As per NSE, the issue received bids for 24,19,632 shares compared with the issue size of Rs 3,99,52,829 crore. The company had on Monday raised Rs 1,732 crore from anchor investors.
“While we believe that the India specialty chemical industry is going to be one of the biggest beneficiaries of shifting of supply chains post the Covid-19 pandemic, we have concerns over the company’s high debt and negative net worth,” said Angel Broking, which is ‘neutral’ on the issue.
Chemplast Sanmar, which is coming with its IPO nearly a decade after delisting from bourses, is offering its shares at 21 times its adjusted FY21 EPS of Rs 26.
“We assign ‘subscribe with caution’ rating to this IPO as the company is well-positioned to capture favourable industry dynamics. However, the negative net asset value along with higher trade payable days keeps us cautious from a longer-term perspective,” said Saurabh Joshi of Marwadi Shares and Brokers.
The firm is one of the leading specialty chemical manufacturers in India. The issue, with a price band of Rs 530-541, opens for bidding today. The offer will close on August 12, 2021. The company is eyeing to raise about Rs 3,850 crore from the primary market. Here are key things you should know about the issue.
The issue comprises fresh issuance of shares, aggregating up to Rs 1,300 crore, and an offer for sale of up to Rs 2,550 crore by promoters and existing shareholders. Promoters Sanmar Holdings (SHL) and Sanmar Engineering Services () will offload equity shares worth Rs 2,463.44 crore and Rs 86.56 crore respectively, in the offer for sale.
Analysts say the company’s lenders have imposed certain restrictive conditions on them under their financing arrangements, which may limit the company’s ability to pursue the business and limit their flexibility in planning for, or reacting to, changes in their business or industry, posing a risk. Besides, 100 per cent of the share capital of CCVL, a key subsidiary, is pledged in favour of Housing Development Finance Corporation.
Chemplast said the net proceeds from the fresh issue will be utilized for early redemption of non-convertible debentures worth Rs 1,238.25 crore and general corporate purposes, whereas proceeds from the offer for sale will go to the existing shareholders.
The company makes PVC resin, materials, and intermediates for the pharmaceutical, agro-chemical, and fine chemicals sectors. It has four manufacturing facilities, of which, three are located in Tamil Nadu at Mettur, Berigai, and Cuddalore, and one is located in Puducherry at Karaikal.
