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Anupam Rasayan IPO opens for subscription, should you subscribe to the share sale?

Anupam Rasayan IPO comprises fresh issuance of equity shares and proceeds of the issue would be mainly used to pay the debt

twitter-logoBusinessToday.In | March 12, 2021 | Updated 11:48 IST
Anupam Rasayan IPO opens for subscription, should you subscribe to the share sale?
Anupam Rasayan has fixed a price band of Rs 553-555 for the share sale. The public subscription will close on March 16.

Speciality chemical company Anupam Rasayan opened its initial public offer today. The IPO comprises fresh issuance of equity shares and proceeds of the issue would be mainly used to pay the debt.  The company has fixed a price band of Rs 553-555 for the share sale. The public subscription will close on March 16.

The allotment of shares is likely to be held on March 19, 2021. The share is likely to be listed on March 24.

Shares can be purchased in the IPO in a lot of 27 shares. A maximum 13 lots comprising 351 shares can be applied for in the share sale at an amount of Rs 1,94,805.

The Surat-based firm has reserved about 2.20 lakh shares for employees. Half of the issue is reserved for qualified institutional buyers, 35 per cent for retail investors and 15 per cent for non-institutional bidders.

Axis Capital, Ambit Private, IIFL Securities and JM Financial have been appointed as merchant bankers for the issue.

On March 2, the firm received market regulator Sebi's approval to raise Rs 760 crore through the share sale.

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On March 11, the firm raised Rs 225 crore from anchor investors.  It has been decided to allocate 40,48,647 shares to 15 anchor investors at Rs 555 per share, which is the upper band of the initial public offer. At this price, the company mopped-up Rs 225 crore.

Aditya Birla Sunlife Mutual Fund (MF), Nomura Funds Ireland Public Ltd Company, Fidelity International, Sundaram MF, SBI Life Insurance Co, IIFL Special Opportunities Fund, Malabar Select Fund and Max Life Insurance Co were among the 15 anchor investors.

The IPO aggregating up to Rs 760 crore is an entirely fresh issuance of equity shares and proceeds of the issue would be mainly used to pay the debt.

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Geojit has given a subscribe call to the IPO.

"At the upper price band of Rs 555, the stock is available at a PE of 86.4x (annualized basis on FY21E EPS of 6.4) which is aggressively priced. Focus on R&D, cost rationalisation, strong tie-ups with MNCs and improving margin profile, we expect profitability to improve led by higher capacity utilisation and reduction in debt. We assign a Subscribe rating, with a long term perspective."

Angel Broking in a note said, "The company has strong and long-term relationships with various multinational corporations, including Syngenta Asia Pacific Pte. Ltd., Sumitomo Chemical Company Limited and UPL Limited. The company has posted strong revenue growth of 24.3% CAGR between FY2018 to FY2020. Despite the impact of the COVID-19 pandemic, the company has posted revenue growth of 45.0% for the nine month period ending December 2021. Given strong revenue growth and long-term relationships with various multinational corporations we recommend a "SUBSCRIBE" rating to the IPO."

Anupam Rasayan is a company engaged in the custom synthesis and manufacturing of specialty chemicals in India. Company started its business as a partnership firm in 1984 as a manufacturer of conventional products and have, over the years, evolved into custom synthesis and manufacturing of life science related specialty chemicals and other specialty chemicals, which involve multi-step synthesis and complex technologies, for a diverse base of Indian and global customers.

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