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.
Next Article

G R Infraprojects Limited - IPO Note

G R Infraprojects - IPO Note
IPO
by Nikita Bhoota 06/07/2021

G R Infraprojects Ltd IPO Details

Issue Opens - July 07, 2021

Issue Closes - July 09, 2021

Price Band - ₹ 828-837

Face Value - ₹5

Issue Size - ~₹963.28 cr (at upper price band)

Bid Lot - 17 Equity Shares

Issue Type - 100% Book building

 

% Shareholding

Pre-IPO

Post-IPO

Promoter Group

88.04

86.54

Public

11.96

13.46

Source: RHP

Company Background

G R Infraprojects Limited is an integrated road engineering, procurement and construction (“EPC”) company with experience in design and construction of various roads/highways projects across 15 States in India and having recently diversified into projects in the railway sector. The company was incorporated in December 1995. The company’s principal business operations are broadly divided into three categories:

(i) civil construction activities

(ii) development of roads, highways on a Build Operate Transfer (“BOT”) basis, including under annuity and Hybrid Annuity Model (“HAM”); and

(iii) manufacturing activities, under which they process bitumen, manufacture thermoplastic road-marking paint, electric poles and road signage and fabricate and galvanize metal crash barriers.

The Company has executed over 100 projects since 2006.

Offer Details:
The offer is fully comprised of an offer for sale of 11,508,704 shares aggregating up to ₹963.28  
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 brand visibility once it’s shares get listed on the exchanges.

G R Infraprojects - Financials

Particulars (Rs million)

FY19

FY20

FY21

Revenue from Operations

52,825.84

63,726.99

78,441.29

EBITDA

13,263.07

16,370.84

19,125.41

EBITDA Margin (%)

24.90

25.49

24.19

PAT

7,166.38

8,008.32

9,532.21

PAT Margin (%)

13.46

12.47

12.06

EPS

73.91

82.59

98.31

RoNW (%)

32.14

26.45

23.95

Net Debt to Equity (x)

0.86

0.87

1.07

Source: RHP

Competitive Strengths:

Focus on EPC projects with a Pan-India presence
G R Infraprojects Limited is focused on EPC projects which executes a range of construction projects involv-ing varying degrees of complexity. The company’s focused approach would enable them to benefit from future market opportunities and expand into new markets. This combined with the company’s technical experience and pricing, will be critical in competing in the industry.

G R Infraprojects Limited’s Order Book primarily comprised of EPC and HAM projects in the road sec-tor across the states of Uttar Pradesh, Madhya Pradesh, Maharashtra, Gujarat, Chhattisgarh, Rajasthan, Andhra Pradesh, Bihar, Manipur, Odisha and Himachal Pradesh. In addition to these, they also have railway projects in Andhra Pradesh and Madhya Pradesh and an optical fibre project spread across the states of Bihar, Odisha, West Bengal, Andaman and Nicobar Islands, Jharkhand and Sikkim. This shows the pan-India presence that the company has.

Established track record of timely execution 
G R Infraprojects Limited has more than 25 years of experience in the business which enables them in efficient project management and execution of projects with the help of trained and skilled     manpower, efficient deployment of equipment and an in-house integrated model. In the last three years, all the projects were completed within the scheduled time. In addition, in Fiscals 2021, 2020, and 2019, of the total projects completed by the company, 50.00%, 50.00% and 80.00% of such projects were completed before the scheduled completion date, respectively. Timely completion of the projects also enables them to get a bonus.

Risks:

  • Continued effect of Covid-19 pandemic on the company’s business and operations is highly uncertain and cannot be predicted.
  • Failure to obtain new contracts would materially affect the company’s business.
  • Business is dependent on road projects awarded by the GoI or the State Governments and any adverse change in their policies may lead to contracts getting terminated, renegotiated or foreclosed. This would have a material impact on the company’s business
Next Article

Clean Science and Technology IPO Subscription Details - Day 1

Clean Science & Technology IPO Subscription - Day 1
IPO
by Nikita Bhoota 07/07/2021

Clean Science and Technology has been subscribed 1.70 times today on July 7, the first day of bidding.
The offer has received bids for 2.09 crore equity shares vs. IPO size of 1.23 crore equity shares, the subscription data available on the exchanges showed.

The reserved portion of non-institutional investors has been subscribed 2.15 times, retail investors (2.48 times), whereas qualified institutional buyers have put in bids for 18,224 equity shares vs. their reserved portion of 35.15 lakh shares.

The offer size has been reduced to 1.23 crore equity shares from 1.718 crore equity shares on completing fundraising from anchor investors on July 6. 

Clean Science garnered Rs 463.98 crore by issuing 51,55,404 equity shares at a price of Rs 900 per share.

