The IPO market is buzzing, and there is a lot of action in the SME IPO space, too. The Neochem Bio Solutions IPO aims to raise Rs 44.97 crores from the primary market. Here is a detailed analysis of the issue, key risks, and a look at how the valuations stack up.
Neochem Bio SME IPO: Issue details
The IPO is entirely a fresh issue of 0.46 crore shares. The IPO bidding will close on December 04. The company has set the price band between Rs 93 to Rs 98 per equity share.
Neochem Bio SME IPO: Allotment and listing
The allotment for the IPO is expected to be finalised on December 5. The listing of the stocks will take place on the NSE SME on December 09, as per the tentative schedule.
Neochem Bio SME IPO: Key risk factors
Here are some risks that investors should watch out for
#1 Dependence on a single manufacturing unit
The company’s sole manufacturing facility is located in Moraiya, Ahmedabad. This unit is integral to its business operations. Any disturbance, slowdown, or shutdown of this facility will have an adverse impact on the business.
Plus, operating in this industry is inherently hazardous, involving the research, development, and manufacture of products requiring the handling of volatile, flammable, and hazardous chemicals.
#2 Requirement of substantial working capital
The business requires high working capital, primarily due to the time gap between raw material purchase and collection of receivables. The company’s funding requirements have not been appraised by an independent agency, and any failure to arrange adequate working capital could adversely affect its growth plans and financial condition, the company outlined in its RHP.
#3 Delayed customer payments
The company is exposed to the risk of delays in customer payments, which can significantly impact liquidity. The trade receivable days were 149 days for the six-month period ended September 30, 2025.
#4 Negative cash flows in past
Also, the company has reported negative cash flows from its operating, investing, and financing activities in previous years. This negative cash flow could affect the company’s ability to meet working capital expenditure and repay loans.
In FY23, the company reported a negative cash flow of Rs 34 lakhs. It posted a positive cash flow of Rs 30 in FY24. However, the company again recorded a negative cash flow of Rs 30 lakh.
Neochem Bio SME IPO: Issue objectives
The company will be using Rs 23.90 crore from the IPO proceeds to fund the long-term working capital requirements. It will use Rs 10 crore for the payment of certain outstanding borrowings. The remaining funds will be used for the general corporate purposes.
Neochem Bio SME IPO: Valuation metrics
The company’s net profit has significantly risen in FY25, ahead of the IPO. In FY25, the company posted a net profit of Rs 7.75 crore, a significant jump from the Rs 1.80 crore it reported in FY24. The company recorded a net profit of Rs 1.07 crore in FY23.
The company’s ROE (return on equity) metric stands at 48.4%, while the ROCE (return on capital employed) came in at 27.2%. The company’s EPS (earnings per share) was 1.97 in FY23, 2.70 in FY24, and jumped to 11.61 in FY25, ahead of filing for IPO.
The speciality chemicals industry has a P/E ratio of 50.20 times, as per Trendlyne, while the company has a P/E ratio of 14.76 times on the basis of the upper price band.
| Company | P/E Ratio (No. of times) |
| Neochem Bio Solutions | 14.76 |
| Rossari Biotech | 26 |
| Indian Emulsifiers | 8.83 |
Neochem Bio SME IPO: Lot size
A retail buyer needs to apply for a minimum of 1,200 lots, which have 2,400 shares, amounting to Rs 2,35,200. The minimum lot size investment for a High Networth Individual is 3 lots, which have 3,600 shares, totalling Rs 3,52,800.
Neochem Bio SME IPO: Book runner and registrar
Vivro Financial Services is working as the book-running lead manager for the IPO, and MUFG Intime India is the registrar of the issue. The Market Maker of the company is Rikhav Securities.
About Neochem Bio
Neochem Bio Solutions is the manufacturer of specialty performance chemicals. The company, incorporated in 2006, makes products that are essential and used in industries such as textile & garment washing, home & personal care (HPC), institutional and industrial cleaners, water treatment, paints and coatings, paper and pulp, construction, rubber, and dyes and pigments.
SECURITIES WARNING: EXTREME INVESTMENT RISK
SME IPOs constitute investments of inherently extreme risk. These securities are only suitable for investors with a sophisticated understanding of capital markets and a demonstrated capacity for total loss of principal. Due to low liquidity, investors must be prepared for severe price volatility and material difficulty in exiting the position. This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.