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Anupam Rasayan IPO review (May apply)

Review By Dilip Davda on March 8, 2021

•    ARL is in custom synthesis and speciality chemical manufacturing business.
•    Life science speciality chemical has a major share in top lines.
•    Capex of Rs. 800 cr. in the last three fiscals has started bearing fruits.
•    The issue is aggressively priced based on comparison with listed peers.
•    Investors looking for long term bet may consider investing in this IPO.

Anupam Rasayan Ltd. (ARL) is one of the leading companies engaged in the custom synthesis and manufacturing of specialty chemicals in India (Source: F&S Report). It commenced business as a partnership firm in 1984 as a manufacturer of conventional products and have, over the years, evolved into custom synthesis and manufacturing of life science-related specialty chemicals and other specialty chemicals, which involve multi-step synthesis and complex technologies, for a diverse base of Indian and global customers. The company's key focus in custom synthesis and manufacturing operations is developing in-house innovative processes for manufacturing products requiring complex chemistries and achieving cost optimization.

It has two distinct business verticals (i) life science-related specialty chemicals comprising products related to agrochemicals, personal care and pharmaceuticals, and (ii) other specialty chemicals, comprising specialty pigment and dyes, and polymer additives. In Fiscal 2020 and in the nine months ended December 31, 2020, its revenues from life science-related specialty chemicals vertical accounted for 95.37% and 93.75%, respectively, of revenue from operations, while revenue from other specialty chemicals accounted for 4.63% and 6.25%, respectively, of revenue from operations, in such periods.

ARL has developed strong and long-term relationships with various multinational corporations, including, Syngenta Asia Pacific Pte. Ltd., Sumitomo Chemical Company Limited and UPL Limited that has helped it expand product offerings and geographic reach across Europe, Japan, United States and India. In particular, it has been manufacturing products for certain customers for over 10 years. In the nine months ended December 31, 2020, ARL manufactured products for over 53 domestic and international customers, including 17 multinational companies. The Government of India has also recognized the Company as a three-star export house.

According to the F&S Report, India's specialty chemicals industry is expected to grow at a CAGR of approximately 10% to 11% over the next five years, due to rising demand from end-user industries, along with tight global supply on account of stringent environmental norms in China.

As of December 31, 2020, ARL operated six multi-purpose manufacturing facilities in Gujarat, India, with four facilities located at Sachin, Surat, Gujarat and two located at Jhagadia, Bharuch, Gujarat and an aggregate installed capacity of 23,438 MT. In addition, given that company's operations are primarily export-oriented, the close proximity to Adani Hazira Port of its facilities located at Sachin, Surat, Gujarat helps in reducing freight and logistics costs.

To part finance repayment/prepayment of certain debts with accrued interest (Rs. 563.70 cr.), general corpus fund needs, the company is coming out with a maiden IPO by way of fresh equity issue worth Rs. 760 cr. The issue is for approx 13693698 equity shares (at the upper cap of the price) of Rs. 10 each being offered in the price band of Rs. 553 - Rs. 555 per share. Minimum application is to be made for 27 shares and in multiples thereon, thereafter. The company has reserved 220000 equity shares for eligible employees and out of the rest, it has allocated 50% QIBs, 15% HNIs and 35% for Retail investors. The company is offering a discount of Rs. 55 per share to employees.

The issue constitutes 13.71% of the post issue paid-up equity capital of the company. The issue opens for subscription on March 12, 2021, and will close on March 16, 2021.

This issue is jointly lead managed by Axis Capital Ltd., Ambit Pvt. Ltd., IIFL Securities Ltd. and JM Financial Ltd. and KFin Technologies Pvt. Ltd. is the registrar to the issue. Post allotment, shares will be listed on BSE and NSE.

Having issued initial equity at par, it raised further equity in the price range of Rs. 113.41 to Rs. 249.61 per share between November 2016 and November 2020. It has also issued bonus shares in the ratio of 9 for 1 in June 2005, 1 for 4 in July 2006, 1 for 4 in March 2011 and 4 for 1 in March 2015. The average cost of acquisition of shares by the promoters is Rs. 0.19, Rs. 1.32, Rs. 5.83 and Rs. 125.52 per share.

