Anupam Rasayan shares made a faint listing on the stock exchanges today, falling prey to the weakness on Dalal Street.
Anupam Rasayan shares made a faint listing on the stock exchanges today, falling prey to the weakness on Dalal Street. Anupam Rasayan stocks opened at Rs 534.7 per share, down Rs 20 apiece or 3.66% from the IPO price of Rs 555 per share. On listing, Anupam Rasayan had a market capitalization of Rs 5,342 crore. The Rs 760-crore IPO of Anupam Rasayan, a Specialty Chemicals firm, was subscribed 44 times by investors earlier this month. Upon listing Anupam Rasayn became the eleventh stock to debut on the bourses in 2021.
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Anupam Rasayan is one of the leading companies involved in the custom synthesis & manufacturing of specialty chemicals in India. The company boasts a strong and long-term relationship with diversified customers across geographies. The consistent financial track record of the company adds to its merits. Through the issue, the promoter stake in the company has been trimmed to 65.41% against 75.8% pre-issue. Public shareholding now increases to 34.59% against 24.2% earlier.
The IPO was highly rated by analysts on Dalal Street, however, some have deemed it to be aggressively priced. “At higher price band of Rs 555, Anupam Rasayan is demanding a TTM P/E multiple of 95.2x (to its restated TTM EPS of Rs 5.8), which is significantly higher than the peer average of 33x. Thus the issue seems to be aggressively priced,” said analysts at Choice Broking who had given the issue a “Subscribe for long-term” rating. Industry peer Navin Fluorine is trading at a P/E of 29.6x and PI Industries is at 51.4x.
Product portfolio of Anupam Rasayan has steadily picked up over the years. In 2015 the company had 15 product offerings which had increased to 41 at the end of last year. “Its products are sold to multinational corporations for use as additives, ingredients or intermediates that impart particular characteristics to the customer’s end-use products,” said analysts at Marwadi Financial Services. Anupam Rasayan’s customer base has increased from 34 in 2015 to 53 in December last year.
The firm operates in a highly working capital intensive business, which Choice Broking sees as a risk. Other risks aligned with the company include unsustainable profitability margins, intense competition, and unfavourable forex movements. Marwadi Financial Services highlighted that the company is highly dependent on select few customers, which is another risk. “The company is highly dependent on few of its customers as the revenue generated from sales to top 10 customers represented 86.65% and 84.01% of revenue from operations in Fiscal 2020 and in the nine months ended December 31, 2020, respectively,” they said.