Anupam Rasayan IPO Review – Should you invest or avoid this IPO?
There is a flood of IPOs lined up in March, 2021. Surat (Gujarat) based Anupam Rasayan India Limited IPO would open for subscription on 12th March, 2021. Anupam Rasayan is one of the leading companies in India that are engaged in cotton synthesis and manufacturing of specialty chemicals. Should you invest in Anupam Rasayan IPO? In this article we would provide Anupam Rasayan India Limited IPO dates, IPO Price band, market lot, reasons to invest, risk factors, IPO Price valuations and final review whether one should invest or avoid.
About Anupam Rasayan India Limited
They are one of the leading companies in India which is engaged in the custom synthesis and manufacturing of specialty chemicals.
Their key focus in its custom synthesis and manufacturing operations is developing in-house innovative processes for manufacturing products requiring complex chemistries and achieving cost optimization.
They have two distinct business verticals (i) life science related specialty chemicals comprising products related to agrochemicals, personal care and pharmaceuticals, and (ii) other specialty chemicals, comprising specialty pigment and dyes, and polymer additives. For 9 months ending Dec-20, revenues from life science related specialty chemicals vertical accounted for 93.75% and other specialty chemicals accounted for 6.25%.
It has 6 manufacturing facilities out of which 4 are situated at Sachin and 2 are located at Jhagadia with an aggregated installed capacity of 23,438 MT.
Anupam Rasayan competitive strengths
1) Diversified customer base across geographies and industries
2) In-house R&D team to foster product innovation
3) Diversified and customized product portfolio
4) Strategically located manufacturing facilities
5) Consistent financial performance track record
Anupam Rasayan IPO Dates, Price Band and Issue Details
|Anupam Rasayan IPO Details|
|IPO Opening Date||12-Mar-21|
|IPO Closing Date||16-Mar-21|
|Issue Type||Book Built Issue IPO|
|Face Value||Rs 10 per equity share|
|IPO Price band||Rs 553 to Rs 555 per equity share|
|Market Lot||27 Shares|
|Min Order Quantity||27 Shares|
|Listing at||BSE and NSE|
|Issue Size||Total Rs 760 Crores|
Note: Anupam Rasayan IPO Price Band is confirmed on 8th March, 2021.
Objects of issue
Here are the objects of the IPO issue.
1) Repayment / prepayment of certain indebtedness availed by company (including accrued interest)
2) General corporate purpose
Who are the company promoters?
Mr. Anand S Desai, Dr. Kiran C Patel, Ms. Mona A Desai, Kiran Pallavi Investments LLC, and Rehash Industrial and Resins Chemicals Private Limited are the promoters of the company.
Company Financial Performance
Here are the consolidated revenue and profit details in the last 3 years and 9 months.
|For the year / Period ending||Total Revenues (Rs in Millions)||Profits after tax
(Rs in Millions)
|9 Months ending Dec-20||5,631.6||480.9||8.5%|
Its EPS for FY2020 is Rs 6.94 and last 3 years average EPS is Rs 6.77.
Why to invest in this IPO?
Here are a few reasons to invest.
1) Anupam Rasayan is one of the leading companies in India which is engaged in the custom synthesis and manufacturing of specialty chemicals.
2) Strong revenue growth in the last 3 year and 9 months.
Risk Factors of investing in this IPO
1) Company margins are in declining mode. It earned 11.6% margins in FY18 Vs 9.8% in FY20. Even for the 9 months ended Dec-20, its margins further fallen to 8.5%.
2) Company has incurred significant indebtedness. An inability to comply with repayment could impact business.
3) If company experience insufficient cash flows to meet required payments of debt and working capital requirements, its business can impact.
4) The company proposes to use a portion of net proceeds for repayment or pre-payment of loans taken from Axis Bank which is an affiliate for one of the BLRM.
5) Company’s manufacturing facilities operate on industrial land allotted to them by industrial development corporation on a lease basis. Failure to comply with the conditions of use of such land can result in adverse impact on its business. Even registered office and corporate offices are located on leased premises. There is no assurance for renewal of such lease agreements.
6) Company has negative cash flows from operating activities.
7) The specialty chemical industry provides significant entry barriers. Company face competition from both domestic and international corporations. Its inability to compete effectively could result in loss of customers and market share.
8) For complete internal and external risk factors, you can refer the RHP of the company.
Anupam Rasayan IPO Dates / Time Table / IPO Schedule
|Anupayam Rasayan India Limited IPO Schedule|
|Finalization of Allotment||19-Mar-21|
|Initiation of Refunds||22-Mar-21|
|Credit to Demat Account||23-Mar-21|
|IPO Shares Listing Date||24-Mar-21|
How to apply this IPO?
You can login to your demat account, visit IPO section and click on the IPO link of Anupam Rasayan India Limited. You can then enter minimum lot quantity and price band and then submit.
Anupam Rasayan IPO Price band is Rs 553 to Rs 555
1) On the upper price band of Rs 555 and EPS of Rs 6.94 for FY20, the P/E ratio works out to be 80x.
2) For the last 3 years average EPS of Rs 6.77, the P/E ratio is 82x.
3) If we annualize its 9 months ending Dec-20 EPS for FY21, the P/E works out to be 69x.
4) Means, the company asking price of Rs 555 of the upper price band in the P/E range of 69x to 82x.
5) There are listed peers like PI Industries trading at P/E 65.7x (Highest) and Navin Fluorine at P/E 32.2x (Lowest) and the industry average is 42.8x. Hence Anupam Rasayan IPO price of Rs 555 is overpriced.
Anupam Rasayan IPO GMP
Grey Market Price (GMP) of this IPO would be updated soon.
Anupam Rasayan IPO Review – Should you invest?
Anupam Rasayan is leading company engaged in the custom synthesis and manufacturing of specialty chemicals in India.
Anupam Rasayan posted strong revenue growth in the last 3 years and 9 months.
Company margins are on declining mode.
Anupam Rasayan IPO price is overpriced. In the current bull run, I know that investors are not worried about valuations.
High Risk investors can invest in this IPO for medium to long term perspective.
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