Chemcon Speciality Chemicals IPO: Check grey market premium, issue details; should you subscribe?

Strong buyer base and lengthy standing relationship with prospects has supported in retaining Chemcon Speciality Chemicals Ltd market share, growing product base and reaching out to new prospects

The Rs 318-crore Chemcon Speciality Chemicals IPO, which opened for subscription immediately, includes recent issue of fairness shares aggregating as much as Rs 165 crore, and a suggestion on the market of as much as 45 lakh fairness scrips. The issue will shut for subscription on September 23. The value band has been mounted at Rs 338-340 per share. At the higher finish of the worth band, the IPO will fetch Rs 318 crore. The Vadodara-based firm raised Rs 95.40 crore by means of allotment of 28.06 lakh shares to 13 anchor traders at Rs 340 per share. So far within the day, Chemcon Speciality Chemicals IPO has been subscribed 1.18 instances. The retail class has subscribed its portion 2.65 instances; and NIIs 0.26 instances. Most analysis and brokerage companies have really useful to ‘subscribe’ to this issue.

Chemcon Speciality buying and selling at Rs 150-200 premium in grey market

Dipin Kwatra, Director at New Vertical Vera Advisory Pvt Ltd, a wealth administration agency, stated because the issue measurement of Chemcon Speciality Chemicals is round Rs 320 crore, with a value band of Rs 338-340, it was buying and selling with Rs 150-200 premium at round Rs 500. “Due to increased demand, small IPOs generally quote at a high premium in the grey market,” Kwatra informed Financial Express Online. The firm has proposed to utilise the web proceeds from the recent issue for capital expenditure in the direction of the growth of its manufacturing facility, to satisfy working capital necessities and common company functions.

Brokerages advocate to ‘subscribe’ to Chemcon IPO

Strong buyer base and long-standing relationship with prospects has supported in retaining Chemcon Speciality Chemicals Ltd market share, growing product base and reaching out to new prospects, stated analysts at Geojit Financials. “At the upper price band of Rs 340, CSCL is available at P/E of 25.5x on FY20, which is attractive when compared to peers,” it stated. The brokerage agency has given a subscribe ranking to this issue contemplating its wholesome enterprise efficiency, common capability expansions, robust buyer base, increasing margin profile and enhancing outlook for the sector.

The speciality chemical substances producer of pharma chemical substances and oil nicely completion chemical substances, enjoys excessive entry obstacles which result in consumer stickiness and long-standing relationships. Motilal Oswal Financial Services like Chemcon Speciality Chemicals because of the management place in area of interest merchandise, excessive entry obstacles and wholesome financials. The brokerage has suggested traders to subscribe to the issue. “Further considering the bright prospects for Chemical companies due to shift of supply chain away from China, we believe Chemcon would be well placed to capture this with its planned capex,” it added.

Angel Broking has additionally given a subscribe ranking to the Chemcon Speciality Chemicals IPO. It stated that not one of the listed chemical firms has the identical enterprise as Chemcon. Its speciality chemical friends similar to Neogen Chemicals, Paushak, Atul and Aarti Industries are presently buying and selling at P/E multiples of 57.0x, 37.6x, 29.6x and 35.6x respectively on FY20 EPS. “We believe the company is clearly undervalued compared to its peers; a lot of value is left in the table. We are positive on the future outlook for the industry as well as the company,” it stated.

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