Clean Science and Technology Limited - IPO Note

Clean Science & Technology - IPO Note
IPO
by Nikita Bhoota 06/07/2021

Clean Science & Technology Ltd IPO Details

Issue Opens - July 07, 2021

Issue Closes - July 09, 2021

Price Band - ₹ 880-900

Face Value - ₹1

Issue Size - ~₹1,546.6 cr (at upper price band)

Bid Lot - 16 Equity Shares

Issue Type - 100% Book building

 

% Shareholding

Pre-IPO

Post-IPO

Promoter Group

94.65

78.51

Public

5.35

21.49

Source: RHP

About Clean Science and Technology

Clean Science and Technology Limited manufactures functionally critical specialty chemicals such as Performance Chemicals, Pharmaceutical Intermediates, and FMCG Chemicals. The company was incorporated in 2003, and within 17 years of incorporation the company has grown to be the largest manufacturer globally of MEHQ, BHA, Anisole and 4-MAP, in terms of installed manufacturing capacities as of March 31, 2021. The company is among the few companies globally which is focused entirely on developing newer technologies using in-house catalytic processes that are eco-friendly and cost competitive. This has enabled the company to emerge as the largest manufacturer globally of certain specialty chemicals in terms of installed manufacturing capacities as of March 31, 2021. Some of these technologies have been developed and commercialized for the first time globally.

Offer Details

The offer is fully comprised of an offer for sale of shares aggregating up to ₹1,546.62 crores at       
the upper price band. The proceeds would go directly to such selling shareholders. The objective of offer is to provide the company with the benefits of listing on the exchanges

 

Clean Science & Technology - Financials

Particulars (Rs million)

FY19

FY20

FY21

Revenue from Operations

3,932.70

4,193.00

5,124.28

EBITDA

1,476.02

1,961.51

2,845.97

EBITDA Margin (%)

37.53

46.78

55.54%

PAT

976.58

1,396.31

1,983.8

PAT Margin (%)

24.83

33.30

38.71

EPS

9.19

13.15

18.68

ROCE (%)

50.75

58.48

73.89

ROE (%)

35.90

40.82

36.76

Net Debt to Equity (x)

0.17

0.23

0.19

 

Competitive Strengths:

Strategic process innovation through consistent R&D Initiatives: 
Clean Science and Technology Limited is among the leading companies in India to have commercialized use of environment-friendly processes to manufacture certain specialty chemicals. This was possible by optimizing the use of conventional raw materials, improving atom economy, enhancing yields, reducing effluent discharge, and consequently increasing cost competitiveness. This process at such a large scale is difficult to replicate and creates a significant barrier for new entrants. 

One of the largest producers globally of certain critical specialty chemicals used across industries:
Clean Science and Technology Limited is amongst the largest producer of certain speciality chemicals in terms of manufacturing capacities as of FY21. The company’s products are used as polymerization inhibitors, intermediates for agrochemicals and pharmaceuticals, anti-oxidants, UV blockers, and anti-retroviral reagents, which are functionally critical in a wide range of industries, including in the manufacture of paints and inks, agro-chemicals, pharmaceuticals, flavors and fragrance, food and animal nutrition, and personal care products.

Strong and long-term relationships with key customers:
The company’s ability to meet the demand along with quality at competitive prices has resulted strong and long-standing relationship with various multinational corporations. Revenue generated from the top 10 cus-tomers represented 47.9% of the revenue from operations as of FY21. The company’s long-term relationships and ongoing active engagements with customers also allow them to plan their capital expenditure, enhance the company’s ability to benefit from increasing economies of scale with stronger purchasing power for raw mate-rials and a lower cost base.

Risks:

  • Operations are dependent on R&D capabilities and their inability to continue to design catalytic processes may adversely affect their business.
  • None of catalytic processes are patented and the intellectual property may not be adequately protected.    
  • Significant portion of their revenue comes from certain key customers and loss of one or more of such customers can have an adverse impact on their operations.

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