Neogen Chemicals Jumps 22% Over IPO Price On Stock Market Debut

Neogen Chemicals Ltd. made its stock market debut on the National Stock Exchange with a 16.7 percent premium, listing at Rs 251 apiece. That’s compared to a Rs 215 issue price. The stock rose 22.6 percent thereafter hitting the daily upper price limit.

The maker of bromine and lithium-based derivatives maker's Rs 132.35 crore IPO was oversubscribed 41 times. The reserved category for qualified institutional buyers was subscribed 30.49 times and non-institutional investors 113.88 times. The retail portion was oversubscribed 16.06 times.

The IPO comprised of a fresh issue of up to Rs 70 crore and an offer-for-sale of up to 29 lakh equity shares. The promoters’ shareholding fell to 70 percent from 95.8 percent after the listing. The rest is now held by public.

The company said it would use the proceeds from the fresh issue to prepay or repay of all or part of certain borrowings, early redemption of 9.8 percent fully redeemable cumulative preference shares, long-term working capital and general corporate purposes.

Business

Commencing operations in 1991 at Mahape, Navi Mumbai with a few bromine-based compounds and lithium salts, Neogen Chemicals now has a range of 198 products in pharmaceutical and agrochemical intermediates and engineering fluids, among others.

The company operates in two key segments—organic chemicals contributes nearly 70 percent to its revenue and the rest comes from inorganic chemicals. It manufactures and sells its products in the domestic and global markets, particularly the U.S., Europe and Japan. The domestic and global markets each contribute 50 percent to its revenue (including 16 percent deemed exports where the company supplies its products to customers who will eventually export the end-product).