experience in the petroleum and specialty oils industry.

Financials:

The Company’s revenue from operations increased from Rs. 2,221.00 crores in FY 2020-21 to Rs. 4,079.44 crores in FY 2022-23 indicating a CAGR growth of 35.53%.

The company's EBITDA expanded from Rs. 138.77 Crores in FY 2020-21 to Rs. 316.62 Crores in FY 2022-23, with a CAGR of 51.05%. Also, the company’s EBITDA margin has increase from 6.25% in FY 2020-21 to 7.76% in FY 2022-23.

The company's Net Profit expanded from Rs. 100.32 Crores in FY 2020-21 to Rs. 213.18 Crores in FY 2022-23, with a CAGR of 45.77%. Also, the company’s Net Profit margin has Increase from 4.52% in FY 2020-21 to 5.23% in FY 2022-23.

The company's ROCE has increased from 29.37% in FY 2020-21 to 41.19% in FY 2022-23.

The ROE has increased from FY 2020-21 to FY 2022-23 being 24.77% in FY 2020-21 to 32.28% in FY 2022-23.

Valuation:

The company's price-to-earnings (PE) ratio stands at 7.11, while the industry's PE ratio is 52.65, suggesting that the issue price is undervalued. Additionally, the company's price-to-book ratio is 1.78, whereas the industry's PB ratio is 4.71, signifying fair valuation of the issue price.

Peer Comparison:

Key Risks:

1) Dependence on Specific Business Divisions:

It depends significantly on the personal care, health care and performance oil business division and downturns in the industries addressed by this business division or an inability to manage sales by the business division effectively leading to any reduction in revenue from this division could adversely affect the business, financial condition and results of operations.

2) Promoter involvement in regulatory actions: The company promoters are involved in certain regulatory actions, including notices and summons with requests for information from the Enforcement Directorate and the Central Bureau of Investigation, and proceedings and investigations in respect of certain criminal proceedings. Any adverse outcome in such matters may adversely affect the company's business, reputation, financial condition, and results of operations.

3) Raw material price volatility: Delays, interruptions, or reductions in the supply of raw materials to manufacture products and abrupt fluctuations in the prices of raw materials may adversely affect the company's business, results of operation, financial condition, and cash flows.

IPO Details: