There are flood of IPOs in the last few days. Chennai based Archean Chemical Industries IPO would open for subscription on 9th November, 2022. Company is the leading speciality marine chemical manufacturer in India. Should you invest in Archean Chemical Industries IPO? This article would provide IPO details, Dates, Listing Date and conclusion on whether this is good or bad for investment.
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About Archean Chemical Industries Limited
Archean Chemical Industries Ltd is India’s largest exporter of bromine and industrial salt. It is the leading speciality marine chemical manufacturer in India and is focused on producing and exporting bromine, industrial salt, and sulphate of potash to customers around the world. Archean Chemical Industries markets the products to 18 global customers in 13 countries and to 24 domestic customers. The company was the largest exporter of industrial salt in India with exports of 2.7 million MT.
Archean Chemical Industries IPO Details
| IPO Opening Date | 09-Nov-22 |
| IPO Closing Date | 11-Nov-22 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 2 per equity share |
| IPO Price band | Rs 386 to Rs 407 per equity share |
| Lot Size | 36 Shares |
| Min Order Quantity | 36 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 1462.3 Crores |
| Fresh issue | Rs. 805 Crores |
| OFS | Rs. 657.3 Crores |
Archean Chemical Industries IPO RHP
What are the strengths of Archean Chemical Industries Limited?
1) Company is leading market position, expansion and growth in bromine and industrial salt
2) Company with high entry barriers in the specialty marine chemical industry
3) It has established infrastructure and integrated production with cost efficiencies
4) Company focusses on environment and safety
5) It is a largest Indian exporter of bromine and industrial salt with a global customer base
6) Strong and consistent financial performance
7) It has experienced management team, promoters and financial investors and stakeholders
What are the Objects of the IPO Offer?
Archean Chemical Industries IPO Size is Rs 1,462 Crores which has OFS and fresh issue
1) OFS for Rs 657.3 Crores – Under OFS, selling shareholders would sell their shares and the company would not get any money from this IPO proceeds.
2) Fresh issue of Rs 805 Crores – Fresh issue would be used for the following:
- Redemption or earlier redemption, in part or full, of NCDs issued by the company.
- General corporate purposes
Who are the promoters of Archean Chemical Industries Limited?
Chemikas Speciality LLP, Ravi Pendurthi and Ranjit Pendurthi are the promoters of the company.
How is the company financial track record?
Here are the total assets, revenues and profits of the company in the last 3 years and 3 months.
| Financial Year ending / Period ending (Amt in Crores) | ||||
| Particulars | FY20 | FY21 | FY22 | 30-Jun-22 |
|---|---|---|---|---|
| Total Assets | 1,260.5 | 1,428.6 | 1,529.7 | 1,606.7 |
| Revenues | 572.9 | 617.0 | 1,142.8 | 408.8 |
| Profit After Tax | 40.0 | -36.2 | 188.6 | 84.4 |
| Profit % | 6.98% | -5.87% | 16.50% | 20.65% |
Why to invest in Archean Chemical Industries IPO?
Here are the positive factors in this company.
1) Archean Chemical Industries Ltd is the leading speciality marine chemical manufacturer in India and is focused on producing and exporting bromine, industrial salt, and sulphate of potash to customers around the world
2) Company has generated stable revenue growth in the last 3 years.
3) While the company has incurred loss for FY21, the margins have increased for FY22 and for 3 months ending Q1 FY23.
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Risk Factors of investing in Archean Chemical Industries IPO
1) Company IPO proceeds contains OFS also where such funds would go to selling shareholders and company would not get benefit from this.
2) Company business is dependent and will continue to depend on its manufacturing facility to certain risks in its manufacturing process. Any slowdown or shutdown in its manufacturing operations can affect the company,
3) Company inability to comply with repayment and other covenants in its financial agreements could adversely affect its business.
4) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.
Frequently Asked Questions (FAQs)
What is Archean Chemical Industries IPO date?
This IPO would open on 9th November, 2022 and closes on 11th November, 2022.
What is Archean Chemical Industries Share Price?
The IPO share price band is Rs 386 to Rs 407 per share.
How much portion allocated to each group of investors in this IPO?
1) QIB – Not less than 75% of the offered shares
2) NII / HNI – Not less than 15% of the offered shares
3) Retail – Not less than 10% of the offered shares
Is it good or bad for investment?
An investor should always invest in a company that has strong financial track record. This company has generated stable revenue growth in the last 3 years and 3 months. While it incurred loss in FY21, its margins improved in FY22.
Archean Chemical Industries IPO Valuation
Archean Chemical Industries IPO price band is Rs 386 to 407 per share.
If we consider FY2022 EPS, the P/E ratio works out to be 22x.
If we consider last 3 years weighted EPS, the P/E ratio works out to be 38x.
If we annualize Q1 FY23 EPS, the P/E ratio works out to be 12x.
Means company is asking for the issue price in P/E of 12x to 38x. There are listed peers like Aarti Industries trading at P/E 19x (Lowest) and Neogen Chemical trading at P/E 80x (Highest) and industry average P/E is 38x. However, large companies in this segment like Tata Chemicals, Deepak Nitrate and Aarti Industries Limited are trading at 19x to 28x. Hence Archean Chemical Industries IPO share price is reasonably priced.
Archean Chemical Industries dates – subscription, Allotment and Listing
| Offer Open | 09-Nov-22 |
| Offer close | 11-Nov-22 |
| Finalization of Allotment | 16-Nov-22 |
| Initiation of Refunds | 17-Nov-22 |
| Credit to Demat Account | 18-Nov-22 |
| IPO Shares Listing Date | 21-Nov-22 |
How to buy Archean Chemical Industries IPO online through Zerodha?
If you do not have Zerodha account, sign-up here and proceed to the next step.
If you have a demat account with Zerodha, you can apply this IPO online using the UPI as a payment gateway. Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.
Follow below steps to apply this IPO in Zerodha platform:
1) Visit the Zerodha portal and login to the console.
2) Go to Portfolio and click the IPOs link.
3) Visit ‘Archean Chemical Industries Limited IPO’ row and click the ‘Bid’ button.
4) Enter your UPI ID, Qty and the Price which you want to bid.
5) Click on ‘Submit’ IPO application form.
6) Visit the UPI App (net banking or BHIM) to approve the mandate.
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Archean Chemical Industries IPO Review – Should you Subscribe?
After going through all these points, you might be wondering whether Archean Chemical Industries IPO is good or bad for investment?
Archean Chemical Industries is India’s largest exporter of bromine and industrial salt and is the leading speciality marine chemical manufacturer in India. Company had stable revenue growth in the last 3 years. While it incurred losses in FY21, its margins for FY22 and Q1FY23 have improved. Its issue price is also reasonably priced.
On the other side, company IPO proceeds contains OFS also where such funds would go to selling shareholders and company would not get benefit from this.
Investors who are willing to invest for a medium to long term, can invest in this IPO.
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Industrial salt is a very low priced high volume bulk (often loose or 50 kg packing) product and does not contribute much to the profits of a company. Bromine and its chemicals are high margin product in the company’s product portfolio.