Chemplast Sanmar Makes Flat Debut as IPO Frenzy Fizzles Out

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  
  • Home
  • Views On News
  • Aug 24, 2021 - Chemplast Sanmar Makes Flat Debut as IPO Frenzy Fizzles Out

Chemplast Sanmar Makes Flat Debut as IPO Frenzy Fizzles Out

Aug 24, 2021

Shares of speciality chemical company Chemplast Sanmar made a muted debut today as the scrip got listed at Rs 525 on BSE, a 3% discount to its issue price of Rs 541.

On NSE, the scrip debuted at Rs 550, up 1.7%.

Post listing, the market capitalisation of the company stood at Rs 84 bn, according to BSE data.

This is the second time that the Chemplast Sanmar stock has gotten listed on the stock exchanges. The scrip had earlier been delisted from the bourses in June 2012.

That apart, Aptus Value Housing Finance also made its stock market debut today and witnessed a tepid listing as its shares started trading at Rs 333, down nearly 6% from issue price of Rs 353 per share.

Chennai-based Chemplast Sanmar's weak listing this time is much in line with poor listings of Aptus and Nuvoco Vistas this week as the broader market pain has sent midcap and smallcaps falling sharply in terms of valuations, making the debutants look expensive.

--- Advertisement ---
Watch this Before Investing Your Money in EV Stocks

On Monday, we revealed this massive 15x opportunity in electric vehicles.

And also shared the details of 3 EV stocks to ride this mega opportunity.

Now, these are not typical EV stocks. Instead, these are what we call the backdoor EV stocks.

As per our research, the best way to ride the 15x EV wave is through these 3 stocks only.

You can get full details by watching this video...

Chemplast Sanmar received poor response from investors

The initial public offering (IPO) of specialty chemical company had seen a tepid response from investors though the issue sailed through.

The offer was subscribed 2.17 times during 10-12 August as the retail portion was booked 2.29 times.

The portion set aside for qualified institutional buyers was subscribed 2.7 times and that for non-institutional investors saw a 1.03 times subscription.

The company raised Rs 13 bn through its fresh issue and the remaining Rs 25.5 bn through offer for sale (OFS).

Fund usage from the public issue

Chemplast said net proceeds from fresh issue will be utilised for early redemption of non-convertible debentures worth Rs 12.4 bn, whereas proceeds from offer for sale will go to the existing shareholders. It will also use the funds for general corporate purposes.

--- Advertisement ---
[Alert] Sell These 3 Stocks Immediately

These 3 stocks are ticking time bombs in your portfolio.

It is very likely that you could be owning these 3 overvalued...

fundamentally weak... ready to crash stocks... in your portfolio today.

Because many stock brokers have painted rosy pictures of these stocks. But the reality is starkly different.

If the market crashes, then these stocks could wipe out your wealth.

You should get rid of these stocks as soon as possible.

Click her for full details of these 3 landmines

Company financials

The net worth of Chemplast Sanmar turned negative in the fiscal 2021, not based on operational or cash losses, but due to restructuring, primarily in Chemplast Cuddalore Vinyls Limited (CCVL).

The outstanding non-convertible debentures (NCDs) of Rs 12.4 bn were raised in December 2019 at 17.5% interest per annum directed towards investing in Sanmar Group International-SGIL (Rs 4.8 bn) and repayment of advances received from its promoter Sanmar Holdings limited (SHL) (Rs 6.7 bn), with the remaining amount directed towards servicing its debt.

The company has redeemed its investments from SGIL in the year 2021 and another Rs 9.8 bn investment in a joint venture (JV) with a group entity.

On the financial performance front, for the last three financial years, the company has posted net profits of Rs 1.2 bn, Rs 461.3 m, and Rs 4.1 bn in the financial year 2019, 2020, and 2021, respectively.

The company has done a revaluation of assets to show better valuations.

Key Parameters

(Rs m) FY18 FY19 FY20 Dec-20
Revenues 31,254.0 12,543.4 12,576.6 8,751.5
Revenue Growth (%)   -59.9% 0.3%  
Expenses 27,546.3 10,379.5 11,281.5 8,863.6
Profit Before Tax (PBT) 4,077.1 1,934.0 717.0 259.9
Net Profit 2,485.4 1,184.6 461.3 161.4
Data Source: Company's Red Herring Prospectus (RHP)

An overview on company's business

Chemplast is among the leading manufacturers for most of its products.

In speciality paste PVC resin, the company's installed capacity of 66,000 tonnes per annum and along with Finolex with 22,000 tonne capacity, addresses close to half of the domestic demand.

