Shares of Archean Chemical Industries Pvt Ltd made a stock market debut on Monday. The chemical stock got listed at Rs 450 apiece on the NSE, a premium of over 11 per cent as compared to its IPO issue price of Rs 407 per share. On the BSE, Archean Chemical shares started trading at Rs 449 apiece.
Shares of the specialty chemical company were commanding a grey market premium (GMP) of Rs 124 ahead of the market debut. Note that the IPO of the specialty marine chemical manufacturer was subscribed 32.23 times with major support by qualified institutional buyers (QIBs) that had bid for 48.91 times. High net worth individuals (HNIs) bought 14.90 times the allotted quota and retail portion booked 9.96 times.
It has consistent top-line & bottom-line growth with cost efficiencies, industry-leading position, expansion plans in product lines and capacities. Its revenue from operations in FY22 grew at a CAGR of 36 percent and exports business increased at a CAGR of 29 percent during FY20-FY22. Its profit for FY22 stood at Rs 189 crore, increasing significantly from Rs 67 crore in previous year, though it had a loss of Rs 36 crore in FY20.
Archean Chemical Industries Ltd is focused on producing and exporting bromine, industrial salt, and sulphate of potash to customers around the world. It produces products from its brine reserves in the Rann of Kutch, located on the coast of Gujarat, and manufactures products at its facility near Hajipir in Gujarat.
The bromine produced by Archean is used as key initial level material, which has applications in pharma, agrochemicals, water treatment, flame retardant, additives, oil & gas and energy storage segments. Industrial salt is an important raw material used in the chemical industry for the production of various other chemicals and compounds and sulphate of potash is used as a fertilizer and also has medical uses.
What Should Investors Do Now?
Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd., said: “The company’s strong listing can be attributed to strong interest from investors. Counter has debuted at Rs. 450, i.e., 10.57 per cent over its issue price. It was India’s leading and largest industrial salt producer, with 2.7 million metric tonnes exported in fiscal 2021. They have 18 global customers in 13 countries and 24 domestic customers. It is a formidable player in the bromine, industrial salt, and sulphate potash industries.”
“The issue was priced at a P/E of 22.82 based on annualised FY22 numbers. However, the company deserves this premium multiple due to its phenomenal growth prospects. Nevertheless, the high debt-to-equity ratio (3.25 based on March, FY 22 consolidated numbers), high product, key customer concentration, and restructuring of loans during FY 17–18 make us averse to the issue. Therefore, we advise investors to lock in listing gains. Those who applied for listing gains can keep a stop loss of Rs. 433 in place,” he added.
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