The IPO of Chemcon Speciality Chemicals, which opened on Monday, has seen a strong investor response despite the market volatility. Chemcon IPO was subscribed 7.5 times as of 12:15 pm today. The manufacturer of speciality chemicals is offering shares in the price band of ₹338-340 in the initial share sale. The issue closes on September 23. Ahead of its IPO, Chemcon Speciality Chemicals raised over ₹95 crore from 13 anchor investors. At the upper end of the price band, the IPO will fetch ₹318 crore.
At the end of Day 1, the issue was subscribed 5.20 times, with retail individual investor category seeing 9.86 times subscription.
Lot Size and probable listing date
The lot size of Chemcon Speciality Chemicals IPO is 44 shares. Retail investors can bid for a maximum of 13 lots. Minimum application money for retail investors at the upper price band per lot is Rs. 14,960.
According to brokerages, the share allocation in Chemcon Speciality Chemicals issue is likely to be finanlised on September 28 and the issue may get listed on October 1.
Link Intime India Pvt Ltd is the registrar of the IPO while Intensive Fiscal Services and Ambit Capital are the book running lead managers to the issue.
The initial public offer (IPO) of Chemcon Speciality Chemicals comprises fresh issuance of equity shares aggregating up to ₹165 crore and an offer for sale of up to 45 lakh equity scrips by promoters.
The company intends to utilise the net proceeds from the fresh issue to meet capital expenditure for expansion of its manufacturing facility, fund working capital requirements and general corporate purposes.
Chemcon Speciality Chemicals Ltd is a leading manufacturer of specialised chemicals such as HMDS (Hexamethyldisilane) & CMIC (Chloromethyl isopropyl carbonate) which are predominantly used in pharmaceutical industry (pharmaceuticals chemicals) and inorganic bromides, predominantly used as completion fluids in the oilfields industry (oil well completion chemicals).
Its revenue and PAT grew at a CAGR of 29% and 36% respectively over FY18-20. In FY20, Chemcon had reported sales of ₹262 crore with net profit at ₹49 crore.
Samco Securities recommends subscribe to Chemcon IPO.
“If we look at Chemcon, the overall specialty chemicals business in which the company operates has stringent entry barriers on back of complex chemistry and prolonged period to be enrolled as a supplier with customers. Given the company is the only manufacturer of HMDS in India and the largest of CMIC in India in terms of production, it aims to capitalize on the potential growth in India by expanding manufacturing and sales. However, concentration risk is high since 72% of its revenue is from Top 10 clients along with dependency on a limited product portfolio. Chemcon is valued at a price to earnings multiple of 25.5 times which makes the company fairly priced when compared to its peers,” said Nirali Shah, Senior Research Analyst, Samco Securities.
Geojit Financial Services also recommends “subscribe”, citing Chemcon’s healthy business performance, regular capacity expansions, strong customer base, expanding margin profile and improving outlook for the sector.