SME IPO crisis: Phytochem Remedies withdraws Rs 38 crore issue due to undersubscription

Jammu-based packaging company Phytochem Remedies was forced to withdraw its SME IPO after its Rs 38 crore issue was undersubscribed with just 62% subscription from only 797 applications."The decision to withdraw the Issue has been taken by the management due to unfavourable market conditions and volatility in the capital markets, impacting the overall investor sentiment. Accordingly, the Company shall not be proceeding with the Issue and requests you to kindly take note of the same," Phytochem Chairman and Managing Director Niranjan Surana said in a regulatory filing.After the completion of the three-day-long bidding process ending on Monday, Phytochem IPO saw 797 bids for about 23.1 lakh shares, garnering around Rs 22.63 crore. As this meant only about 62% subscription against the demand for Rs 38.22 crore, the IPO was left undersubscribed.Shares were proposed to be listed on the BSE SME platform on December 26. In the unofficial grey market, the stock was trading at par with the issue price, suggesting that investors were factoring in a flat debut. Market participants said the absence of a premium reflects cautious sentiment around SME offerings amid tighter regulations and selective investor appetite.At the fixed issue price of Rs 98 per share, Phytochem Remedies was valued at a pre-IPO market capitalisation of about Rs 115 crore. The IPO was an entirely fresh issue and had no offer for sale component.The minimum investment for retail investors was relatively high at Rs 2.35 lakh, as bids must be placed for at least 2,400 shares. The non-institutional and retail categories were allocated nearly 47.5% of the issue, while around 5% was reserved for the market maker, Aftertrade Broking.Phytochem Remedies is engaged in the manufacture of corrugated boxes and boards used across sectors such as FMCG, food and beverages, pharmaceuticals, pesticides and automobiles. The company operates two manufacturing units in Bari Brahmana, Jammu, and employs 51 people as of September 2025.Financially, the company has reported a sharp improvement in profitability over the past two years. Revenue rose 12% year-on-year in FY25, while profit after tax nearly doubled to Rs 4.48 crore. For the first half of FY26, the company posted a PAT of Rs 3.75 crore.The company planned to use the IPO proceeds primarily for capital expenditure on machinery and civil construction, along with partial repayment of borrowings and general corporate purposes.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)