Shares of Mumbai-based specialty chemicals manufacturer Neogen Chemicals made a blockbuster debut on the exchanges, after the shares listed at a 17% premium to issue price.
Shares of Mumbai-based specialty chemicals manufacturer Neogen Chemicals made a blockbuster debut on the exchanges, after the shares listed at a 17% premium to issue price. Neogen Chemicals shares listed at Rs 251 on BSE, as compared to the issue price of Rs 215, implying a 16.74% premium. Notably, the strong listing comes after the issue had been oversubscribed by a whopping 41 times in its recent IPO between April 24 and April 26th. At the end of the last day on April 26th, Neogen Chemicals got subscribed by 40.76 times, as the the issue got bids for 17,49,57,510 shares as against the total issue size of 43,29,038 shares.
Neogen Chemicals’ public offer consisted of a fresh issue of shares totalling up to Rs 70 crore by the company and an additional offer for sale of up to 16,99,600 equity shares by promoters Haridas Thakarshi Kanani and up to 12,00,400 shares by Beena Haridas Kanani. At the upper end of the price band, Neogen Chemicals had looked to raise up to Rs 132.35 crore. The firm had set a price band of Rs 212-215 for the IPO. The minimum bid lot has been kept at 65 shares and in multiples of 65 shares thereafter.
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Various brokerages had said that the issue is priced higher than its peers. “At the higher end of the issue price of Rs 215 a share, the stock is valued at ~20.1x FY18EV/EBITDA and ~47.8x P/E. Arti Industries and Atul Industries trade at FY18 P/E multiples of 38-42, while Vinati Organics and Navin quote at respectively 21x and 63x. On the annualised 9MFY19 EPS of `7, the stock priced at 28.5xPE and 17.4x EV/EBITDA,” Anand Rathi said in a report. However, Anand Rathi noted that the higher multiple is justified given the company’s ability to grow profitably and command better return ratios.