CHEMCON IPO : Apply or Not ????

 

About the Company

1. Incorporated in 1988, Chemcon Speciality Chemicals Ltd is a manufacturer of specialized chemical products i.e. HMDS and CMIC

2. Chemcon Chemicals is a leading manufacturer of Pharmaceutical chemicals and generates maximum revenue from this particular segment


Business Expertise
- Oilfield chemicals (Calcium Bromide, Sodium Bromide, and Zinc Bromide)

- Pharma intermediates, Silanes, and chemicals contract manufacturing work

- It exports products to global markets covering the US, Germany, Italy, South Korea, Japan, the United Arab Emirates, Serbia, Russia, Spain, Thailand and Malaysia

- Hetero Labs Limited, Laurus Labs Ltd, Aurobindo Pharma Ltd, Lantech Pharmaceuticals Ltd, Macleods Pharma Ltd are the key customers of its Pharma chemical business

- Shree Radha Overseas, Universal Drilling Fluids, Water Systems Speciality are some of the clients of its oilfield chemicals segment.

- KamalKumar Rajendra Aggarwal, Navdeep Naresh Goyal, and Shubharangana Goyal are the promoters of the company

Competitive Strengths
• Largest manufacturer of pharmaceutical chemicals across the globe.
• Leading oilfield chemicals manufacturer in India.
• Diversified clientele base in the domestic and global markets.
• Strong and consistent financial performance.
• Dedicated manufacturing plants for each product.

Company Financials




Purpose of IPO??
• To meet capital expenditures for expansion of manufacturing facility.
• To meet business working capital requirements.
• To meet general corporate purposes.


IPO Issue Details



The Percentage of Offer Size available for Allotment/allocation:
1. QIBs: 50%
2. Non-Institutional Investors: 15%
3. Retail Individual Investors: 35%

Positives
- From FY 2018-2020 the PAT is growing consistently at a healthy CAGR of 29 and 36 respectively. 
- Debt Equity Ratio is 0.3 in FY-20
- Good substitute for the imports from China and has good opportunity to expand in domestic market.
- Strong financials & fundamentals.
- Low is P/E
- Booming Sector and good growth in future.

Negatives
- Promoters & Promoters Group's corporate Governance is issue to be looked out.

Peers of the Company
- Aarti Industries, Vinati organics, Atul, Neogen Chemicals, Sudharshan Chemicals, 

Personal View
- We will be buying this IPO only for the listing gains.
- No long term view suggested from our end for this company, once the listing is done and everything goes well, we will be booking profits and exiting in 1-2 days.

Dos & Don'ts
- Apply only one lot as the IPO is going to be highly oversubscribed and even if you apply 10 lots you will be allotted only 1 lot at listing.
- Do not apply from different Demat accounts linked with same PAN Details, your subscription will likely get rejected.
- You can apply from different Demat acounts linked with different PAN e.g from your family members account so as to get more chances of allotment





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