Anupam Rasayan IPO kicks off; Should you subscribe?

The Rs 760-crore initial public offering (IPO) of speciality chemical company Anupam Rasayan got subscribed 34% so far on the first day on Friday.

The public offer has received bids for 32,50,962 shares till 11.10 am (IST) against 97,01,809 shares offered by the company. Most of the brokerages are positive on the issue.

Geojit Financial Services has a ‘Subscribe’ rating on the issue. “At the upper price band of Rs 555, Anupam Rasayan is available at a PE of 86.4 times (annualised 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.”

The company on Wednesday raised Rs 225 crore from anchor investors. The company allocated 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 has mopped-up Rs 225 crore, according to a circular uploaded on the BSE website.

The anchor book saw participation from multiple pools of capital, including foreign portfolio investors, domestic mutual funds, insurance companies and alternative investment funds. Also, the book saw participation from investors across the globe, including India, Asia, the UK and the US.

Among the 15 anchor investors are 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.

The company has fixed a price band of Rs 553-555 a share for its initial share sale.

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

Anupam Rasayan commenced operations in 1984 with conventional products and now it makes speciality chemicals that involve multi-step synthesis and complex chemistries.

Anand Rathi Shares and Stock Brokers also gave a ‘Subscribe’ rating to the issue. “Anupam Rasayan has a robust track record of performance. The company will be able to gain more market share and simultaneously its margins will also improve. It has priced its issue at 95.2x PE at the upper band on a trailing basis which is aggressively priced as compared to its peers.”

“Considering the rising fancy for life care and speciality chemicals segment linked with future performance trends, the company is expected to do well post-listing going forward. Moreover, it has a strong financial position and has been generating positive cash flow,” said the brokerage firm in a report.