Chemcon IPO Details

Chemcon Speciality Chemicals, is a leading manufacturer of specialised and pharmaceutical chemicals. Chemcon’s key products include: Calcium bromide, Sodium bromide, Zinc bromide, HMDS and CMIC. HMDS and CMIC are predominantly used in the pharmaceutical industry. As of 2019, Chemcon was the only manufacturer of HMDS in India and the 3 rd largest producer worldwide (Source: Frost & Sullivan Report)

Apart from an illustrious roster of elite domestic clients, Chemcon’s exports its products to several markets worldwide including USA, China, Japan, UAE, Serbia, Russia, Malaysia, and Azerbaijan.

• The total Issue Size is 9.353 - 9.382mn shares (Rs. 3,171 - 3,180mn)
• Chemcon’s Offer For Sale of 4.5mn Shares of Rs.10 each aggregating at Rs.153 Crores and Fresh Issue of 4.853 - 4.822mn Shares and will be listed in the National and Bombay Stock Exchange.
• With this IPO; Chemcon intends to meet its capital expenditures for manufacturing facility expansion

Chemcon Speciality Chemicals IPO Review/Ratings

Key Competitive Strengths

1. A leading manufacturer of the Pharmaceutical chemicals globally and a leading manufacturer Oilwell completion chemicals in India.
2. Diversified customer base coupled with long standing relationships.
3. The specialty chemicals industry in which it operates has high entry barriers.
4. Manufacturing facility with dedicated plants for its products • Consistent financial performance with a strong financial position.

Risks and Concerns

• Geopolitical tension in the Asia region.
• Subdued economic growth and lower demand of its product.
• Unfavorable volatility in the key raw material prices.
• Delay in demand revival of Oilwell completion chemicals.
• Unfavorable movement in forex rates.
• Difficulty in maintaining the profitability.

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Chemcon IPO Fundamental Analysis

1. The Net profit increased from 430.4 mn in FY 19 to 488.5 mn in FY 20. This is a growth of 13.50%.
2. Chemcon supplies its products to domestic customers and also exports to countries including the USA, Italy, South Korea, Germany, the People’s Republic of China, Japan, UAE, Serbia, Russia, Spain, Thailand, and Malaysia.
3. Mr. Kamalkumar Rajendra Aggarwal, Mr. Navdeep Naresh Goyal and Mr. Shubharangana Goyal are the promoters of Chemcon.
4. After this issue, the promoter holding will drop from 100% to 74.47% and Public shareholding will rise to 25.53%.
5. In terms of production volume in 2019, Chemcon is the only manufacturer of HMDS in India and the third-largest manufacturer worldwide. The company is also the largest manufacturer of CMIC in India and the second largest in the world.
6. Price to Earnings Ratio (P/E) for FY20 = 25.5
7. Debt to Equity Ratio (D/E) for FY20 = 0.1
8. Earnings Per Share (EPS) = 35.7
9. Return on Equity (ROE) for FY 20 = 15.7%
10. Price to Book Ratio (P/B) = 4.0
11. Return on Assets (ROA) = 21.6%
12. Return on Capital Employed (ROCE) = 22.7%