The Rs 1,546.6-crore public issue, a complete offer for sale, will close for subscription on July 9, 2021. The price band for the offer has been fixed at Rs 880-900 per equity share.

Clean Science & Technology IPO - subscription Status

Category Subscription Status
Qualified Institutional (QIB) 0.01 Times
Non-Institutional (NII) 2.15 Times
Retail Individual 2.48 Times
Total 1.70 Times

 

About the Company:

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.

Next Article

G R Infraprojects IPO subscription Details - Day 1

G R Infraprojects IPO subscription Details - Day 1
IPO
by Nikita Bhoota 07/07/2021

G R Infraprojects IPO has been subscribed 2.28 times today on July 7, the first day of bidding. Investors have put in bids for 1.85 crore equity shares vs. offer size of 81.23 lakh shares.

Retail investors are at the leading the race, putting in bids 3.25 times their reserved portion, the subscription data available on exchanges showed.

The portion set aside for non-institutional investors has subscribed 2.68 times and that of employees 24 percent, whereas qualified institutional buyers have put in bids for 49 percent of their reserved portion.

GR Infraprojects will raise Rs 963.3 crore through its public issue comprising a complete offer for sale by existing shareholders. Of which, Rs 283 crore has already been raised from anchor investors at a higher end of the price band of Rs 828-837 per share.

G R Infraprojects IPO - Subscription Status

Category

Subscription Status
Qualified Institutional (QIB) 0.49 Times
Non-Institutional (NII) 2.68 Times
Retail Individual 3.25 Times
Employee 0.24 Times
Total 2.28 Times


About the Company:

G R Infraprojects Limited is an integrated road engineering, procurement and construction (“EPC”) company with experience in design and construction of various roads/highways projects across 15 States in India and having recently diversified into projects in the railway sector. The company was incorporated in December 1995. The company’s principal business operations are broadly divided into three categories:
(i) civil construction activities
(ii) development of roads, highways on a Build Operate Transfer (“BOT”) basis, including under annuity and Hybrid Annuity Model (“HAM”); and
(iii) manufacturing activities, under which they process bitumen, manufacture thermoplastic road-marking paint, electric poles and road signage and fabricate and galvanize metal crash barriers.
The Company has executed over 100 projects since 2006.

Next Article

Zomato IPO – Fun Facts and the Serious Truth

Zomato IPO – Fun Facts
IPO
08/07/2021

Zomato Ltd needs no introduction with its ubiquitous presence in the food delivery space in India. Think of food delivery, and it is obvious that you would whip out your mobile phone and click on the Zomato app. The much awaited IPO of Zomato is here and is expected to hit the market around the last week of July. What we know is that it will be a Rs.7,785 crore IPO which will include Rs.7,500 crore by way of a new issue and Rs.375 crore by way of an offer for sale to give exit to its largest shareholder, Info Edge Enterprises.

Should you invest in the Zomato IPO? Hard to decide before the final pricing comes in, but here are some fun facts and the serious truths about the Zomato IPO. Hopefully, this should help you to make a decision about investing in the Zomato IPO.

First the fun facts on Zomato

Here are some fun facts which would give you a quick idea of the business model of the company. It is like understanding the business model upside down with fun facts.

  • In the year 2020, the most ordered item on Zomato was Biryani with Zomato delivering approximately 22 orders per minute.
  • In 2020, the biggest single order was worth Rs.199,950 and smallest order was worth Rs.10 with maximum repeat orders of 360 pizzas coming from 1 customer in Jalgaon.
  • Surprisingly, Delhi, Mumbai, Bengaluru and Pune ordered 2.5 million momos in 2020, with Delhi ordering more than the other big-3 cities put together.
  • Behind these fun facts there are some hard numbers too. Zomato gets 9 crore visitors a month and covers 12,000 restaurants across 110 cities in 23 nations.

But how did this idea come about? The founders of Zomato, Deepinder Goyal and Pankaj Chaddah, were IIT-Delhi alumni working for Bain & Co. They saw colleagues spend a lot of time trying to order lunch and thus the idea of Zomato was born in 2008.

Now for the serious truth about the Zomato IPO

As investors await the finer details of the Zomato IPO, here is a quick take on some hard facts behind the Zomato story. It promises to be one of the biggest IPOs in recent times but here are the hard facts behind the apparently enticing story of Zomato.

