The initial public offer (IPO) of speciality marine chemical manufacturer Archean Chemical was subscribed 32.23 times on the final day of the issue today. The firm received bids for 64.31 crore shares against an IPO size of 1.99 crore shares.
The qualified institutional buyers' category was booked 48.91 times, the portion set aside for non-institutional investors was subscribed 14.90 times, and the quota for retail investors was subscribed 9.95 times of the allotted portion.
With a price band of Rs 386 to Rs 407 per share, the company aims to raise Rs 1,462.3 crore from the IPO.
The lot size of Archean Chemical IPO was 36 shares for which one would have to spend Rs 14,652. The allotment of shares may happen on November 16 for a likely listing on November 21.
The firm raised Rs 658 crore from 42 anchor investors at the upper price band of Rs 407 per equity share ahead of its IPO.
Grey market premium
The grey market premium (GMP) stood at Rs 80 today, implying that the grey market expects the firm to list around Rs 487 (Rs 407 + Rs 80).
Geojit Financial Services stayed positive on the IPO for short to medium term. "At the upper price band of Rs 407, ACIL is available at a P/E of 26x (FY22), which appears reasonably priced. Considering its consistent top-line & bottom-line growth with cost efficiencies, industry-leading position in a high entry barrier industry, expansion plans in product lines and capacities, we assign a 'Subscribe' rating on a short to medium term basis," the brokerage said.
Choice Broking assigned a 'Subscribe with Caution' rating to the issue. "At the higher end of price band, ACIL is demanding an EV/Sales multiple of 3.8x, which is in-line to the peer average. The company’s operations are likely to get support from import substitution, lower exports from the China and lower cost of operations. The macros of ACIL are positive, but demanded stretched valuation is a concern. Thus we assign a 'Subscribe with Caution' rating for the issue," the brokerage said.
Ashika Research assigned a 'subscribe' call to the issue. "In terms of the valuations, on the higher end of price band, ACIL demands a P/E multiple of 14.8x based on Q1FY23 post issue fully diluted EPS and EV/EBITDA multiple of 8.1x based on Q1FY22 post-issue fully diluted EBITDA. The industry P/E and EV/EBITDA is 25x and 15x which indicates that the IPO is suitably priced. China plus one policy, largest manufacturer of certain specialty chemicals, expanding manufacturing facility, expanding R&D infrastructure, strong financials and a healthy balance sheet will augur well for the company’s performance going forward. Hence, it is recommended to "SUBSCRIBE" the issue," said the brokerage said.
Archean Chemical Industries Ltd (ACIL) has an integrated production facility for bromine, industrial salt, and sulphate of potash operations, located at Hajipir, Gujarat, which is located on the northern edge of the Rann of Kutch brine fields.
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