Chemplast Sanmar IPO subscribed over 2 times on last day
As of FY21, the net worth of the company was negative, however, post-IPO it will turn positive
The initial share sale of specialty chemicals maker Chemplast Sanmar got oversubscribed more than 2 times on the last day of the bidding process on Wednesday. The company’s initial public offer (IPO) received bids for 8,30,84,454 shares till 4 pm (IST) against 3,99,52,829 shares on offer, as per exchanges data.
The quota for retail investors was subscribed 2.34 times, while that for qualified institutional buyers (QIBs) 3.84 times and non-institutional investors 1.27 times.
The initial public offer aggregating up to Rs 3,850 crore has a fresh issue of up to Rs 1,300 crore and an offer for sale of up to Rs 2,550 crore. The price range for the offer has been fixed at Rs 530-541 per share.
Earlier, the company on Monday said that it has collected over Rs 1,732 crore from anchor investors.
ICICI Securities, Axis Capital, Credit Suisse Securities (India), IIFL Securities, Ambit Private Ltd, BOB Capital Markets, HDFC Bank, IndusInd Bank, and YES Securities (India) Limited are the managers to the offer.
Chennai-based Chemplast Sanmar is a leading specialty chemicals manufacturer with a focus on specialty paste polyvinyl chloride resin and custom manufacturing of starting materials and intermediates for pharmaceutical, agro-chemical and fine chemicals sectors.
Brokerages view
Angel Broking | Rating: Neutral
Angel Broking believes that the Indian specialty chemical industry is going to be one of the biggest beneficiaries of shifting of supply chains post the Covid-19 pandemic we have concerns over the company’s high debt and negative net worth. At the higher end of the price band, the stock will be trading at P/E (price to earnings) multiple of 17.7xFY21 EPS (earnings per share) which is at a discount to other chemical players.
Choice Broking | Rating: Subscribe for long term
As of FY21, the net worth of the company was negative, however, post-IPO it will turn positive. The company is looking to raise Rs. 1,300 from the fresh issue. Of these, around Rs. 1,240cr will be used for the early redemption of non-convertible debentures issued by the company. Consequently, post redemption the debt to equity ratio is likely to be around 1.1-1.2x.