Chemplast Sanmar IPO fully subscribed on final day of bidding; QIP portion subscribed 2.56 times

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Chemplast Sanmar IPO's portion set aside for qualified institutional buyers was subscribed 2 percent and that of non-institutional investors 10 percent. Retail investors have put in bids 1.63 times their reserved portion

August 12, 2021 / 03:16 PM IST

The initial public offering (IPO) of Chemplast Sanmar, a specialty chemicals manufacturer, has been subscribed 1.84 times on August 12, the final day of bidding.

The offer received bids for 7.35 crore equity shares against an IPO size of 3.99 crore shares, the subscription data available on exchanges showed.

The portion set aside for qualified institutional buyers was subscribed 2.56 times and that of non-institutional investors saw 23 percent subscription.

Retail investors have put in bids 2.11 times their reserved portion. The public issue opened for subscription on August 10.

Chemplast Sanmar, one of India's leading manufacturers of specialty paste PVC resin on the basis of installed production capacity, raised Rs 1,732.5 crore from several anchor investors on August 9. It is looking to mop up Rs 3,850 crore through the public issue, comprising a fresh issue of Rs 1,300 crore and an offer for sale of Rs 2,550 crore by selling shareholders.

The company is returning to the exchanges after nine years. It delisted in June 2012 when it acquired shares of the face value of Re 1 each from investors at Rs 15 per share. This is equivalent to Rs 75 per share of face value Rs 5 each.

Also read: Chemplast Sanmar IPO | 10 key things to know before subscribing to it

The price band for the offer has been fixed at Rs 530-541 a share. "This is in comparison to the equivalent delisting price of Rs 75 per share of the face value of Rs 5 each in 2012," said Saurabh Joshi, Research Analyst at Marwadi Shares and Finance.

As far as valuations are concerned, considering the FY21 adjusted EPS of Rs 25.95 on a post-issue basis, the company is going to list at a P/E of 20.85 with a market cap of Rs 8,553.7 crore, while its peers namely PI Industries and SRF are trading at a P/E of 61.16 and 37.26 respectively, it said.

Also read: Chemplast Sanmar IPO: Should you subscribe?

Marwadi Shares assigned a "subscribe (with caution)" rating to this IPO as the company is well-positioned to capture favourable industry dynamics. However, the negative net asset value along with higher trade payable days warranted caution from a long-term perspective, the brokerage said.

Chemplast is also the third-largest manufacturer of caustic soda and the largest manufacturer of hydrogen peroxide, in the South India region, on the basis of installed production capacity as of December 2020 and one of the oldest manufacturers in the chloromethanes market in India.

Pursuant to the CCVL acquisition, the company picked 100 percent equity interest in CCVL that is the second-largest manufacturer of suspension PVC resin in India and the largest manufacturer in the South India region, on the basis of installed production capacity as of December 2020.

In the grey market, investors traded Chemplast Sanmar shares at a premium of Rs 15 or 2.8 percent compared to the upper end of issue price band of Rs 541 a share, the IPO Watch and IPO Central data showed.

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