Archean Chemical Industries makes a strong debut, lists at 10% premium to issue price
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The company is focused on producing and exporting bromine, which is used as key initial-level materials in several industries
Archean Chemical Industries made a solid stock market debut on November 21, listing at 10 percent premium to its issue price of Rs 407 per share. The shares of specialty marine chemical manufacturer got listed at Rs 450 apiece on the NSE and Rs 449 on the BSE.
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The initial public offering (IPO) of the company was subscribed 32.23 times with major support from qualified institutional buyers putting in bids 48.91 times the allotted portion. High net-worth individuals bought 14.90 times the allotted quota and retail portion was booked 9.96 times.
The company is focused on producing and exporting bromine, which is used as key initial-level materials in pharmaceuticals, agrochemicals, water treatment, flame retardant, additives, oil & gas and energy storage batteries.
It also produces and exports industrial salt, and sulphate of potash to customers, along with marketing products to 18 global customers in 13 countries and to 24 domestic customers.
In FY22, its net profit grew 183 percent to Rs 188.6 crore compared to previous financial year, and revenue rose 52.6 percent to Rs 1,130.4 crore in the same period.
“Based on FY22 earnings, the company is valued at 26.5x P/E, 12.4x EV/EBITDA and 5.1x EV/sales, which seems to be attractive in comparison to its peers, and the industry in which the company operates has high entry barriers,” Narendra Solanki, Head- Equity Research at Anand Rathi Shares & Stock Brokers said.
However, the company has only one manufacturing facility and relies on three products for revenue generation, which is a key risk according to ananlysts. The company does not have long-term agreements with suppliers for raw materials and is also dependent on third-party transportation and logistics service providers, they added.
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