A scientist conducts an experiment at a laboratory (Photographer: Simon Dawson/Bloomberg)

Fine Organic Industries Closes 5% Above IPO Price On Stock Market Debut

Fine Organic Industries Ltd. closed at a premium of 5.1 percent at Rs 822.80 apiece over its IPO price on stock market debut. The stock traded between a low of Rs 786.65 and a high of Rs 834.

The chemical maker’s Rs 600-crore initial public offering was subscribed 8.92 times on the final day of bidding on June 22, according to National Stock Exchange data.

The portion reserved for qualified institutional buyers was subscribed 12.86 times the number of shares on offer, while the non-institutional investors was subscribed 21 times. The retail investors' segment was subscribed 1.44 times.

Business And Financials

Fine Organics makes oleochemical-based additives used in plastic, cosmetics, paint, ink and coatings, among others. As on Dec. 31, it had a range of 387 different products which it sells under the ‘Fine Organics’ brand.

Raw material costs form the bulk of its total expenses. The cost of raw materials as a percentage of net sales was 64 percent for the nine months ended Dec. 31. The company procures raw materials from domestic and international sources, therefore any significant change in price or an adverse movement in the exchange rate can impact its operating margin.

  • The company has 603 direct consumers or end users, including multinational, regional and local fast-moving consumer goods makers such as Hindustan Unilever Ltd. and Parle Products Ltd.
  • It has 127 distributors across 67 countries and more than 5,000 customers.
  • Fine Organics has three manufacturing facilities near Mumbai (around 65 kilometres from the port), having a combined installed capacity of approximately 64,300 tonnes per annum.
  • The speciality additive maker’s revenue has grown at an annualised rate of 9.4 percent in five years to March 2017. Net profit increased 30 percent during the period.
  • Its revenue and net profit stood at Rs 581 crore and Rs 61 crore, respectively, for the nine months ended December 2017.

Valuations