  1. Zomato was founded in 2008 as Foodiebay but the name was changed to Zomato in 2010 and has remained so since. Its international operations include Qatar, Sri Lanka, UAE, Philippines, South Africa, UK, US and Australia.
  2. Zomato does not only delivery restaurant delicacies. It also delivers groceries and other home needs. In fact, Zomato is one of the major B2B suppliers of food and other ingredients to restaurants and other institutional customers.
  3. Zomato has raised $2.1 billion till date from venture funds and the last round valued the company at $5.4 billion. The IPO is expected to value the stock of Zomato at closer to $7.5 billion. 
  4. Finally, a quick word on why Zomato could be profitable soon. They spent as little as Rs.55 on acquiring a customer and it breaks even once the first order is delivered. In a word, the potential is humongous.

So, that in a nutshell are the fund facts and the hard truth about the issue
 

Read: Zomato IPO Note

Next Article

5 Large Cap Stocks to BUY

5 best large cap stocks to buy
by Nikita Bhoota 08/07/2021

Historically, Recommended Large Cap Stocks Portfolio Performance

For FY21 we had built and recommended 5 Large cap Stocks to BUY Portfolio for investors. We are glad to announce that our recommended Portfolio has performed well wherein almost all the stocks in the portfolio have achieved the desired targets and have given strong returns throughout the last year. Below is the stock-wise performance of 5 Large cap Stocks to BUY Portfolio between the period 26 August 2020- 05 July 2021. Sensex jumped 35% in the same period.
 

Company

26-Aug-20

05-Jul-21

Gain

Infosys

951

1,579

66.0%

Power Grid

185

230

24.5%

ICICI Lombard

1,264

1,565

23.8%

SBI Life Insurance

839

1,010

20.4%

Bharti Airtel

515

524

1.7%

Source: BSE

Therefore, we recommend investors to consider booking profit in the stocks that have generated healthy returns and invest in our new large cap stocks portfolio.

Here, are out 5 large cap stocks picks based on financial performance, management, business outlook and historical trend to earn healthy returns in the long run.
 

Company

CMP (Rs)*

Target (Rs)

Upside

HDFC Bank

1,495

1,780

19.1%

ITC

204

240

17.6%

Power Grid

230

280

21.7%

Bharti Airtel

524

753

43.7%

HCL Technologies

980

1,200

22.4%

Source: BSE,5paisa Research, *CMP as on 5th July 2021.

HDFC Bank (HDFCB):

About the Company:
HDFC Bank is the largest private sector bank in India with a market share of ~9.5% in system loans as of FY20. It has a unique franchise in the banking sector with a loan portfolio of ~Rs 9.9tn (as on March 2020), strong national network of 5,416 branches spread across urban and rural markets.

Investment Rationale:
HDFCB reported a strong performance in the quarter. Healthy loan growth, strong growth in fee income, and stable margins were the key operating highlights. Asset quality improved QoQ, with GNPL ratio at 1.32% and restructured loans at 0.57%. The Bank also made further contingent provisions of Rs13bn, on a prudent basis. Total additional provisions now stand at Rs231bn or 2.0% of loans. Going forward, profitability would be supported by improving margins, higher cost efficiencies and lower credit costs. Asset quality for the Bank has held-up well, despite the COVID-impact and it still carries a high provision buffer, which keeps it well-positioned going forward. We project PAT CAGR of 24.7% over FY21-23E.

Year

Net profit (Rs Cr)

BVPS(Rs)

P/BV(x)

ROE

FY21

31,120

369.5

4.0

16.6%

FY22E

39,040

440.3

3.4

17.5%

FY23E

48,410

515.2

2.9

18.4%

Source: 5paisa Research

ITC

About the Company:
ITC has a diversified presence in FMCG, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, and Information Technology. While ITC is a market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent business of FMCG. ITC has a market share of 80% in Cigarettes and has iconic brands like Gold Flake and Kings Classic in the space. It operates hotels under the Welcome and Fortune brands. ITC has a high level of expertise in developing FMCG brands from scratch: e.g. Sunfeast (biscuits), Bingo (chips), Yippee (noodles), and Aashirvaad (flour).

Investment Rationale:
Cigarette volumes recovered to nearly pre-Covid levels towards the close of the year. Hotels business turned EBITDA-positive in 2HFY21 (Ebitda margin of 8.7% in 4QFY21). However, continued closure of educational institutions impacted stationery sales in FMCG business.  The company has recommended a final dividend of Rs5.75, taking the total dividend for the year to Rs10.75, which translates into a dividend pay-out of ~100% in FY21. While constraints in increasing the number of operating outlets and the limited hours of operations are posing challenges at the frontend, there are no material supply bottle-necks. The company remains well geared to swiftly respond to the changing situation on the ground. We expect revenue, EBITDA and PAT CAGR of 9.2%, 11.9% and 13.3% respectively over FY21-FY23E.
 

