Archean Chemical shares witnessed a premium listing amid a weak market. The stock debuted at Rs 450, up 10% or Rs 43 from its issue price. The shares price rallied further to Rs 466, up 14% on NSE. “The company’s strong listing can be attributed to strong interest from investors. The issue was priced at a P/E of 22.82 based on annualised FY22 numbers. However, the company deserves this premium multiple due to its phenomenal growth prospects. Nevertheless, the high debt-to-equity ratio, high product, key customer concentration, and restructuring of loans during FY 17–18 make us averse to the issue. Therefore, we advise investors to lock in listing gains. Those who applied for listing gains can keep a stop loss of Rs 433 in place,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.
“The IPO was offered at reasonable valuations and the company has reported impressive Q1FY23 results that augurs well for the chemical company. So, allottees who applied for the public issue for listing premium are advised to maintain stop loss at ₹440 and wait for further upside whereas those who have medium to long term perspective can hold the stock maintaining stop loss at ₹410 apiece levels. In medium term, Archean Chemial share price may go up to ₹550 tom ₹570 whereas in long term or say in next one year, it may go up to ₹640 apiece levels. Fresh investors can also buy the stock at current levels maintaining stop loss at ₹410 for 3-6 month target of ₹550 to ₹570 and one eyar target of ₹640,” said Ravi Singhal, CEO at GCL Securities.
Shares of the specialty chemical company were commanding a grey market premium (GMP) of Rs 124 ahead of the market debut. Note that the IPO of the specialty marine chemical manufacturer was subscribed 32.23 times with major support by qualified institutional buyers (QIBs) that had bid for 48.91 times. High net worth individuals (HNIs) bought 14.90 times the allotted quota and retail portion booked 9.96 times. In fact, the response to issue has been better from day one of subscription.
Archean Chemical Industries is one the leading specialty marine chemical manufacturers in India and the largest exporter of bromine and industrial salt by volume in India, with having 18 global customers in 13 countries and 24 domestic customers. It has consistent top-line & bottom-line growth with cost efficiencies, industry-leading position, expansion plans in product lines and capacities. Its revenue from operations in FY22 grew at a CAGR of 36 percent and exports business increased at a CAGR of 29 percent during FY20-FY22. Its profit for FY22 stood at Rs 189 crore, increasing significantly from Rs 67 crore in previous year, though it had a loss of Rs 36 crore in FY20.
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