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Anupam Rasayan IPO opens tomorrow: grey market premium falls; should you subscribe?

The Rs 760-crore Anupam Rasayan initial public offering (IPO) is set to open for subscription on Friday, 12 March 2021, at a price band of Rs 553-555 per share.

The volatility in Indian share market has hit the grey market premium of Anupam Rasayan. (Image: anupamrasayan.com)

The Rs 760-crore Anupam Rasayan initial public offering (IPO) is set to open for subscription on Friday, 12 March 2021, at a price band of Rs 553-555 per share. Ahead of the IPO, the speciality chemical company raised Rs 225 crore from anchor investors. According to the BSE circular, it has allocated 40.48 lakh shares to 15 anchor investors at Rs 555 per share. Among the 18 anchor investors are Aditya Birla Sunlife Mutual Fund (MF), Nomura Funds Ireland Public Ltd Company, Fidelity International, Sundaram MF, SBI Life Insurance Co, IIFL Special Opportunities Fund, Malabar Select Fund and Max Life Insurance.

Also read: Kalyan Jewellers IPO opens March 16; check price band, issue size, grey market premium, details

The volatility in Indian share market has hit the grey market premium of Anupam Rasayan. The grey market premium of Anupam Rasayan has fallen 10 per cent to Rs 230 apiece so far this week. The shares were ruling at Rs 785 apiece, at a grey market premium of 41.44 per cent over the IPO price on Thursday. Earlier this week, the shares were seen trading at Rs 875 apiece, a grey market premium of 58 per cent.

Upon listing, Anupam Rasayan India will be joining the listed peers such as PI Industries, Navin Fluorine International Ltd, Astec Lifesciences Ltd and SRF Ltd. The company has a strong long-term relationship with many multinational companies like Syngenta Asia Pacific Pte Ltd, Sumitomo Chemical Company Ltd, and UPL Limited to expand geographical reach across countries like the United States, Europe, Japan, and India. Analysts at Anand Rathi Share and Stock Brokers Ltd have given ‘subscribe’ rating to the issue as the company has a robust track record of performance. “It is expected that the company will be able to gain more market share and simultaneously its margins will also improve. It has priced its issue at 95.2x PE at the upper band on a trailing basis which is aggressively priced as compared to its peers,” the research and brokerage firm added.

Anupam Rasayan India has six manufacturing facilities out of which four are situated at Sachin and two are located at Jhagadia with an aggregated installed capacity of 23,438 MT as of December 31, 2020. “At the upper price band of Rs 555, the issue is priced at a 69x P/E and 5.8x P/BV,” Aditya Kondawar, Founder and COO, JST Investments, told Financial Express Online. Annualizing the 9MFY21 sales, the company is coming at 7.5x price to sales. Kondawar said that the valuations are astronomical.

Investors can bid for a minimum of 27 equity shares and in multiples thereafter, translating to a minimum investment Rs 14, 985. The book running lead managers to the issue are Axis Capital Ltd, Ambit Private Ltd, IIFL Securities Ltd and JM Financial Ltd. While the registrar to Anupam Rasayan India Ltd will be KFin Technologies Private Ltd. Marwadi Shares and Finance Ltd has recommended to ‘subscribe’ to the Anupam Rasayan India Ltd IPO based on its past track record, strong long-term relationship with its customers and also the strategic manufacturing location along with huge capex in the last three fiscals. An analyst at a research firm said that considering TTM EPS of Rs 5.83 on a post-issue basis, the company is going to list at a P/E of 95.16X with a market cap of Rs 55,445 mn. The issue is aggressively priced compared to its peers; Navin Fluorine is trading at a P/E of 29.6X and PI Industries at 51.4X.

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