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Vadivarhe Speciality NSE SME IPO review (Apply)

Review By Dilip Davda on May 17, 2017

Vadivarhe Speciality Chemicals Ltd (VSCL) is primarily engaged in manufacturing of Speciality chemicals, Active Pharmaceutical ingredients, intermediate and personal care ingredients. It is a a globally active, Indian chemical producer, focused on organic chemicals and custom synthesis. It has entered into an agreement with Enaltec Labs Pvt Ltd in December 2012 to manufacture API products for them for a period of 10 years based on the material and specification provided by them. The company has also entered into an agreement with Zenvision Pharma LLP for offering its manufacturing facility on Loan and License basis. Some of its major clients are Glaxo Smithkline Pharmaceuticals Ltd, Fine Organics Ltd UK, Chem-Impex International INC, D C Fine Chemicals, USV Ltd, Lupin Ltd, Mankind Pharma Limited, Himedia Laboratories Pvt. Ltd., Hetero Labs Ltd & many others in the Domestic and International sector.

To part finance its working capital needs and general corpus fund requirements, the company is coming out with a maiden IPO of 3444000 equity share of Rs. 10 each at a fixed price of Rs.42 per share to mobilize Rs. 14.46 crore. Offer consists of fresh equity issue of 689000 equity share and the rest by way of offer for sale. Issue opens for subscription on 22.05.17 and will close on 25.05.17. Minimum application is to be made for 3000 shares and in multiples thereof, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Hem Securities Ltd and Bigshare Services Pvt Ltd is the registrar to the issue. On Rs. 10 FV basis after issuing equity at par on MoA, it raised further equity at a price of Rs. 1000 per share in 2010 and has also issued bonus shares in the ratio of 8 for 1 in January 2010, 1.5 for 1 in February 2013 and 3 for 2 in February 2016. Post issue, company's current paid up equity capital of Rs. 12.09 crore will stand enhanced to Rs. 12.78 crore.

On performance front, the company has posted turnover/net profits of Rs. 13.99 cr. / Rs. 0.07 cr. (FY14), Rs. 19.13 cr. / Rs. 3.98 cr. (FY15), Rs. 26.43 cr. / Rs. 3.38 cr. (FY16) and Rs. 35.37 cr. / Rs. 5.79 cr. (FY17). Thus while its top line has shown continuous growth, its bottom line suffered a bit in FY16. Thus if we attribute latest earnings on the fully diluted equity post issue, then asking price is at a P/E of 9 plus(against industry composite of 32 plus and peers trading in the range of 14 to 21 P/E) and P/BV at 2.14. Its average RoNW for last three year is 23.07%.

On merchant banker's front, this is the 32nd mandate from its stable since 2013 and last 10 listings have shown positive trends on the day of listing.

Conclusion: Investors may consider investment from short to long term in this reasonably priced issue.


Conclusion / Investment Strategy

Investors may consider investment from short to long term in this reasonably priced issue of Vadivarhe Speciality NSE SME IPO.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on May 17, 2017

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 information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

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.

Email: dilip_davda@rediffmail.com

Vadivarhe Speciality IPO FAQs

  1. 1. Why Vadivarhe Speciality IPO?

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

  2. 2. How is Vadivarhe Speciality IPO?

    Read the Vadivarhe Speciality IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Vadivarhe Speciality IPO what should investors do?

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

  4. 4. Is Vadivarhe Speciality IPO good?

    Our recommendation for Vadivarhe Speciality IPO is to subscribe.

  5. 5. Is Vadivarhe Speciality IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Vadivarhe Speciality IPO.

  6. 6. When will Vadivarhe Speciality IPO allotment status?

    The Vadivarhe Speciality IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Vadivarhe Speciality IPO allotment status to check.

  7. 7. When will Vadivarhe Speciality IPO list?

    The Vadivarhe Speciality IPO will list on Friday, June 2, 2017, at NSE SME.