Archean Chemical IPO opens tomorrow: The initial public offering (IPO) of specialty chemicals manufacturer Archean Chemical Industries Ltd will open tomorrow, November 9, 2022. The IPO will remain open for bids until November 11.
Archean Chemical IPO: Price Band
The price range has been set in the range of Rs 386 to Rs 407 per share for the initial sale of shares. At the higher end of the price range, the IPO is expected to fetch Rs 1,462 crore.
Archean Chemical IPO: Target
Archean Chemical IPO consists of a new issuance of shares for a total of Rs 805 crore and an offer for sale (OFS) of up to 1.61 crore shares by the promoter and investors including the India Resurgence Fund, a joint venture between the Piramal Group and Bain Capital. The company plans to use the net proceeds from the new issuance to redeem non-convertible bonds (NCDs) issued by the company.
Archean Chemical IPO: GMP Today
Ahead of Archean Chemical Industries’ initial public offering (IPO) to investors for subscription tomorrow, the stock already has a 17 percent premium in the gray market. With the price band set at Rs 386 to Rs 407 per share for the IPO, shares of the company have a gray market premium (GMP) of Rs 70, according to market observers.
A stock’s GMP can help as an indication of how an IPO’s investor sentiment can affect performance. A strong GMP may indicate a higher probability of making a profit, while a weak GMP may indicate that a company’s stock is not listed for a profit.
The company’s shares are expected to list on Monday, November 21, 2022 on the leading stock exchanges BSE and NSE.
Archean Chemical IPO: Should You Invest?
Brokers and analysts remain mostly positive on the matter, although they warn to exercise caution due to the pricey valuation.
Based on FY22 earnings, the company is valued at 26.5x P/E, 12.4x EV/EBITDA and 5.1x EV/Sales, which is a discount to competitors. The company has a leading market position and is constantly expanding, according to Reliance Securities.
Reliance Securities recommended subscribing to the offering given the company’s market leadership, integrated manufacturing, cost savings, consistent financial performance, high barriers to entry, an experienced management team and attractive valuation.
It claims an EV/Sales multiple of 3.8x, which is in line with the peer average. The company’s operations are likely to benefit from import substitution, lower exports from China and lower operating costs, Choice Broking said.
“The company’s macros are positive, but overvaluation is a concern,” it added with a ‘subscribe cautiously’ rating to the issue.
About Archean Chemical
Archean Chemical Industries is a leading manufacturer of specialty marine chemicals in India, focusing on the manufacture and export of bromine, industrial salt and potassium sulfate to customers around the world. It produces its products from its brine reserves in the Rann of Kutch, located on the coast of Gujarat, and manufactures products at its factory near Hajipir in Gujarat.
IIFL Securities, ICICI Securities and JM Financial are the book-running lead managers of the public offering. Link Intime India has been appointed as the Registrar of the IPO.
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