Chemspec Chemicals Ltd IPO

Upcoming DRHP

IPO Synopsis

Chemspec Chemicals, a leading manufacturer of critical additives for the FMCG ingredients, filed a DRHP with SEBI to raise funds worth Rs. 700 crores via a complete offer for sale. The OFS will comprise of sale of equity shares by promoters Bhaichand Amoluk Consultancy Services worth Rs. 233 crore, Mitul Vora worth Rs. 233 crores and Rushabh Vora worth Rs.233 crores.

Over the years, the company has evolved from a local supplier to FMCG companies in India to a supplier to multinational FMCG companies in 43 countries across five continents. Revenue from such companies constituted 86.67%, 88.88% and 89.76% of total revenue from operations in FY21, FY20 and FY19 respectively. JM Financial and Axis Capital are the lead managers to the public issue.
 
Objective of the Issue
The proceeds from the Issue will be utilised for:
- Increasing its brand visibility
- Enhancing its brand image
- Offering liquidity to unitholders
- Extending a public market for its equity shares

About Chemspec Chemicals Ltd

Chemspec Chemicals is a leading manufacturer globally of critical additives for FMCG ingredients used in skin and hair care products and intermediates for pharmaceutical APIs used in anti-hypertension drugs. As part of its FMCG product portfolio, it manufactures UV filters which are used as the primary ingredient in sunscreen lotions and creams, antibacterial soaps, anti-dandruff shampoos, and preservatives. The Company is also the largest manufacturer of ‘piroctone olamine’ in India, and the largest producer of ‘chemilide’ (an antibacterial ingredient) in the world with an approximate market share of 70% market share. The company manufactures these products at Taloja facility in Maharashtra which has a production capacity of 6,000 TPA and is approved by US FDA The firm has evolved from a local supplier to FMCG companies in India to a supplier to multinational FMCG companies in 43 countries including North America, Europe, the Asia Pacific region (APAC) including Japan, the Middle East and Africa

Entry barriers also include high cost of product development, complexity of the chemistry involved in manufacturing, time and cost involved in developing technologies and lengthy supplier qualification process
The principal raw materials used to manufacture the products include phenol derivatives, isobutylene derivatives, benzene and aniline derivatives, cresol derivatives, etc which are sourced from Indian manufacturers while some are imported from China and France. Its clientele includes Beiersdorf AG, Unilever Supply Chain Company AG, L’Oreal, DSM Nutritional Products, Godrej Consumers Products, Glenmark Life Sciences, Dr. Reddy's Laboratories, CTX Lifesciences etc.

 

Particulars (in Rs. Crores)

FY21

FY20

FY19

Revenue from contracts with customers

505.91

596.61

325.98

EBITDA

123.83

102.53

24.54

PAT

81.08

60.75

5.12

EPS (basic in Rs.)

16.11

10.4

0.79

ROE

44.23%

59.41%

8.75%

ROCE

59.36%

79.03%

18.15%

 

Particulars (in Rs. Crores)

FY21

FY20

FY19

Total Assets

257.42

254.49

242.64

Share Capital

10.07

0.35

0.45

Total Borrowings

9.25

50.85

94.46

 

Particulars (in Rs. Crores)

FY21

FY20

FY19

Net cash generated from / (used in) operating activities

110.79

80.52

-4.54

Net cash from / (used in) investing activities

-46.83

-13.34

-6.66

Net cash flow from / (used in) financing activities

-44.22

-66.99

10.50

Net increase (decrease) in cash and cash equivalents

19.74

0.19

-0.70

 

Peer Comparison
 

Name of the company

Total Revenue (in Rs. crores)

Basic EPS

NAV Rs. per share

PE

RoNW %

Chemspec Chemicals Limited

510.34

16.11

36.43

NA

44.23%

Galaxy Surfactants Limited

2,784.06

85.2

367.06

36.89

23.20%

Vinati Organics Limited

954.26

26.2

150.16

77.16

17.40%

Aarti Industries Limited

4,506.10

30

201.75

28.66

14.90%

SRF Limited

8,400.04

205.5

1,157.12

36.89

17.50%

Fine Organic Industries Limited

1,133.22

39.3

238.55

78.78

16.50%

PI Industries Limited

4,577.00

49.9

352.13

59.95

13.80%

Navin Fluorine International Limited

1,179.39

52

330.06

74.14

15.80%

Atul Limited

3,731.47

221.2

1,293.31

41.99

17.20%

 


Key Points for Chemspec Chemicals IPO are:-

Key Points

  • Strengths

    1. Leadership position in an industry with a high entry barrier.
    2. Long-standing relationships with a marquee customer and distributor base across geographies.
    3. Continuous R&D and process improvement to drive product development.
    4. Diversified portfolio of functionally critical products across segments.
    5. Advanced manufacturing facility, which is registered with the US FDA, with strong focus on environment, sustainability, health and safety measures.

  • Risks

    1. Unscheduled, unplanned or prolonged disruption of the manufacturing operations or shutdown of facility would have an effect on entire manufacturing operations.
    2. Decline in demand for the end products.
    3. Decrease in the utility of the products that are supplied to various industries.
    4. Any increase in the cost of the raw material or other purchases or a shortfall in the supply of raw materials.
    5. Performance is linked to regulatory policies and approvals of the markets they operate in
    6. Do not have long-term agreements with most of the suppliers or customers thus there could loss of one or more of them or a reduction in their demand for the products
    7. Manufacturing facility is located in a single region.

How to apply for an IPO?

  • Login to your 5paisa account and select the issue in the current IPO section

  • Enter the number of lots and price at which you wish to apply for

  • Enter your UPI ID and click on submit. With this, your bid will be placed with the exchange

  • You will receive a mandate notification to block funds in your UPI app

  • Approve the mandate request on your UPI and funds will be blocked

FAQs

What is the minimum lot size and investment required for the Chemspec Chemicals IPO?

Chemspec Chemicals Ltd IPO details are yet to be announced.

What is the price band of the IPO?

Chemspec Chemicals Ltd IPO details are yet to be announced.

When does the Chemspec Chemicals issue open and close?

Chemspec Chemicals Ltd IPO details are yet to be announced.

What is the size of Chemspec Chemicals IPO issue?

The IPO issue comprises of Rs.700 crore via a complete offer for sale.

Who are the promoters/key personnels of Chemspec Chemicals?

Promoter of Chemspec Chemicals are:

1. Jayant Vora
2. Mitul Vora
3. Rushabh Vora
4. M/S Bhaichand Amoluk Consultancy Services Llp

What is the allotment date of Chemspec Chemicals?

Chemspec Chemicals Ltd IPO details are yet to be announced.

What is the Chemspec Chemicals listing date?

Chemspec Chemicals Ltd IPO details are yet to be announced.

Who are the book runners for Chemspec Chemicals IPO?

JM Financial and Axis Capital are the lead managers to the issue.

What is the objective of the issue?

The proceeds from the issue will be used as follows:

1. Increasing its brand visibility.
2. Enhancing its brand image.
3. Offering liquidity to unitholders.
4. Extending a public market for its equity shares.

How to apply for the Chemspec Chemicals IPO?

To apply for the IPO, follow the steps given below

1. Login to your 5paisa account and select the issue in the current IPO section.
2. Enter the number of lots and price at which you wish to apply for.
3. Enter your UPI ID and click on submit. With this, your bid will be placed with the exchange.
4. You will receive a mandate notification to block funds in your UPI app.

Open Demat Account