Before its IPO, Archean Chemical Industries receives Rs 658 billion from anchor investors.
In FY 2021, Archean Chemical Industries Limited—a member of the nation’s chemical industry—exported more industrial salt and bromine than any other company in India. Additionally, the company has the lowest production costs domestically and globally for these goods. Bromine is widely used in industries like water treatment, medicines, fire retardants, oil and gas battery packs, additives, and agrochemicals. Contrarily, industrial salt is employed in the production of sodium metal, bicarbonate of soda, soda ash, hydrochloric, bleaching powders, sodium sulfate, and chlorine.
The company is the only producer of this product and has found capacities for 28500 MT of bromide, 30,000,000 MT of industrial salt annually, and 1,30,000 MT of sulfate potash annually. The company has access to raw materials in Rann of Kutch, and its manufacturing facilities are close to the Mundra Port and Jakhau Jetty. Transportation is efficient and practical for foreign customers due to the port’s immediate vicinity.
Before its public offering on November 7, speciality marine chemical business Archean Chemical Industries secured Rs 658 crores from anchor investors. Forty-two investors purchased the shares of the company through the anchor book.
In addition to SBI Mutual Fund, Japan Life, Icici, HDFC Birla Sun life mutual, Goldman Sachs, DSP Small Cap Help finance, Abu Dhabi Investment Authority Authority, Kotak Birla Sun life joint, Government Pension Financing International, and Abakkus Emerging Opportunity Fund, these companies offer mutual funds.
Birla, Aditya Through the anchor book, the following institutions made investments in the business: Sun Life, Theleme Indian Master Group, Tata Birla Sun life mutual, BNP Paribas Fund, Segantii India Fund, Elara India Opportunities Help finance, Edelweiss, Saint Capital Help finance, Winro Corporate, and Societe Generale.
In its BSE filing, Archean Chemical stated that the distribution of 1.61 crore share capital to anchor shareholders at the top price range of Rs 407 a share had been finalized. The subscription period for the public issue begins on November 9 and ends on November 11. The company intends to raise Rs 1,462.3 crore through a public offering, which will include a new share issuance for Rs 805 crores and a provision to sell 1.61 crore shares. The offer’s price range is Rs 386-407 a share.
The offer is restricted to qualified institutional buyers to the extension of up to 75%, non-institutional investors to the time of 15%, and retail investors to the area of 10%.
The official registrant for the Archean Chemicals public offering is Link Sm India Private Ltd. The issuance is being managed by JM Financial, ICICI Securities, and IIFL Securities. According to a November 4 article from Mint, shares of Archean Chemical were selling at a profit of Rs 70 before the company’s first public offering.
Archean Chemical Industries sells its goods to 24 domestic consumers and 18 international clients in 13 different nations. The firm was India’s largest salt exporter, exporting 2.7 million MT of commercial salt in FY 2020–21.
In India, the business is the sole producer of sulfate potash. Most of its marine chemical business is done business-to-business, domestically and abroad. Qualified institutional buyers will receive 75% of the allocation, while non-institutional buyers will receive 15% of the shares. Retail bidders now have access to the final 10% of shares.
Through IPOs, the year 2022 has given an abundance of investment prospects for investors. Even as 2022 draws close, the share market is still seeing a steady stream of new initial public offerings. Archean Chemical Industries Ltd. is the latest name on the IPO market. This initial public offering (IPO) will begin on November 9, 2022, and end on November 11, 2022. The information about this IPO and its evaluation is provided below.
The goals of the IPO are highlighted in the RHP for Archean Chemical Industries Limited. The same’s specifics are listed below.
- This IPO has some characteristics of a sale offer. After deducting offer costs and applicable taxes, the corporation will not receive the profits from the transaction.
- The NCDs that the firm has issued will be redeemed or redeemed sooner (in part or whole) using the proceeds from the fresh issuance of the IPO.
- Other goals of the corporation include obtaining listing advantages and other primary business objectives.
Advantages of the business
The following highlights a few of the company’s main advantages.
- The business benefits from being the biggest exporter of industrial salt and bromine while having a sizable global clientele. The business also holds a dominant market share and has room to grow and expand in the industrial salt and bromine categories.
- Because of the high entry barriers to the industry of specialty marine chemicals, it is difficult for competitors to establish a foothold.
- The business has created infrastructure, integrated manufacturing, and reduced costs over the years.
- Despite its development and expansion, the corporation hasn’t let safety and the environment slip from its priorities.
- The business benefits from having seasoned promoters, financiers, and stakeholders, in addition to a highly experienced management team.
The following highlights the various hazards that the organization faces.
- Changes in exchange rates pose the company’s export revenue’s most significant risk.
- Despite being a market leader in the export of industrial salts and bromine, the company seems unable to expand into new export markets.
- The company is also subject to a significant amount of unsecured debt, which puts its operations at risk if repayment is delayed.
- The business also runs the danger of having all of its manufacturing operations in one place. Any significant developments in this area will inevitably have an effect on the company. The chemical industry must strictly adhere to all applicable safety, health, labor, and environmental legislation.
- The production, use, and storage of hazardous materials pose a risk to the company.
IPO by Archean Chemical Industries Limited: Should You Apply?
Over time, the organization has displayed solid financial performance. Even though their sales and profit margins fell in FY 2021, they managed to rise again in FY 2022. They have a fair advantage over their rivals due to their solid financial position, and dominance in the field of specialty chemicals and exports. This company’s PE ratio, which is 38x based on the weighted average of the last three years’ EPS, puts it in the area of a moderately priced IPO compared with the industry standard. Therefore, investors with medium and long investment perspectives should consider the IPO.
Edited by Prakriti Arora