Archean Chemical Industries and Five Star Business Finance will make their maket debuts on Monday. Last heard, Archean Chemical Industries commanded a grey market premium (GMPs) of Rs 125 against the price band Rs 386-407 per share, suggesting a 31 per cent listing pop over the issue price of Rs 407.
Five Star, on the other hand, commanded at a discount of Rs 2 against price band Rs 450-Rs 474, suggesting a flattish debut. The two IPOs ran from November 9 to November 11. Archean Chemical Industries IPO was subscribed 32.23 times while that of Five Star Business Finance 70 per cent.
Archean Chemical Industries is a specialty marine chemical manufacturer and focused on producing and exporting bromine, industrial salt, and sulphate of potash to customers around the world. It is the largest exporter of bromine and industrial salt by volume in India in FY21 and have amongst the lowest cost of production globally in both bromine and industrial salt.
It produces its products from its brine reserves in the Rann of Kutch, located on the coast of Gujarat. It manufactures its products at its facility near Hajipir in Gujarat. As of June 30, it marketed its products to 18 global customers in 13 countries and to 24 domestic customers. Brokerages such as Geojit, Hem Securities, Nirmal Bang, Reliance Securities and Ventura Securities had ‘subscribe’ ratings on the issue.
Five Star Business Finance, on the other hand, is an NBFC providing secured business loans to micro-entrepreneurs and self-employed individuals, each of whom are largely excluded by traditional financing institutions. It is headquartered in Chennai, Tamil Nadu with a strong presence in south India and all of its loans are secured by its borrowers’ property, predominantly being SORP.
Over 95 per cent of Five Star Business Finance's loan portfolio comprises loans from between Rs 1 lakh to Rs 10 lakh in principal amount, with an average ticket size of Rs 2.90 lakh. Samco Securities had a ‘subscribe’ rating on this issue; SMC had given it 1.5 out of 5 stars.
Archean Chemical's IPO consisted of a fresh issue of equity shares aggregating up to Rs 805 crore and an offer-for-sale (OFS) of up to 1.61 crore shares by the promoter and investors, including the India Resurgence Fund, a joint venture between the Piramal Group and Bain Capital. The net proceeds of the IPO will be utilised for towards funding the redemption or earlier redemption, in part or full of NCDs issued by the company and for general corporate purposes. IIFL Securities, ICICI Securities, JM Financial Limited are the lead managers of the issue. Link Intime India Private Ltd is the registrar to the IPO.
Five Star, on the other hand, was purely an offer for sale (OFS) by existing institutional investors. The individual promoter did not sell shares as part of the OFS. Analysts were largely mixed on the issue. While a presence in underpenetrated and fast growing segment is a positive, geographic concentration, high competitive intensity in small business finance industry and substantial portion of customers being first time borrowers are seen as key risks.