High Promoter Holding: Multibagger Stock Cancels Fundraising Plan Citing Sufficient Cash Accruals for Capex Needs
Company reported its highest-ever quarterly and annual performance
A noteworthy development took place on June 14, 2025, during the board meeting of a company that manufactures aroma chemicals and has delivered impressive multibagger returns—105.05 per cent over the last three years and a remarkable 89 per cent gain in just the past year.
We are talking about Privi Speciality Chemicals Limited (PSCL). Incorporated in 1985, PSCL manufactures aroma chemicals that serve as key ingredients in the production of fragrances. The company operates six manufacturing facilities in Mahad, Maharashtra, and one in Jhagadia, Gujarat. It boasts integrated operations, enabling it to manufacture essential raw materials in-house.
During its board meeting held on Saturday, June 14, 2025, the Board of Directors took a significant decision: they chose not to proceed with the proposed capital raising of up to Rs 1,000 crore through Qualified Institutional Placement (QIP). This fundraising had previously been approved by the board and shareholders via resolutions dated May 2, 2025, and August 12, 2024, respectively.
The decision to withdraw the QIP plan was taken in light of the company’s improved financial performance and the availability of sufficient internal cash accruals to meet its capital expenditure requirements.
What is QIP (Qualified Institutional Placement)?
Qualified Institutional Placement is a capital-raising mechanism used by listed companies in India. It allows companies to issue equity shares, fully or partly convertible debentures, or other convertible securities (excluding warrants) directly to Qualified Institutional Buyers (QIBs), bypassing the longer public issue process.
QIBs typically include mutual funds, foreign institutional investors (FIIs), banks, insurance companies, and pension funds.
Does QIP Dilute Promoter Holding?
Yes, a QIP results in the issuance of new shares to institutional investors, increasing the total number of outstanding shares. This can lead to dilution of the promoter's stake.
Interestingly, PSCL’s promoter holding stands at 74.05 per cent, and records show that this level has been consistently maintained since June 2022.
Company’s Capex Plans and Product Pipeline
In its recent investor presentation, PSCL outlined a planned capital expenditure of Rs 250–300 crore, to be financed through a mix of internal accruals and debt. The company is also gearing up to launch two new products, currently in the scale-up phase for plant-level production, aimed at the fine fragrance segment. These are expected to hit the market in FY26–27.
In addition, PSCL has successfully developed menthol, peppermint oil, and several super-speciality aroma chemicals at lab and pilot scale. These innovations are expected to drive future growth following the ongoing capacity expansion of its existing products.
Financial Performance
For the quarter and year ended March 31, 2025, Privi Speciality Chemicals reported its highest-ever quarterly and annual performance. In Q4FY25, profit after tax more than doubled year-on-year to Rs 63.98 crore, while EBITDA margins improved by 342 basis points, reaching 23.46 per cent.
What’s Your Take?
Do you think the board made the right decision by shelving the QIP? And what lesson do you take from this development?
Disclaimer: The article is for informational purposes only and not investment advice.