Chemplast Sanmar IPO opens today: GMP, other key details. Should you subscribe?
Premium- Chemplast Sanmar IPO comprises fresh issue of equity shares worth ₹1,300 crore and an OFS of ₹2,550 crore
Specialty chemicals company Chemplast Sanmar Limited's initial public offering (IPO) opens for subscription today and the three-day public issue will conclude on August 12. The company has fixed its price band in the range of ₹530-541 per share. The Rs-3,850-crore issue comprises fresh issue of equity shares worth ₹1,300 crore and an offer-for-sale (OFS) of ₹2,550 crore.
Specialty chemical maker Chemplast Sanmar Ltd on Monday said it has collected over ₹1,732 crore from anchor investors ahead of its initial share-sale. The company has decided to allocate 3,20,24,029 equity shares to anchor investors at ₹541 apiece, valuing the transaction to ₹1,732.5 crore, according to a circular uploaded on BSE website.
As per market observers, Chemplast Sanmar grey market premium (GMP) is at ₹30 today.
''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. At the higher end of the price band, the stock will be trading at P/E multiple of 17.7xFY21 EPS which is at a discount to other chemical players. However, we have a NEUTRAL recommendation on the IPO given our concerns due to high debt on books and negative net worth,'' Angel Broking said in a note.
Chennai-based Chemplast Sanmar is a leading specialty chemicals manufacturer with focus on specialty paste PVC (polyvinyl chloride) resin and custom manufacturing of starting materials and intermediates for pharmaceutical, agro-chemical and fine chemicals sectors. Chemplast Sanmar was delisted nearly a decade from the stock exchanges.
The company said it would utilise an aggregate amount of ₹1,238.25 crore from the net proceeds towards early redemption of the non-convertible debentures (NCDs) issued by it. In addition, funds will also be used for general corporate purpose.
"The early redemption of the NCDs in full will help reduce our outstanding indebtedness and debt servicing costs, assist us in maintaining a favourable debt to equity ratio and enable utilisation of our internal accruals for further investment in business growth and expansion," the company said in the red herring prospectus.
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