Anupam Rasayan IPO: Weak or strong? Here is what subscription data highlights
Anupam Rasayan IPO subscribed 0.59 times. The public issue subscribed 1.19 times in the retail category, and 0.02 times in the NII category by Mar 12, 2021 12.45 pm. Anupam Rasayan is engaged in manufacturing of custom synthesis (CSM) and specialty chemicals in India. Anupam Rasayan enjoys a long standing relationship with its customers, given its fully integrated operations with presence across the value chain.
Anupam Rasayan IPO subscribed 0.59 times. The public issue subscribed 1.19 times in the retail category, and 0.02 times in the NII category by Mar 12, 2021 12.45 pm.
Anupam Rasayan is engaged in manufacturing of custom synthesis (CSM) and specialty chemicals in India. Anupam Rasayan enjoys a long standing relationship with its customers, given its fully integrated operations with presence across the value chain. It derives 87% of its revenue from top 10 customers with whom it has long term agreements between 2-5 years.
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Anupam Rasayan has significantly expanded its product portfolio to 41 of which Life science products catering to agrochemicals, personal care and pharma contribute 90% of revenue while exports form 60%. Development of new complex chemistries like hydrogenation, photo chlorination along with focus on higher value products would help in increasing the wallet share further.
Zee Business Managing Editor Anil Singhvi said that the Valuations of the company are expensive at current levels.
Major capex behind; asset sweating to support growth Anupam Rasayan:
The CSM market in India is expected to grow at 12% CAGR over next 5 years owing to strong demand domestically led by Government’s Make in India campaign as well as globally due to China+1 strategy adopted by MNCs. Over the last 3 years, Anupam Rasayan undertook a capex of Rs 8 bn to expand its manufacturing capacity to 23,438MT, majority of which commenced in Mar '20. Now with major capex behind, the commissioning of assets would help ARL capitalize on the growth opportunities which have started to reflect in 9M FY21 revenues.
Healthy Financials of Anupam Rasayan:
Over FY18-20, ARL’s Revenue/EBITDA/PAT grew at a CAGR of 24%/35%/140% while EBITDA margins expanded 397bps to 25.5%. Backward integration in FY15 helped ARL reduce its import dependence to 22% by FY20 and improve its margins. Focus on higher value products with supported margins. In 9MFY21, Revenue/EBITDA/PAT grew 45%/28%/12% YoY. The net D/E stood at 0.9x as of 9mFY21, which post repayment, would reduce to zero. Return ratios are suppressed at 10% due to huge capex undertaken which could improve with its commissioning.
Anupam Rasayan Valuation & View:
Motilal Oswal like Anupam Rasayan given its presence in the high growth CSM market, wide product portfolio, strong client relationship and high entry barriers. Anupam Rasayan is expected to witness strong growth for next 2-3 years given its recent completion of major capex and strong sectoral tailwinds. The issue is valued at 3.5x FY21 P/BV and 7.7x FY21 EV/Sales on an annualized and post issue basis. Though the valuation appears little on a higher side both on absolute and relative basis, in the current scenario the market prefers emerging growth stories. Hence Motilal Oswal recommends Subscribe to the issue.
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