Clean Science and Technology IPO – Issue Details and Review
Clean Science IPO would open for subscription on 7th July 2021. Clean Science and Technology Ltd is one of the India’s leading chemical manufacturers globally. Company generated strong revenue and margin growth in the last 3 years. Its business is de-risked model. Should you invest in Clean Science IPO or avoid? In this article we would provide review and analysis on Clean Science and Technology IPO.
About Clean Science and Technology Limited
Company is incorporated in 2003. It is one of the global leading chemical manufacturers from India. Company manufactures functionally critical specialty chemicals such as Performance Chemicals (MEHQ, BHA, and AP), Pharmaceutical Intermediates (Guaiacol and DCC), and FMCG Chemicals (4-MAP and Anisole). Company supplies its products to manufacturers and distributors in India as well as overseas markets i.e. China, Europe, USA, Korea, Taiwan, and Japan. Bayer AG, Genex Laboratories Limited, Nutriad International NV, SRF Limited, Vinati Organics are a few of its customers. In fiscal 2020, it generated 69% of revenues through export outside India.
Company has 2 production facilities at Kurkumbh, Maharashtra with an aggregated installed production capacity of 29,900 MTPA.
Clean Science and Technology Limited competitive strengths
1) It is global leading supplier of certain chemicals; Ansole, 4-MAP, MEHQ, BHA, DCC, etc.
2) Its manufacturing facility is located with close proximity to JNPT port to export products.
3) Company has strong long-term relationship with key customers.
4) It has consistent track record of financial performance.
5) Company has international presence with export to several countries i.e. China, USA, Korea, Japan, Taiwan, etc.
Clean Science and Technology – IPO issue details
|IPO Opening Date||07-Jul-21|
|IPO Closing Date||09-Jul-21|
|Issue Type||Book Built Issue IPO|
|Face Value||Rs 1 per equity share|
|IPO Price band||Rs 880 to Rs 900 per equity share|
|Lot Size||16 Shares|
|Min Order Quantity||16 Shares|
|Listing at||BSE and NSE|
|Issue Size||Rs 1,546.62 Crores|
Objects of the issue
Company has come-up with public issue for offer for sale where selling shareholders would sell the shares and company would not get any proceeds from the issue. There is no fresh issue of share except that company would get benefitted by listing its shares on stock exchanges.
Company promoters and Financial Performance
Ashok Ramnarayan Boob, Krishnakumar Ramnarayan Boob, Siddhartha Ashok Sikchi, and Parth Ashok Maheshwari are the company promoters.
Here are the restated consolidated revenue and profit details in the last 3 years.
|Period ending||Total Revenues (Rs in Mns)||Profits after tax
(Rs in Mns)
What we like in Clean Science IPO?
Here are the positive factors what we liked in this company.
1) Company has posted good revenue growth at 14.15% CAGR in the last 3 years. Company revenues increased from Rs 404.5 Crores in FY2019 to Rs 538 Crores in FY2021.
2) Company has posted good growth in margins in the last 3 years. Its margins improved from Rs 97.65 Crores in FY2019 to Rs 198.38 Crores in FY2021.
3) Clean Science is among the leading companies in India to have commercialized use of environment-friendly processes to manufacture certain specialty chemicals, at global capacities. They have achieved this position by optimizing use of conventional raw materials, improving atom economy, enhancing yields, reducing effluent discharge, and consequently increasing cost competitiveness.
4) It is among the largest producers of functionally critical specialty chemicals globally (used across various industries) resulting in a de-risked business model.
5) Company has automated manufacturing facilities with proven design and commercialization capabilities and strong focus on EHS.
Risk Factors in Clean Science and Technology IPO
1) Company operations are dependent on its R&D capabilities and any inability to continue to design catalytic processes may adversely affect its business.
2) Currently none of the catalytic processes are patented and its intellect property may not be adequately protected which may have material adverse impact on its business.
3) Certain capital commitments have not been provided in its financial statements.
4) Its business is dependent on its manufacturing facilities. Any unscheduled, unplanned or prolonged disruption of its manufacturing operations could materially and adversely affect its business.
5) There are certain outstanding litigation proceedings against company and directors. Any adverse outcome can affects its business.
6) Its group companies have incurred losses in the past.
7) Significant portion of company revenues is derived from sale of MEHQ. Any reduction in demand can affect the business.
8) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.
Clean Science and Technology IPO Schedule
|Finalization of Allotment||14-Jul-21|
|Initiation of Refunds||15-Jul-21|
|Credit to Demat Account||16-Jul-21|
|IPO Shares Listing Date||19-Jul-21|
Clean Science IPO Price Valuations
Clean Science and Technology IPO Issue Price band is Rs 880 to Rs 900.
1) On the upper price band of Rs 900 and EPS of Rs 18.68 for FY21, the P/E ratio works out to be 48x.
2) For the last 3 years average EPS of Rs 15.26, the P/E ratio is 59x.
3) Means, the company is asking price of Rs 900 on the upper price band in the P/E range of 48x to 59x.
5) There are listed peers like Fine Organic Industries where it is trading at P/E 76x (Highest) and SRF Ltd at P/E of 34x (Lowest) and industry average P/E is 55x.
Hence, we can conclude that Clean Science and Technology Share Price of Rs 900 (upper price band) is fully priced.
Should you invest in Clean Science and Technology IPO?
Clean Science and Technology manufacture functionally critical specialty chemicals. It is among the few companies (globally) focused entirely on developing newer technologies using in-house catalytic processes, which are eco-friendly and cost competitive.
Company generated good revenue growth in the last 3 years.
Company’s generated good margins in the last 3 years.
Clean Science and Technology IPO share price is fully priced.
Considering all these positive factors, we recommend SUBSCRIBE for this IPO for short term to long term perspective.
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