Chemcon Speciality Chemicals launched its initial public offering (IPO) today. The specialised chemical products manufacturer is offering 93.52 lakh shares of Rs 10 each. The share sale will end on September 23. Of these, 48.52 lakh shares will be issued fresh and 45 lakh shares will be part of offer for sale (OFS). Shares are available in a price band of Rs 338 to Rs 340 per share.
One can bid for the stock in a lot size of 44 shares amounting to Rs 14,960. A maximum 13 lots comprising 572 shares worth Rs 1,94,480 can be applied by an individual. Ambit Private Limited and Intensive Fiscal Services Private Limited are lead managers to the issue. Link Intime India is the registrar to the issue.
Chemcon is planning to raise around Rs 350-400 crore through the IPO. The firm plans to utilise fresh issue proceeds for expansion of manufacturing facility, working capital requirements and general corporate purposes.
Geojit Research has given a subscribe rating to the IPO.
"At the upper price band of Rs 340, Chemcon Speciality Chemicals is available at P/E of 25.5 times on FY20, which is attractive when compared to peers. Considering healthy business performance, regular capacity expansions, strong customer base, expanding margin profile and improving outlook for the sector, we have a 'SUBSCRIBE' rating on this IPO."
Hetero Labs Limited, Laurus Labs Ltd, Aurobindo Pharma Ltd, Lantech Pharmaceuticals Ltd, Macleods Pharma Ltd are the key customers of the firm's pharma chemical business. Apart from domestic market, the company exports its products to USA, China, Japan, UAE, Serbia, Russia, Malaysia, and Azerbaijan. It has a manufacturing plant at Manjusar near Vadodara in Gujarat, 5 operational plants, 3 warehouses, and 2 leased warehouses.
"Company has shown consistent financial performance with a strong financial position. Also, the specialty chemicals industry in which company operate has high entry barriers Therefore, looking after all, we recommend subscribe the issue both for short & long term horizon," said Hem Securities. By Aseem Thapliyal