Supported by plant closures internationally and higher import duties, domestic market is expected to grow faster at 5-7% compound annual growth rate (CAGR) in the financial year 20-25.

It also plans on additional capacity of 35,000 tonnes in this segment at a cost of Rs 2.6 bn, operational by 2024.

The company generates revenue from PVC allied products such as caustic soda, hydrogen peroxide, and chloromethanes.

Instant Updates: Join Our Telegram Channel and Get Instant Updates

India's speciality chemical sector

Speciality chemicals account for 20% of the US$4 tn chemicals industry globally, and India's market is predicted to increase at a compound annual growth rate (CAGR) of 12% to US$64 bn by the year 2025.

China is the leading speciality chemicals exporter with an 18% market share in global exports. As nations look for alternatives away from China, India stands to benefit from lower labour costs and a large consumer base.

Also, the easing of lockdown restrictions around the world has improved the outlook for the sector.

Chemplast Sanmar GMP ahead of its listing

Investors solely invested in IPOs of Aptus Value Housing Finance and Chemplast Sanmar for listing gains were disappointed as grey market trends post-Nuvoco Vistas' weak listing suggested a poor listing for the two issues.

Shares of Chemplast Sanmar was available at Rs 25-30 discount to its issue price in the grey market. Market observers said that sentiment had gone from bad to worse.

They noted that even the CarTrade IPO, which was seen as a unique play with no listed peer, got listed at a discount last week despite enjoying a grey market premium of about Rs 200 earlier.

About Chemplast Sanmar

Incorporated in 1985, Chemplast Sanmar is a leading specialty chemical manufacturer in India.

The company is engaged in the manufacturing of specialty paste PVC resin, starting materials, and intermediates for agro-chemical, pharmaceuticals, agro-chemical, and fine chemical sectors.

It also produces other types of chemicals such as Caustic Soda, Chlorochemicals, Hydrogen Peroxide, Refrigerant gas, and Industrial Salt.

It has four manufacturing facilities, among which, 3 are situated at Mettur, Berigai, and Cuddalore in Tamil Nadu, and one is located in Puducherry at Karaikal.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Equitymaster requests your view! Post a comment on "Chemplast Sanmar Makes Flat Debut as IPO Frenzy Fizzles Out". Click here!


More Views on News

ANDHRA PETRO 2020-21 Annual Report Analysis (Annual Result Update)

Oct 27, 2021 | Updated on Oct 27, 2021

Here's an analysis of the annual report of ANDHRA PETRO for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of ANDHRA PETRO. Also includes updates on the valuation of ANDHRA PETRO.

AARTI SURFACTANTS 2020-21 Annual Report Analysis (Annual Result Update)

Oct 27, 2021 | Updated on Oct 27, 2021

Here's an analysis of the annual report of AARTI SURFACTANTS for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of AARTI SURFACTANTS. Also includes updates on the valuation of AARTI SURFACTANTS.

RALLIS Announces Quarterly Results (2QFY22); Net Profit Down 31.9% (Quarterly Result Update)

Oct 20, 2021 | Updated on Oct 20, 2021

For the quarter ended September 2021, RALLIS has posted a net profit of Rs 564 m (down 31.9% YoY). Sales on the other hand came in at Rs 7 bn (up 0.4% YoY). Read on for a complete analysis of RALLIS's quarterly results.

Ami Organics Stock Makes Impressive Debut on Bourses. Lists at 49% Premium (Views On News)

Sep 14, 2021

Shares of Ami Organics makes a strong debut on the stock exchange. Did you bid for the IPO?

Chemplast Sanmar IPO Opens Tomorrow. Should You Bid? (Views On News)

Aug 9, 2021

Chemplast Sanmar was delisted nearly a decade ago from the stock exchanges.

More Views on News

Most Popular

A Complete Guide for Beginners on How to Invest in IPOs

As an investor, you must have endeavoured to find a suitable opportunity for investing in IPOs. But do you know what is an IP...

Tata Group Stocks are on Fire: Which one Should You Buy? (Profit Hunter)

Oct 15, 2021

Tata group stocks are on fire. Find out which one deserves your attention.

India's Big PSU Selloff: Watch Out for these Top Stocks (Views On News)

Oct 15, 2021

The government's plan to divest its stakes in PSUs could spark off a rally in these four stocks.

Up 31,500% in a Year! This Packaging Company Sheds its Penny Stock Status (Views On News)

Oct 18, 2021

What's driving the relentless rally in this packaging company?

Insider Alert! Promoters are Increasing their Stakes in these 5 Companies (Views On News)

Oct 19, 2021

Promoters of many small and mid-cap companies are raising their stakes since the last few quarters.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms