The initial public offer (IPO) of speciality marine chemical manufacturer Archean Chemical Industries will open today. The issue will close on November 11. The IPO has a price band of Rs 386 to Rs 407 per share. At the upper end of the price band, the share sale is expected to fetch Rs 1,462.3 crore. The grey market premium (GMP) of the stock stood at Rs 70 today, implying that the grey market expects the firm to list around Rs 477 (Rs 407 + Rs 70).
The lot size of Archean Chemical IPO is 36 shares for which one will have to spend Rs 14,652.
A retail individual investor can submit bids for up to 13 lots or 468 shares by spending Rs 1,90,476. The allotment of shares will be done on November 16 and they are likely to be listed on BSE and NSE on November 21.
The firm raised Rs 658 crore from 42 anchor investors at the upper price band of Rs 407 per equity share. The speciality marine chemical manufacturer allocated 1,61,67,991 equity shares to anchor investors including SBI Mutual Fund, Nippon India Fund, ICICI Prudential, HDFC Mutual Fund, Goldman Sachs Fund, Ashoka India Opportunities Fund, DSP Fund, IIFL Funds, Kotak Fund Motilal Fund, Tata Mutual Fund, Theleme India Fund, Baroda BNP Paribas Fund and Edelweiss Fund.
Nomura, Kuber India Fund, BNP Paribas Arbitrage, Aditya Birla Sun Life Insurance Company, ICICI Prudential Mutual Fund (MF), Tata MF, Edelweiss MF and IDFC MF are among the anchor investors, it added.
The IPO consists of a fresh issue of equity shares aggregating up to Rs 805 crore and an offer-for-sale (OFS) of up to 1.61 crore shares by the promoter and investors, including the India Resurgence Fund, a joint venture between the Piramal Group and Bain Capital.
The net proceeds of the IPO will be utilised for towards funding the redemption or earlier redemption, in part or full of NCDs issued by the company and for general corporate purposes. IIFL Securities, ICICI Securities, JM Financial Limited are the lead managers of the issue. Link Intime India Private Ltd is the registrar to the IPO.
Here's a look at what brokerages said on the prospects of the IPO.
Geojit is 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," said Geojit.
Choice Broking has assigned a 'Subscribe with Caution' rating to the issue.
“At 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 has 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 Ashika.
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. The facility and its surrounding salt fields and brine reservoirs span approximately 240 sq.km.
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