Issue Date: 24th Apr ? 26th Apr 2019 Price Band(Rs): 212 – 215 |? Lot Size (No. of Share): 65
Company Background
Incorporated in 1991, Neogen Chemicals is one of India?s leading manufacturers of bromine-based, and lithium-based, specialty chemicals. Company manufactures specialty organic bromine-based chemical compounds (Bromine Compounds) and other specialty organic chemical compounds as well as specialty inorganic lithium-based chemicals compounds (Lithium Compounds and together with the Bromine Compounds the Products).
Issue Details
Issue Opens
24-Apr-19
Issue Closes
26-Apr-19
Issue Size(Rs in Crore)
132.35
Face value(per equity share)
10
Price Band(Rs.)
212-215
Lot Size(No of Share)
65
No of Shares on Offer(Crore)
0.62
Min order quantity
65
Institutional(%)
50%
Non-Institutional(%)
50%
Commencement of Trading
08-May-19
Strengths
It shown strong revenue growth at 20% CAGR in the last 5 years.
It has shown good improvement in margins in the last 5 years. Its profits grown at 31% CAGR. Its profits are at Rs 6.4 for every Rs 100 of revenue.
Company is one of India?s leading manufacturers of bromine-based, and lithium-based, specialty chemicals in India.
Concerns
There are proceedings pending against the company and its Directors, which, if determined against the company or these directors, may have an adverse effect on its business.
Demand dependent on few industry from application industries such as pharmaceuticals, Agrochemicals, refrigeration and construction chemicals.
Does not have long-term agreements with suppliers for its raw materials. They operate in a highly competitive industry
Our View
The company is asking highest price band of Rs 215 in the P/E of 25x to 49x based on its standalone last year EPS, annualize standalone EPS for 9 months ended Dec-18, and consolidated EPS of 3 years average. Its competitors like Navin Fluorine International is trading at P/E of 19.5x (Lowest) and Vinati Organics at P/E of 58x (Highest) and the industry average P/E is at 37.6x, hence the IPO Price band of Rs 215 per share is fully priced.
As the company is now in fast forward mode with capacities, it holds a promising outlook and investors may consider investment for long-term prospective.
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