The year 2022 has brought a hoard of investment opportunities for investors through IPOs. We are now reaching the end of 2022 but the list of new IPOs in the stock market is still coming on. The latest name in the IPO market is Archean Chemical Industries Limited.
This IPO was open from 9th November to 11th November 2022. Archean Chemical Industries Limited IPO was subscribed 32.23 times and its retail portion was subscribed 9.96 times. The grey market premium (GMP) of Archean Chemical IPO is indicating positive investor interest. As per market observers, the GMP of Archean Chemical Industries Limited shares are available at a premium of Rs. 85 today.
The details of this IPO and its review are mentioned hereunder.
The various details of the Archean Chemical Industries Limited IPO are as under.
The size of the IPO and different categories of the issue are,
|IPO Opening Date||9th November 2022|
|IPO Closing Date||11th November 2022|
|Issue Type||Book Built Issue IPO|
|Face Value of shares||Rs.2 per share|
|IPO Price Band||Rs.386 – Rs.407 per share|
|IPO Size||Rs.1462.31 crores (35,928,992 shares of Re.2 face value)|
|Offer For Sale||Rs.657.31 crores (1,61,50,000 shares of Rs. 2 face value)|
|Fresh Issue||Rs.805 crores (1,97,78,870 shares of Rs. 2 face value)|
The important dates for the Archean Chemicals Limited IPO are highlighted below.
|Price Band Allotment||3rd November 2022|
|Anchor Investors Allotment||8th November 2022|
|Opening date||9th November 2022|
|Closing Date||11th November 2022|
|Allotment date||16th November 2022|
|Refund Date||17th November 2022|
|Share Credit Date||18th November 2022|
|Listing Date||21st November 2022|
IPO Lot Sizes
The subscription for shares of Archean Chemicals Industries Limited IPO can be done in lots by different investor categories. The details of the lot sizes for this IPO are mentioned below.
|Minimum investment||1 lot|
|Shares in each lot||36 shares|
|Minimum amount of investment per lot||Rs. 14,652|
|Maximum permissible investment in Lots||13 lots|
|Maximum shares for investment||468 shares|
|Maximum amount of investment permissible||Rs. 190,476|
The categories of eligible investors and their share in the IPO are
|Category of Investor||Reservation of the IPO applicable||Total number of shares for the category||Amount of eligible investment (amount in crores)|
|QIB (Qualified Institutional Buyers)||75%||2,69,46,744||Rs. 1096.73|
|NII (Non-Institutional Bidders)||15%||53,89,348||Rs. 219.35|
|RII (Retail Individual Investors)||10%||35,92,899||Rs. 146.23|
Archean Chemical Industries Limited IPO Objectives
The RHP of the Archean Chemical Industries Limited IPO highlights the objectives of the IPO. The details of the same are mentioned below.
- This IPO is partly in the nature of an Offer for Sale. Therefore, the proceeds from the same will not be received by the company after the deduction of offer expenses and taxes thereon.
- The proceeds for the fresh issue of the IPO will be used to meet the redemption or earlier redemption (in part or in full) of NCDs that have been issued by the company.
- The other objects of the company include getting listing benefits and other general corporate purposes.
About Archean Chemical Industries Limited IPO
Archean Chemical Industries Limited belongs to the chemical sector in the country and was the largest exporter of bromine as well as industrial salt in India in FY 2021. The company also has the lowest cost of production of these products not only nationally but also internationally. Bromine has wide applications in the sectors like water treatment, pharmaceuticals, flame retardants, oil and gas storage batteries, additives, and agrochemicals. Industrial salt on the other hand is used for the production of caustic soda, soda ash, hydrochloric acid, bleaching powders, sodium sulphate, chlorine, and sodium metal.
The company has an overall installed capacity of 28500 MT of bromine, 30,00,000MT per annum of industrial salt, and 1,30,000 MT per annum of sulphate potash being the only manufacturer of this product. The raw material for the company is available in Rann of Kutch and they have their manufacturing unit closer to captive Jakhau Jetty and Mundra Port. The close proximity to the port makes transportation effective and convenient for international customers.
Financials of the company
The core financials of the company are tabled below.
|Year||Total Assets (Rs. In crores)||Operating Revenue (Rs. In crores)||Profit after tax (Rs. In crores)||Basic EPS||Diluted EPS||RONW|
Strengths of the company
Some of the key strengths of the company are highlighted below.
- Largest exporter of Bromine and industrial salt with a strong global customer base.
- Leadership in product’s market share with high potential for growth and expansion.
- Speciality marine chemicals has high entry barriers and therefore challenging for competition.
- Well-established infrastructure and integrated production allows better cost efficiencies.
- Company has maintained focus on environment and safety standards.
- Company’s management carries rich experience among promoters, financial investors, and stakeholders.
Risks of investment
The different risks that are faced by the company are highlighted below.
- Since the revenues are mostly derived from export-oriented business, the company faces exchange rate fluctuations.
- The company is has been unable to penetrate into new export markets.
- Burden of large unsecured loans and risk of default.
- Manufacturing facility is concentrated in one area, resulting in region-specific risk.
- Chemical sector is subject to stringent compliance surrounding safety, health and labor laws.
- Risk of using and storing hazardous substances.
What is the Grey Market Premium (GMP) on Archean Chemical Industries Limited IPO?
As of November 14, 2022, as per market observers, the grey market premium for the shares of Archean Chemical International Limited IPO is Rs. 85 per share.
Should you apply for Archean Chemical Industries Limited IPO?
The company has shown strong financials over the years. Although it recorded a dip in its revenues and profit margins, in FY 2021, they have managed to recover the same in FY 2022. Their strong financials combined with their dominance in the speciality chemicals area as well as their exports gives them a fair advantage over their peers. The PE ratio of this company based on the last 3 years of weighted EPS is 38x which brings it in the range of being a reasonably priced IPO as compared to the industry average.
The IPO is, therefore, a good option for investors with medium to long-term investment horizons.
How to apply for Archean Chemical Industries Limited IPO?
Investors can invest in this IPO through the Fisdom app.
The issue size of Archean Chemical Industries Limited IPO is Rs.1462 crores.
The revised holdings of the promoters of Archean Chemical Industries Ltd post the IPO will be approximately 44%.
The price band for Archean Chemical Industries Limited IPO is Rs. 386 – Rs. 407.
The shares of the company will be listed on NSE and BSE on 21st November 2022.
The Archean Chemical Industries Limited IPO is made up of Fresh Issue and Offer for sale for Rs. 805 crores and Rs. 657 crores respectively.