Year

Net Sales (Rs Cr)

OPM (%)

APAT (Rs Cr)

EPS(Rs)

PE (x)

FY21

49,273

34.5

13,383

10.9

18.8

FY22E

54,545

36.6

16,092

13.1

15.6

FY23E

58,760

36.3

17,175

14.0

14.6

Source: 5paisa Research

Power Grid

About the Company:
PGCIL is India’s Central Transmission Utility (CTU) owned by the Government of India (57.9% stake). PGCIL owns and operates one of the largest transmission networks spanning 125,000 circuit kilometres, second only to the Grid Corporation of China. As at end FY16, PGCIL had an inter-state power transmission capacity of 59GW. Currently, it carries >40% of India’s total generated electricity. Further, PGCIL has two other operating businesses − telecom and consulting − which contribute less than 5% to its revenue and profit.

Investment Rationale:
PGCIL’s 4QFY21 standalone PAT was up 10% YoY, as it completed Rs70bn worth of projects. The management says 1) the aggregate projects pipeline is now Rs410bn and would be completed in the next 2-3 years; 2) Company expects the project pipeline to improve, as several large projects, such as Leh-Ladakh, are likely to be awarded on nomination basis; also, lines required to evacuate RE power from Gujarat and Rajasthan, etc are likely to be shortly tendered out; 3) standalone capitalisation for FY22 is likely to be ~Rs100bn,of which ~Rs60bn entails TBCB projects; 4) Rs50bn worth of TBCB projects are likely to get transferred to InvIT, in the next 12-18 months; 5) debtor days at >45 have significantly come off QoQ (Rs18bn vs. Rs60bn), as states have availed loans under the Atmanirbhar scheme. We expect revenue, EBITDA and PAT CAGR of 5.6%, 4.5% and 8.2% respectively over FY21-FY23E. Valuations are cheap, in the context of improving growth outlook + dividend yield. Thus, we have a buy rating on the stock.
 

Year

Net Sales (Rs Cr)

OPM (%)

Attributable PAT (Rs Cr)

EPS (Rs)

PE (x)

FY21

38,064

87.9

11,935

22.8

10.1

FY22E

40,799

86.4

13,522

25.8

8.9

FY23E

42,454

86.0

13,965

26.7

8.6

Source: 5paisa Research

Bharti Airtel:

About the Company:
Bharti Airtel is a diversified telecom service provider offering wireless, fixed line, enterprise and DTH services. It is India's largest mobile operator with 34% revenue market share as of 3QFY21. It owns 41.7% stake in Indus Tower, one of the largest towercos in India.

Investment Rationale:
On the earnings call, Bharti management stated that 4Q mobile RMS climbed to an all-time high, although April and May have seen some lockdown-related weakness. Bharti seeks extracting a higher share of wallet from India’s 50m high-income households through its bundled plans offering post-paid, DTH and home BB services. On the enterprise front, Bharti increased its RMS to 31% from 23% in 2 years. Consumption spending weakness, a more aggressive JIO, and likely absence of significant price hikes in the next few months are near-term headwinds, but Bharti would benefit from improved industry structure in the medium term.
 

Year

Net Sales (Rs Cr)

OPM (%)

PAT (Rs Cr)

EV/EBITA (x)

FY21

1,00,615

45.1

-15,100

10.8

FY22E

1,12,900

48.8

3,700

9.0

FY23E

1,34,300

50.9

11,700

7.3

Source: 5paisa Research

HCL Technologies

About the Company:
HCL Technologies Limited is engaged in providing a range of software development services, business process outsourcing services and information technology (IT) infrastructure services. The Company's segments include software services, infrastructure management services and business process outsourcing services.

Investment Rationale:
HCLT reported 4QFY21 USD revenue growth of 2.5% cc QoQ, within its guidance range, due to seasonal decline in Products (-4.9% QoQ), though IT services was strong (+4.4% QoQ). For FY22, HCLT has guided to minimum double-digit revenue growth. Robust net new-deal wins of USD3.1bn in 4Q (49% YoY) and USD7.3bn in FY21 (18% YoY) along with an all-time high pipeline provide comfort on growth visibility. It has guided for FY22 margins in the 19-21% range, incl. ~100bps investments, normal wage hike cycle, and recovery in travel and SG&A costs. It declared dividend of Rs16/sh in 4Q and has raised its quarterly pay-out to Rs6/sh (from Rs4). We expect revenue, EBITDA and PAT CAGR of 11.7%, 8.2% and 13.8% respectively over FY21-FY23E.
 

Year

Net Sales (Rs Cr)

OPM (%)

PAT (Rs Cr)

EPS (Rs)

PE (x)

FY21

75,371

26.6

12,532

46.2

21.2

FY22E

85,436

25.1

14,048

51.8

18.9

FY23E

94,042

25.0

16,219

59.8

16.4

Source: 5paisa Research