Chemcon Specialty Chemicals IPO: Here’s All You Need To Know
The maker of specialty chemicals plans to raise Rs 318 crore from its three-day initial public offering which begins on Sept. 21.
Chemcon Speciality Chemicals Ltd. plans to raise Rs 318 crore from its three-day initial public offering which begins on Sept. 21.
- The IPO includes a fresh issue worth Rs 165 crore and an offer for sale by two existing investors to the tune of Rs 153 crore.
- The price band has been fixed at Rs 338–340 apiece.
- At the upper end of the price band, the company will command a market value of Rs 1,245 crore, according to BloombergQuint’s calculations.
- After the offer, promoter shareholding will fall to 74.47% from 100% at present. The rest will be held by public shareholders.
- The company has raised a total of Rs 95.4 crore so far from anchor investors.
The company intends to utilise the proceeds from the fresh issue towards capital expenditure for expansion of manufacturing facilities, working capital requirements and general corporate purposes.
Business And Revenue
Incorporated in 1988, Chemcon Speciality Chemicals makes specialised chemicals such as hexamethyldisilazane/hexamethyldisilane and chloromethyl isopropyl carbonate which are predominantly used to manufacture pharmaceuticals and inorganic bromides like calcium bromide, zinc bromide and sodium bromide—which are used as completion fluids in the oilfields industry.
The company is the largest, and in some cases, the sole producer of the chemicals that it manufactures. The company, according to a Frost & Sullivan, is the sole producer of HMDS and zinc bromide in India and is the largest producer of CMIC and calcium bromide in 2019.
The company has, as of July 31, seven manufacturing facilities with an installed capacity of 21,600 million tonnes per annum. It has established a long-standing relationship with its key customers like Aurobindo Pharma Ltd., Laurus Labs Ltd., Ind-Swift Laboratories Ltd. among others and supplies to countries including the U.S., China, Japan, U.A.E. Nearly 40% of its revenue came from exports in the previous year, the company said in its red-herring prospectus.
From FY18-20, the company saw its revenues, EBITDA and net profit grow at a compounded annual growth rate of 29%, 25% and 36% respectively. On the other hand, its operating margins have remained stable in a range of 27 to 28% in the same period.
Peers And Valuations
Aarti Industries Ltd., Atul Ltd., Fine Organic Industries Ltd. and Vinati Organics Ltd. are its closest peers. In the three years through March 2020, Chemcon Specialty Chemicals has registered higher growth compared to its peers.