JG Chemicals IPO subscribed 4.8 times on Day 2 so far; retail, NII portions booked 7x

The initial public offering (IPO) of JG Chemicals saw a decent response from the investors during the first day of the bidding process as the issue got fully subscribed. Bidding for the issue, which had kicked-off for bidding on Tuesday, March 5, ended day one with over 2.45 times bidding.

The Kolkata-based JG Chemicals is selling its shares in the price band of Rs 210-221 apiece. Investors can apply for a minimum of 67 shares and its multiples thereafter. It is looking to raise Rs 251.19 crore via IPO, which is entirely a sale of Rs 165 crore and offer-for-sale (OFS) of up to 39,00,000 equity shares.

According to the data, the investors made bids for 3,89,56,279 equity shares, or 4.77 times, compared to the 81,68,714 equity shares offered for the subscription by 2.10 pm on Wednesday, March 06. The three-day bidding for the issue will conclude on Thursday, March 7.

The allocation for retail investors was subscribed 6.66 times, while the portion reserved for non-institutional investors saw a subscription of 6.55 times. However, the quota set aside for qualified institutional bidders (QIBs) attracted bids for only 3 per cent as of the same time.

JG Chemicals, incorporated in 1975, produces more than 80 grades of zinc oxide. It has various industrial applications including ceramics, paints and coatings, pharma and cosmetics, electronics and batteries, agrochemicals, fertilisers, speciality chemicals, lubricants, oil & gas and animal feed.

The grey market premium of JG Chemicals has remained stable after day one's response as the company is commanding a premium of Rs 50 in the unofficial market, suggesting a listing pop of about 23 per cent for the investors. However, the premium in the grey market stood around Rs 60 earlier, when the issue was announced.

Analysts tracking the issue are mostly positive on it, suggesting to subscribe to the issue on the back of strong financial performance, niche market sector, high entry barriers and growing demand for its products in various sectors. However, dependence on one single product and select customers pose a threat to the company.

At the upper price band of ₹221, JGCL is available at a P/E of 35 times, which appears to be fully priced. Given its strong market position, loyal customer base, expansion plans, and growth exploration in Southeast Asia, we suggest a 'subscribe rating for medium- to long-term basis, said Geojit Financial Services.

Ahead of its IPO, JG Chemicals raised Rs 75.36 crore from anchor investors as it allocated 34,09,818 shares at a price of Rs 221 apiece. The company has reserved 50 per cent of the net offer for the qualified institutional investors (QIBs), while non-institutional investors (NIIs) will get 15 per cent of shares. Retail investors will get 35 per cent of the net offer.

JG Chemicals has a leading market position with a diversified customer base, being supplier to 9 out of top 10 global tyre manufacturers and to all of the top 11 Indian tyre manufacturers. It has long-term relationships with customers and suppliers & having robust supply chain with more than 250 customers in last 3 years, said Hem Securities

There are High entry barriers in key end-use industries. Company has shown strong and consistent financial performance and has Experienced and dedicated management team; and has focused on long term sustainability with environmental initiatives and safety standards, it added with a 'subscribe' tag.

Centrum Capital, Emkay Global Financial Services and Keynote Financial Services are the book running lead managers of the JG Chemicals IPO, while Kfin Technologies is the registrar for the issue. Shares of the company are likely to be listed at the bourses- both BSE and NSE- on Wednesday, March 13.


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