Anupam Rasayan India Limited IPO Review (Apply or Not???)


Overview of the Company:

  • Anupam Rasayan India Limited is in Specialty Chemicals Business.
  • The Company is Engaged in Custom Synthesis and manufacturing of Specialty Chemicals.
  • The Company was incorportaed in 1984 as a Partnership Firm namely "Anupam Rasayan" in Surat Gujarat.
  • In 2003 the Partnership firm was then Converted into a Public Limited Company. (One can convert directly into Public Limited company if it has minimum 7 Shareholders.)
  • Further, In 2010 the Company started supplying Specialty Chemicals to Syngenta Asia Pacific Pte Ltd in Singapore. In 2017, the Company commenced to supply the specialty chemicals to Sumitimo Chemicals Company Limited in Japan.
  • The Company is recognized as a 3 Star Export House by Government of India.

  • This is the 4th Company in Specialty Chemicals Business coming up with an IPO. The Other three were Rossari Biotech, Chemcon Speciality Chemicals and Heranba Industries Limited.

  • Out of the total sales, the company exports is around 68% and remaining 32% comprises of Domestic Sales. The Company Mainly Exports to Europe (35.97%), Japan (5.83%) and US (3.69%)
  • The Company has 6 multi-purpose manufacturing facilities out of which 4 are in Surat and 2 in Bharuch. The Company also has their Inhouse R&D Facility in Surat and has a total Installed Capacity of 23,438 MT (Metric Tonnes)

What is the meaning of Custom Synthesis?

Custom synthesis means the exclusive synthesis of compounds on behalf of the customer, i.e., you can order a specific molecule that is only synthesized on your request on the scale, with the purity and with the specification or methods you require.

Companies Business Segments:

The Company has two major business segments:

  • Life Science Related Specialty Chemicals: This segment comprises of around 95% of the Business of the Company. In this segment the Company Manufactures a variety of Life Science related specialty chemicals comprising products related to agrochemicals, personal care and pharmaceuticals. The Company manufactures agro intermediates and agro active ingredients for the agrochemicals industry which are used in the manufacture of, amongst others, insecticides, fungicides and herbicides. For the personal care industry, they provide, amongst others, anti-bacterial and ultra violet protection intermediates and ingredients. In the pharmaceutical segment, they are focus on developing intermediates and ‘key starting materials’ for active pharmaceutical ingredients, and may also be used in, amongst others, material sciences and surface chemistry.
  • Other Specialty Chemicals: This segment comprises on Only remaining 5% of the Business. The Companies other specialty chemicals are used in diverse end-user segments, comprising specialty pigments, specialty dyes and polymer additives.

Customer Base of the Company

  • The top three customers of the Company are Syngenta, Sumitomo Chemicals and UPL.
  • Around 86.65% of the Companies Revenue comes from its top ten customers. This can also be a threat to the company because if the company loses two to three of the customers then they will have to face a huge losses.
  • The Company has a total of 53 Clients which Includes 17 Multinational Companies.

Competitor Analysis:

Companies

Total Revenue

P/E Ratio

Return on Net Worth

NAV Per share

P/BV Ratio

Anupan Rasayan India Limited

539.39

79.97

9.62%

76.00

7.30

PI Industries

3,415.40

65.72

17.43%

198.64

11.54

Navin Fluorine International Ltd

1,094.88

32.20

28.93%

285.38

9.43

Astec Lifesciences Limited

534.54

42.73

19.25%

126.17

8.37

SRF

7,258.46

30.58

20.66%

858.26

6.59

Average (Peers)

 

42.81

 

 

8.98

 

Financial Analysis

Particulars

FY 2018 (in millions)

FY 2019 (in millions)

FY 2020 (in millions)

CAGR Growth (%)

Revenue from Operations

3,414.23

5,014.97

5,288.80

24.42%

EBITDA

745.07

921.74

1,348.96

34.56%

EBITDA Margins

21.82%

18.38%

25.51%

 

PAT

413.07

492.48

529.75

13.25%

PAT Margins

11.83%

9.45%

9.82%

 

 The Company has a Stable Growth Rate. However the Company has the Debt Equity Ratio of more than 1 which is a sign of caution as it will reduce the Return on Equity and Networth.

