Chemplast Sanmar rises for 6th day in row after weak debut, up 21% from low

On Wednesday, September 1, 2021, Chemplast Sanmar announced that it has redeemed the entire outstanding NCDs that were issued in December 2019 by the company

Shares of Chemplast Sanmar were trading higher for the sixth straight day, up 3 per cent at Rs 620 on the BSE in intra-day trade on Thursday after a poor listing last week.

The stock of the specialty chemicals firm was trading at its highest level since listing on August 24, 2021.  It has rallied 21 per cent from its low of Rs 510.30 touched on the listing day. With continued upward movement, the stock is now trading 15 per cent higher against its issue price of Rs 541 per share.

Chemplast Sanmar had made a tepid debut on the bourses as it listed at Rs 525, 1 per cent below its issue price on the BSE. The company is engaged in the manufacturing of specialty paste PVC resin, starting materials, and intermediates for agro-chemical, pharmaceuticals, agro-chemical, and fine chemical sectors. It also produces other types of chemicals such as caustic soda, chlorochemicals, hydrogen peroxide, refrigerant gas, and industrial salt.

On Wednesday, September 1, 2021, Chemplast Sanmar announced that it has redeemed, on 31st August 2021, the entire outstanding non-convertible debentures (NCDs) that were issued in December 2019 by the company.

The redemption of these NCDs amounting to Rs 1238.25 crore, which was part of the objects of the primary issue, was made using the net proceeds of fresh issue of equity shares of the Company (IPO) made in August 2021.

The company further announced that using the net proceeds of the offer-for-sale (OFS), received by the selling shareholders Sanmar Holdings and Sanmar Engineering Services (SESL), the term loan availed by SESL from HDFC has been fully repaid.

Consequently, the security in respect of this loan, including the pledge over the equity shares of Chemplast Cuddalore Vinyls (CCVL), the wholly-owned subsidiary of Chemplast, has been fully released on 31st August 2021 by the Security Trustee. With this, there is no pledge over the shares of CCVL held by the company and the shares of Chemplast Sanmar held by the promoters, the company said.

Analysts believe that Chemplast Sanmar is well-positioned to benefit from the industry growth trends given its diversified product portfolio which diminishes the risk associated with any particular product, vertically integrated manufacturing facilities and strong parental support.

Further, given the strong demand for its products, the company intends to increase production capacity. This will aid in generating higher revenue as well as de-bottlenecking, which would lead to better operating efficiencies, they say.