Chemcon Speciality Chemicals IPO: Open for subscription on September 21; Details of public issue

The Initial Public Offer (IPO) of Chemcon Speciality Chemicals will open for subscription today, i.e. on September 21, 2020. The issue closes on September 23, 2020. The manufacturer of speciality chemicals has fixed the price band at Rs 338-340 per share.

The Company plans to raise Rs 318 crore at the upper price band. The issue would comprise of a fresh issue would be of up to Rs 165 crore and an offer for sale would be up to 45 lakh equity shares, to be sold in the price range of Rs 338-Rs 340.

The offer for sale consists of a sale of 22.50 lakh equity shares each by promoters Kamalkumar Rajendra Aggarwal and Naresh Vijaykumar Goyal.

The lot size of Chemcon Speciality IPO is 44, which means the investor will have to apply for a minimum of 44 shares and in multiples thereof. The retail investors can bid for a minimum of 1 lot and can bid for a maximum of 13 lots. Minimum application money for retail investors at the upper price band per lot is Rs 14,960.

The proposed shares of Chemcon Speciality Chemicals issue are likely to be finalized on September 28, 2020, and the issue will be listed on BSE and NSE on October 1, 2020.

Ahead of its IPO, the Vadodra-based Chemcon Speciality Chemicals raised over Rs 95 crore from 13 anchor investors, including ICICI Prudential Mutual Fund, IDFC Mutual Fund, IIFL, HSBC Global and Mirae Asset Mutual Fund.

Chemcon Speciality Chemicals is a manufacturer of specialised chemicals, such as Hexamethyldisilazane (HMDS) and Chloromethyl Isopropyl Carbonate (CMIC), which are predominantly used in the pharmaceuticals industry and inorganic bromides, like calcium bromide, zinc bromide and sodium bromide, which are predominantly used as completion fluids in the oilfields industry. Company supply products to domestic customers and also export products. It exports its products to countries like the US, South Korea, Germany, Ital, China, Japan United Arab Emirates (UAE), Russia, Serbia, Spain, Malaysia and Thailand among others.

Frost & Sullivan Report said the Chemcon was the only manufacturer of HMDS in India and was the third-largest manufacturer of it worldwide.

Revenue and PAT CAGR from FY18-FY20 is 29 per cent and 36 per cent, respectively. On FY20 PE basis it is demanding a valuation of 22.2x. Company ROE is quite strong, it is 49.2 per cent, 44.9 per cent and 34.2 per cent, for FY18, FY19 and F20, respectively.

Competitive Strengths

Chemcon Speciality Chemicals is a leading manufacturer of pharmaceutical chemicals and it has a diversified customer base along with long-standing relationships. Company has delivered consistent financial performance with a strong financial position;

Intensive Fiscal Services and Ambit Capital Private are the book-running lead managers to the issue.

Chemcon Speciality Chemicals will use the proceeds of the fresh issue for capital expenditure towards the expansion of manufacturing facility, working capital requirements, and general corporate purposes. But, the company will not receive any proceeds from the offer for sale, which will go to selling shareholders.