SWOT Analysis

STRENGTH (S)            

  • One of the leading custom synthesis and Manufacturing Company
  • Diversified and Customized Portfolio

  • Decreasing Dependency on Imported Raw Materials – 26% (in FY 2018) to 22% (in FY 2020)
  • Inhouse R&D Facility
  • Strategically Located Manufacturing Facilities – Near Hazira Post
  • Experienced Management

WEAKNESS (W)

  • Debt to Equity Ratio is more than 1

  • Low Return on Equity
  • Concentration of Revenues (10 Customer comprises of more than 85% Revenue)
  • Capital Intensive
  • Cyclical Nature of Business (Agrochem Business – 72% Revenue)

OPPORTUNITIES (O)

  • Growth in Life care and Speciality Chemicals 
  • China Plus one strategy of MNCs
  • Favourable Government Policies
  • Expand Portfolio in Niche Products (Grignard, Ethylene Oxide, Ammoxidation and Isobutylene)

THREATS (T)

  • Domestic and International Competition
  • FOREX Fluctuations
  • Raw material sourcing

 

 

Valuation of the Company:

As per the Comparable Transactions Multiple Method, we can has a basic idea about the Valuations at which the company wants to List in the Market.

Date of Allotment

Name of Allottee

Reason / Nature of Allotment

No of Equity Shares Allotted

FV Per Share

Issue Price per Equity share

Nature of Consideration

26.09.2020

KPI LLC

Preferential Allotment to our Promoter

8,85,055

10

249.20

Cash

30.09.2020

KPI LLC

Preferential Allotment to our Promoter

8,85,055

10

249.61

Cash

10.10.2020

KPI LLC

Preferential Allotment to our Promoter

14,75,093

10

247.66

Cash

17.10.2020

KPI LLC

Preferential Allotment to our Promoter

14,76,093

10

248.39

Cash

04.11.2020

KPI LLC

Preferential Allotment to our Promoter

33,61,600

10

197.17

Cash

The Company wants to issue shares at ₹ 555 per Equity Share but as per CTM it has issued shares at around ₹ 250 per share. During this period from November 2020 to March 2021, the company has neither done some extra-ordinary growth nor in the process to do such growth. It means that the company is demanding more premium and wants to list at a higher valuations and Hence this share is issued at a higher valuations.

IPO Details:

IPO Opening Date

Mar 12, 2021

IPO Closing Date

Mar 16, 2021

Issue Type

Book Built Issue IPO

Face Value

₹10 per equity share

IPO Price

₹553 to ₹555 per equity share

Market Lot

27 Shares

Min Order Quantity

27 Shares

Listing At

BSE, NSE

Issue Size

[.] Eq Shares of ₹10

(aggregating up to ₹760.00 Cr)

IPO Tentative Timetable

The Anupam Rasayan IPO open date is Mar 12, 2021, and the close date is Mar 16, 2021. The issue may list on Mar 24, 2021.

IPO Open Date

Mar 12, 2021

IPO Close Date

Mar 16, 2021

Basis of Allotment Date

Mar 19, 2021

Initiation of Refunds

Mar 22, 2021

Credit of Shares to Demat Account

Mar 23, 2021

IPO Listing Date

Mar 24, 2021

IPO Lot Size

The Anupam Rasayan IPO market lot size is 27 shares. A retail-individual investor can apply for up to 13 lots (351 shares or ₹194,805).

Application

Lots

Shares

Amount (Cut-off)

Minimum

1

27

₹14,985

Maximum

13

351

₹194,805


Conclusion

This IPO is Good for Long Term Prospective as the Company can grow at an CAGR of 10% in India.
The Investor can get a Listing Gain of Around 20-25% from this IPO as per the GMP.

This are my personal views, all the equity investments are subject to market risk. Please read all offer documents before investing. This blog is only for information and education purposes. Please consult your investment adviser before investing.


Thank You for Reading this Article 


To Read My Article on Basics of Initial Public Offer (IPO). Do Visit the Following Link: https://www.yourcaguide.com/2019/11/basics-of-initial-public-offer-ipo.html

To Read My Article on RAILTEL IPO Review. Do Visit the Following Link: https://www.yourcaguide.com/2021/02/railtel-corporation-of-india-limited.html

To Read My Article on MTAR IPO Review. Do Visit the Following Link: https://www.yourcaguide.com/2021/03/mtar-technologies-ipo-review-apply-or.html

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