Archean produces and exports bromine, industrial salt, and sulphate of potash to customers around the world. It had a leadership position in the domestic bromine merchant sales (43 percent market share) and was the biggest exporter of bromine (82.8 percent market share) in FY21, the red herring prospectus said.
The initial public offering (IPO) of Archean Chemical Industries was subscribed 86 percent as bids came in for 1.71 crore shares against an offer size of 1.99 crores by November 10 afternoon, the second day of subscription. The subscription data available with the exchanges showed that retail investors had been aggressive in bidding for the specialty marine chemical manufacturer’s offer. They had bid 2.39 times the allotted quota.
Non-institutional investors bought 1.42 times the portion set aside for them, while qualified institutional buyers purchased 4 percent shares of the part reserved for them. The company has reserved 75 percent of its offer size for qualified institutional buyers, 15 percent for high-net-worth individuals, and 10 percent for retail investors.
The issue size was reduced to 1.99 crore shares from 3.59 crore shares after the company mopped up Rs 658 crore via anchor book. Archean Chemical Industries is looking to mobilize Rs 1,462.3 crore at an upper price band of Rs 407 a share. The offer will close on November 11.
The IPO comprises a fresh issue of Rs 805 crore and offers for sale of Rs 657.3 crore by Investors India Resurgence Fund (Scheme I and II), and Piramal Natural Resources, along with promoter entity Chemikas Speciality LLP. Chemikas Speciality LLP, Ravi Pendurthi, and his brother Ranjit Pendurthi are the company promoters with a 65.58 percent shareholding in the company. The price band for the offer is Rs 386-407 per share.
At a higher price band, Archean is demanding an EV/Sales (enterprise value to sales) multiple of 3.8x, which is in line with the peer average, Rajnath Yadav of Choice Broking said. Its operations are likely to get support from import substitution, lower exports from China, and lower costs of operations. Thus the macros are positive but demanded stretched valuation is a concern. Thus Choice Broking assigned a “subscribe with caution” rating to the issue, Yadav said.
Archean produces and exports bromine, industrial salt, and sulphate of potash to customers around the world. It had a leadership position in the domestic bromine merchant sales (43 percent market share) and was the biggest exporter of bromine (82.8 percent market share) in FY21, the red herring prospectus said.
As per the RHP, the global bromine market has grown 2.3 percent CAGR over 2017-21 to $3.13 billion. Owing to its wide application across sectors like electronics, oil & gas, agriculture, automotive, and construction, the global bromine market is expected to grow by 5.8 percent CAGR over FY21-25 to reach a size of $3.9 billion, it said.
