It seems that the companies are in a race to launch their IPOs this year. Without wasting any time, let’s jump into the analysis of another IPO which is going to hit on 12th March 2021. That too, another speciality chemicals company.
About the company
Anupam Rasayan India Limited was incorporated in 1984. It deals in the custom synthesis and manufacturing of speciality chemicals in India. They have two business verticals. Firstly, speciality chemicals related to life science.
These products belong to the agrochemicals, personal care and pharmaceuticals domain. 95% of its revenues come from these three sectors. Mr Anand S Desai, Dr Kiran C Patel, Ms Mona A Desai, Kiran Pallavi Investments LLC and Rehash Industrial and Resins Chemicals Private Limited are the promoters of the company.
Currently, Anupam Rasayan holds six manufacturing units. Four of the units are based at sites Sachin, Surat and two of the units are in Jhagadia, Gujarat. The total capacity of the six manufacturing sites is 23,438 MT. They have a diversified customer base across countries like the United States, Europe, Japan, and India. Their long-term vision is to develop into a globally reputed chemical manufacturing company.
Most of the business operations of the company are export-oriented. Thus, the proximity of their manufacturing sites to Adani Hazira Port gives them an edge by reducing logistics costs. Almost 70% of the revenue for the company comes from international markets.
About the IPO
The IPO of Anupam Rasayan India Limited will open on 12th March 2021 and will close on 16th March 2021. The total issue size of the IPO is Rs 760 crore. The price band of the IPO is Rs 553 – Rs 555 per equity share. You have to apply for a minimum of 27 Shares which is one lot.
The upper limit to the number of lots you can apply for is 13, which means, 351 shares. The minimum an investor has to pay for this IPO of Anupam Rasayan is Rs 14,985. Similarly, the maximum one can invest in is Rs 1,94,805. Currently, the promoters of the company have 75.80% of the total holdings. The allotment date and listing date for the IPO are 19th Match 2021 and 24th March 2021 respectively.
Anupam Rasayan India Limited plans to use the net proceeds from the IPO in two ways. Their main aim behind going public is to repay their debt which comes with a huge interest cost. A large part of the proceeds will be used to pay off Rs 556.20 crore of debt. As of December 20, Anupam Rasayan India had a total debt of Rs 814.48 crore. The remaining sum will be used to meet general corporate purposes.
|*||30 December 2020||31 March 2020||31 March 2019||31 March 2018|
|Profit after Tax||48.09||52.97||50.20||40.34|
After looking at the table, one can easily see that the company has robust financial books in the previous three years. Total assets, revenues and profits, all three of them have continuously increased over the past three years. And, this pattern looks set to continue for this fiscal year as well. In fact, they have taken only three quarters of this year to beat the total assets and revenue numbers of FY20. The profits numbers are also very close and look almost certain to record better than what was last year.
In FY18, the company had a negative cash flow of Rs 20 crore but next year it jumped to the positive Rs 38 crore. In FY20, it skyrocketed to Rs 94 crore. From FY18 to FY20, the EBITDA margin of the company has shown a significant increase from 21% to 25%. One thing to notice is their falling return to equity (ROE). In FY18, FY19 and FY20, Anupam Rasayan recorded an ROE of 11.78%, 10.21% and 9.62% respectively. A falling ROE is a worrying sign for every investor.
- Anupam Rasayan has a diverse range of multinational companies. Any inability to maintain the relationships with these MNCs could have an adverse effect on their business. By the end of September 2020, they manufactured products for over 45 companies out of which 15 were MNCs.
- Any disruption caused to their manufacturing plants will severely affect their operations and delay the making and delivery of their products.
- Some of the raw materials used by the company are corrosive and flammable. They require special storage and handling. Any error in this part can increase their cost which will eventually hurt the bottom line of the financial books.
- Revenues generated from sales to their top 10 customers accounted for 86.65% which is very high. A loss of one or more such customers can lead to huge losses for the company.
- Anupam Rasayan doesn’t have long-term agreements with its suppliers. Thus, an increase in raw material due to any reason can severely hamper companies operations.
IPO Details in a Nutshell
|IPO Date||March 12, 2021 – March 16, 2021|
|Issue Type||Book Built Issue IPO|
|Face Value||Rs 10 per equity share|
|IPO Price||Rs 553 to Rs 555 per equity share|
|Lot Size||27 Shares|
|Issue Size||Rs 760 crore|
|Listing At||BSE, NSE|
|IPO Listing Date||March 24, 2021|
In the current market, almost every IPO is proving to be a jackpot for investors. Almost every IPO is providing a few lucky ones with bumper listing gains. Anupam Rasayan might follow the same trend. Though, should you hold it for the long term? I would say it will be better to analyse how the company performs in the next few quarters.
Their performance will tell us more if we should be a long-term investor or not. As this IPO gives you four days to apply, you should be patient to see how much attraction it is getting in those days. Once you see it being oversubscribed, quickly apply for one lot and hope to get a bumper listing.
Do your own analysis about the company and let us know in the comments section if you find any other interesting information. Anupam Rasayan filed its draft papers last December. You can find it here. Will you be applying for this IPO? Tell us in the comments section below!