India: Specialty Chemical Companies Line Up To Launch IPOs

Unlisted specialty chemical makers are looking to launch initial public offerings (IPOs) in the coming months, after market investors showed a distinct preference for such firms.

Surat-based Anupam Rasayan plans to file its draft IPO papers soon, looking to raise up to ₹750-800 crore, said two people aware of the matter. Another specialty chemical maker, Mumbai-based Laxmi Organics, on Tuesday evening filed its draft IPO papers for a ₹800 crore share sale.

These IPO plans come on the back of a spectacular performance by specialty chemical makers Rossari Biotech Ltd and Chemcon Speciality Chemicals Ltd, whose IPOs this year were subscribed 79 and 149 times, respectively.

These companies went on to deliver stellar listing day gains of 74.67% and 72% on their stock market debut, respectively. Anupam Rasayan, which is promoted by US-based investor and philanthropist Dr Kiran C. Patel, will used the fresh capital to pare some of its debt borrowings besides funding working capital requirements, said one of the persons cited above, requesting anonymity.

“Axis Capital, Ambit Capital and a couple of other investment banks are advising the company on the IPO,” he said.

An email sent to the company did not elicit a response.

Anupam is engaged in the business of manufacturing agrochemicals catering to the crop protection, personal care and pharmaceutical and veterinary drugs segments.

“As of FY20, Anupam has only 10% raw material dependence on China. It gets almost 70% of its revenues from exports. Out of the six manufacturing facilities it currently operates, two of them were commercialized as early as March 2020 and due to this, growth looks imminent in the upcoming years,” the first person cited above said. In the last three fiscals, the company grew at 20% CAGR in revenue and 25% CAGR in PAT, he added.

Laxmi Organics, a manufacturer of acetyl intermediates and specialty intermediates and the largest manufacturer and exporter of ethyl acetate in India as per a Frost & Sullivan report, is looking to raise ₹500 crore in fresh capital from its IPO. Promoter shareholder Yellow Stone Trust will sell another ₹300 crore worth of shares through the IPO, shows the company’s draft red herring prospectus.

Proceeds from the IPO will be utilized for funding its capex towards setting up a manufacturing facility for fluoro specialty chemicals, working capital requirements, buying machinery, prepayment or repayment of all or a portion of certain outstanding debtsand upgrading existing units. Axis Capital and DAM Capital Advisors are advising the firm on its IPO.

According to brokerage firm Axis Securities, India has been gaining global market share in the space because of its capabilities and supply chain realignment from China to India. “We believe that Indian companies could gain ground further as companies would want to reduce dependence on China after the covid-19 pandemic and shift their supply chains,” the brokerage said.

This article was first published on livemint.com