Archean Chemical shares make decent debut, list at 10% premium to issue price

Shares of speciality marine chemical manufacturer Archean Chemical Industries listed at a premium of 10.57 per cent today against the IPO issue price. The company offered its shares in a price band of Rs 386 to Rs 407.

The stock listed at Rs 450 on NSE. Market cap of Archean Chemical stood at Rs 5,537.38 crore. Total 38.75 lakh shares of the firm changed hands amounting to a turnover of Rs 174.37 crore on NSE.

On BSE, the stock listed at Rs 449, 10.32 per cent higher to the IPO price. Market cap of the firm stood at Rs 5525.08 crore. Total 1.18 lakh shares of the firm changed hands amounting to a turnover of Rs 5.31 crore on BSE.

The company has raised Rs 805 crore from the IPO. The initial public offering (IPO) of Archean Chemical Industries was subscribed 32.23 times on the final day on Friday, November 11, 2022. The issue received bids for 64,31,70,528 shares against 1,99,57,325 shares on offer, according to data available with the National Stock Exchange (NSE). The IPO opened on November 9.

The lot size of Archean Chemical IPO was 36 shares for which one would have to spend Rs 14,652.  A retail individual investor could submit bids for up to 13 lots or 468 shares by spending Rs 1,90,476. The allotment of shares was done on November 16.

Pravesh Gour, Senior Technical Analyst, Swastika Investmart said, "The company's strong listing can be attributed to strong interest from investors. The counter has debuted at Rs. 450, that is 10.57% over its issue price. It was India's leading and largest industrial salt producer, with 2.7 million metric tonnes exported in fiscal 2021. They have 18 global customers in 13 countries and 24 domestic customers. It is a formidable player in the bromine, industrial salt, and sulphate potash industries. The issue was priced at a P/E of 22.82 based on annualised FY22 numbers. However, the company deserves this premium multiple due to its phenomenal growth prospects. Nevertheless, the high debt-to-equity ratio (3.25 based on March, FY 22 consolidated numbers), high product, key customer concentration, and restructuring of loans during FY 17-18 make us averse to the issue. Therefore, we advise investors to lock in listing gains.Those who applied for listing gains can keep a stop loss of Rs 433 in place."

The firm raised Rs 658 crore from 42 anchor investors at the upper price band of Rs 407 per equity share. The speciality marine chemical manufacturer allocated 1,61,67,991 equity shares to anchor investors including SBI Mutual Fund, Nippon India Fund, ICICI Prudential, HDFC Mutual Fund, Goldman Sachs Fund, Ashoka India Opportunities Fund, DSP Fund, IIFL Funds, Kotak Fund Motilal Fund, Tata Mutual Fund, Theleme India Fund, Baroda BNP Paribas Fund and Edelweiss Fund. 

Nomura, Kuber India Fund, BNP Paribas Arbitrage, Aditya Birla Sun Life Insurance Company, ICICI Prudential Mutual Fund (MF), Tata MF, Edelweiss MF and IDFC MF were among the anchor investors, it added. 

The 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 were the lead managers of the issue. Link Intime India Private Ltd is the registrar to the IPO.

Also Read: Five Star Business Finance IPO: Listing date, GMP, issue size and more