Clean Science & Technology IPO: What Brokerages Have To Say

A worker handles samples of sunflower oil blends in the laboratory at the EFKO JSC plant in Alekseyevka, Russia. (Photographer: Andrey Rudakov/Bloomberg)

Clean Science & Technology IPO: What Brokerages Have To Say

Brokerages urged investors to subscribe to the initial public offering of Clean Science & Technology Ltd., citing its dominant presence in the specialty chemicals segment, focus on research and an export-driven business, among other factors.

The Pune-based company's initial share sale was subscribed 1.74 times as of 5 p.m. on July 7, according to exchange data, with retail investors subscribing around 2.54 times.

The Rs 1,546.62-crore IPO comprises an offer-for-sale of 1.71 crore shares by the promoters, according to its red herring prospectus. The price band is fixed at Rs 880-900 apiece.

The brokerages also cited risks like growth stagnation in specific segments and ongoing legal procedures against the company and its executives.

Here's what brokerages have to say about the IPO...

Motilal Oswal

  • Recommends ‘Subscribe’.

  • The company enjoys global leadership in green chemicals has a diversified product portfolio, robust financials with industry leading margins and return ratios and strong focus on ESG front.

  • Well placed to tap opportunity in the fast-growing specialty chemicals space.

  • Created niche by developing clean technology that uses non-toxic raw materials with lower effluents, leading to cost efficiencies.

  • Debt free with strong return ratio of 45%.

  • Exports form 69% of FY21 revenue.

  • The issue is reasonably valued at 48.2x FY21 P/E on post-issue basis, while peers average at 60x. It enjoys higher return on equity of 45%, compared with average of peers at 18%.

Geojit Financial Services

  • Recommends ‘Subscribe’ because of its long-term outlook on technical expertise, process innovation, consistent focus on R&D, positive industry outlook, superior margin profile and healthy return ratios.

  • At the upper price band of Rs 900, the company is available at a price to earnings ratio of 48x—which appears to be fully priced in.

  • Strong customer base with key customers like Bayer AG, SRF Ltd, Vinati Organics Ltd., among others.

  • As of FY21, 48% of revenue is from its top 10 customers.

  • Overall market for specialty chemicals was valued at $800 billion in 2019 and is expected to grow by 5-6% over next five years.

  • As of FY21, the company has emerged as the largest manufacturer globally of specialty chemicals like mequinol, butylated hydroxyanisole and anisole, in terms of installed capacity.

ICICI Direct

  • Assigns ‘Subscribe’ rating.

  • Company’s product portfolio aligned to global and Indian trend of making environmentally friendly chemicals.

  • Its products are used as key starting level materials, as inhibitors, or additives by customers for their finished products, for sale in regulated markets.

  • Due to the resources involved in engaging with new suppliers, customers are less inclined to pursue alternate supply sources, providing advantage over new entrants.

  • Some customers have also been associated with the company for over 10 years as of May 31, 2021.

  • It's in the process of expanding R&D infrastructure by setting up an additional unit at Kurkumbh in Maharashtra.

  • The company intends to and is expanding manufacturing capacities for few of its existing products and adding manufacturing capacities for certain new products.

  • A third manufacturing facility is being constructed adjacent to existing facilities at Kurkumbh. It has also allotted land for the construction of a fourth facility at the same place.


  • Lower growth visibility for mequinol to impede overall growth.

  • Significant portion of revenue from limited market is key business risk.

  • Loss of customers would impede financial performance.

Anand Rathi

  • Recommends ‘Subscribe’.

  • Company’s promoters have combined experience of over 60 years in the chemicals industry.

  • Among the largest producers globally of functionally critical specialty chemicals used in various industries and geographies, resulting in a de-risked business model.

  • Track record of strategic process innovation through consistent R&D initiatives.

  • Strong and long-standing relationships with key customers.

  • Strong and consistent financial performance in the last three financial years.


  • Ongoing legal procedures against company and its executives and directors.

  • No long-term agreements with their raw material suppliers and majority of clients.

  • Company’s intellectual property may not be effectively protected because none of their catalytic methods are patented.

  • Has certain capital commitments that haven't been provided for in financial statements, which if they materialise, may adversely affect the financial condition.

Also read: Clean Science & Technology IPO: All You Need To Know

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