ARL's current paid-up equity capital of Rs. 86.21 cr. will stand enhanced to Rs. 99.90 cr. post issue. With the higher price of the IPO, the company is looking for a market cap of Rs. 5544.48 cr.


On the financial performance front, for the last three fiscals, ARL has (on a consolidated basis) posted turnover/net profits of Rs. 349.18 cr. / Rs. 40.34 cr. (FY18), Rs. 520.96 cr. / Rs. 50.21 cr. (FY19) and Rs. 539.39 cr. / Rs. 52.98 cr. (FY20). For the first nine months of the current fiscal ended on December 31, 2020, it has earned a net profit of Rs. 48.09 cr. on a turnover of Rs. 563.16 cr. Due to essential commodity, ARL continued its operations and despite the pandemic scare, it achieved good performance. Its revenue consists 65% of exports and 35% of domestic sales.

For the last three fiscals, ARL has posted an average EPS of Rs. 6.77 and an average RoNW of 10.18%. The issue is priced at a P/BV of 5.8 based on its NAV of Rs. 95.64 per share as of December 31, 2020, and at a P/BV of 3.5 based on post issue NAV of Rs. 158.57 per share(at the upper price band).

If we annualized FY21-9M earnings and attribute it to fully diluted post issue equity, then the asking price is at a P/E of around 86.45 against an industry composite P/E of 42.81. Thus the issue appears aggressively priced on these parameters.  

According to management, since they have completed major Capex plans of Rs. 800 crore in the last three years and expanded capacities are in operations, the company has started yielding benefits with a CAGR of 24.29% in total revenue from FY18 to 9M-FY21 and trends are expected to continue. Good relationship with global customers with repeat orders encouraged ARL to follow prudent marketing strategy.

As per offer documents, ARL has shown PI Industries, Navin Fluorine, Astec Lifescience and SRF as its listed peers. They are currently trading at P/Es of around 54.21, 30.23, 28.64 and 42.51 (As of March 08, 2021). However, they are not fully comparable on an apple to apple basis.  

The company has not paid any dividend so far, however, post listing; the company will be contemplating a prudent dividend policy, said management.

The four Book Running Lead Managers (BRLMs) associated with the offer have handled 27 issues in the past three fiscals, out of which 9 issues closed below the issue price on the listing date.

Conclusion / Investment Strategy

Based on the companyââ‚-â„¢s financial data, the issue appears aggressively priced. However, considering the rising fancy for life care and speciality chemicals segment linked with future performance trends, the company is expected to do well post listing going forward. Based on these aspects, investors looking for a long term bet may consider investing in this IPO.

Review By Dilip Davda on March 8, 2021

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

Anupam Rasayan IPO FAQs

  1. 1. Why Anupam Rasayan IPO?

    The initial public offer (IPO) of Anupam Rasayan India Limited offers an early investment opportunity in Anupam Rasayan India Limited. A stock market investor can buy Anupam Rasayan IPO shares by applying in IPO before Anupam Rasayan India Limited shares get listed at the stock exchanges. An investor could invest in Anupam Rasayan IPO for short term listing gain or a long term.

  2. 3. Anupam Rasayan IPO what should investors do?

    Anupam Rasayan IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Anupam Rasayan IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  3. 4. Is Anupam Rasayan IPO good?

    Our recommendation for Anupam Rasayan IPO is to subscribe for long term.

  4. 5. Is Anupam Rasayan IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Anupam Rasayan IPO.

  5. 6. When will Anupam Rasayan IPO allotment status?

    The Anupam Rasayan IPO allotment status will be available on or around March 19, 2021. The allotted shares will be credited in demat account by March 23, 2021. Visit Anupam Rasayan IPO allotment status to check.

  6. 7. When will Anupam Rasayan IPO list?

    The Anupam Rasayan IPO will list on Wednesday, March 24, 2021, at BSE, NSE.