Anupam Rasayan IPO opens on March 12: grey market premium & brokerage view

The initial public offering (IPO) of specialty chemicals manufacturer Anupam Rasayan hits the market on March 12 and closes on March 16. The company plans to raise Rs 760 crores and has fixed a price band of Rs 553-555 per share.

Investors can bid for a minimum of 27 equity shares and in multiples, thereafter, translating to a minimum investment of Rs 14,985. A retail investor can at max apply for 13 lots or 351 shares for 1,94,805.

The offering is fresh issuance of shares and the net proceeds would be utilized towards repayment or prepayment of certain indebtedness and for general corporate purposes. As of September, the company had a total debt of Rs814.48 crore.

The specialty chemicals manufacturer on March 10 raised Rs 225 crore from anchor investors, ahead of its initial share-sale.

Grey market premium

Ahead of the public issue, the premium has come down from Rs 290-320 levels to Rs 225-250 per share implying 40-45% premium over the offer price.

“Current IPOs are aggressively priced, and soon after Heranba listing the stock came bit down cooling off sentiments in the primary market,” said grey market tracker Abhay Doshi, Founder of Unlisted Arena.

At the price of Rs 555, the annualised PE based on 9MFY21 earnings per share (EPS) comes to 69, which looks fully priced. The China+1 strategy likely to be adopted by global players should further fuel the exports for Anupam Rasayan. So even though issue being fully priced, we expect the IPO to get huge fancy owing to its robust growth, added Doshi.

Brokerage view

Anand Rathi – Subscribe

“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. However, considering the rising fancy for life care and specialty 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.

SMC – Neutral

“The company has developed strong and long-term relationships with various multinational corporations like Syngenta Asia Pacific, Sumitomo Chemical Company and UPL that have helped it expand product offerings and geographic reach across Europe, Japan, United States and India. In particular, it has been manufacturing products for certain customers for over 10 years. On the industry front, India’s specialty chemicals industry is expected to grow at a CAGR of approximately 10% to 11% over the next five years, due to rising demand from end-user industries, along with tight global supply on account of stringent environmental norms in China. So, it is expected that the company is likely to see good growth in the long-term. However, on the pricing front, the issue looks expensive. An investor with a long-term investment horizon may invest in the issue,” said the report.

Marwadi Shares and Finance – Subscribe

“Considering trailing twelve months EPS of Rs 5.83 on a post-issue basis, the company is going to list at a P/E of 95.16X with the market cap of Rs 5,544.5 crore. The issue is aggressively priced compared to its peers; Navin Fluorine is trading at a P/E of 29.6X and PI Industries at 51.4X. We recommend to ‘Subscribe’ this IPO based on its past track record, strong long-term relationship with its customers and also the strategic manufacturing location along with huge capex in the last three fiscals,” noted the report by Marwardi Shares and Finance

Primary market expert Dilip Davda: Subscribe for long term

Anupam Rasayan is in the custom synthesis and specialty chemical manufacturing business. The company’s life science specialty chemical has a major share in top lines. The company’s capex of Rs 800 crore in the last three fiscals has started bearing fruit. The issue is aggressively priced based on comparison with listed peers. Investors looking for long term bet may consider investing in this IPO.

The issue is likely to finalise the basis of allotment by March 19, and the initialization of funds will take place by March 22. While the credit of equity shares to depository accounts of allottee on March 23. The specialty chemical manufacturer is expected to make its stock market debut on March 24, 2021.

(Disclaimer: The recommendations in this story are by the respective research and brokerage firm. Money9 & its management do not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)