Anupam Rasayan makes weak market debut, lists at 6% discount

On the BSE, the stock fell as much as 10 per cent to Rs 501.15 in intra-day trade

Shares of Anupam Rasayan India, on Wednesday, made a weak debut at the bourses, listing at Rs 520 on the National Stock Exchange (NSE), a 6 per cent discount over its issue price of Rs 555 per share. The stock slipped further and hit a low of Rs 502.25 in intra-day trade, post listing.

On the BSE, Anupam Rasayan opened at Rs 534.70, down 4 per cent from its issue price. The stock later fell as much as 10 per cent to Rs 501.15 in intra-day trade. It touched a high of Rs 548.95 on the BSE and NSE.

At 10:02 am, the stock was trading at Rs 521 on the NSE and BSE. A combined 4.8 million equity shares have changed hands on the counter the NSE and BSE, combined, so far.

However, the Rs 760-crore initial public offer (IPO) of Anupam Rasayan had received strong response from the investors. The specialty chemicals maker’s issue was subscribed 44 times led by non-institutional investors who bid for 97.42 times the shares on offer, according to exchange data. The qualified institutional buyers (QIB) portion was subscribed 65.74 times. Non-institutional investors’ portion subscribed by 97.42 times and of retail investors by 10.77 times, data shows.

The company plans to utilise the proceeds for repayment of Rs 564 crore debt and the remaining for general corporate purposes. While most analysts had assigned a Subscribe rating to the IPO, they have also flagged valuations concerns. The company has strong and long-term relationships with various multinational corporations, including Syngenta Asia Pacific Pte., Sumitomo Chemical Company and UPL.

Anupam Rasayan intends to offer a wide range of chemistry competency with emphasis on chemistries like Grignard and new group chemistries such as ethylene oxide, ammoxidation and isobutylene. Currently, only a few companies in India undertake such new group chemistries (Source: F&S Report). Further, these chemistries will enable it to manufacture more products in the life science related specialty chemicals vertical. The company also proposes to cater to customers across new industry segments and in new geographies to grow market share, analysts at ICICI Securities said in IPO note.

The brokerage firm believes valuations are on the higher side given that it has been facing constraints towards generating free cash flow (FCF) owing to higher working capital cycle, leading to a bloated balance sheet and thereby subdued return ratios. It expects lower probability of inventory cycle to get normalised and thereby working capital cycle, going ahead, for the company.