Archean Chemical Industries IPO opens today: All you need to know

The Rs 1,462.3 crore Archean Chemical Industries IPO will be available for subscription till Friday, November 11, 2022, and the price band of the company has been fixed at Rs 386-407 per share.

The IPO comprises a fresh issue of equity shares aggregating up to Rs 805 crore and an offer-for-sale (OFS) of up to 1,61,50,000 shares by the promoter and investors, including the India Resurgence Fund, a joint venture between the Piramal Enterprises and Bain Capital.

Through the OFS, promoter Chemikas Speciality will sell 20 lakh shares while investors Piramal Natural Resources and India Resurgence Fund, Scheme I will sell around 38.35 lakh (38,35,562) shares each and India Resurgence Fund, Scheme II will divest 64.78 lakh (64,78,876) shares.

The net proceeds from the fresh issue will be used for redemption of non-convertible debentures (NCDs) issued by it and for general corporate purposes, as per the information provided in the red herring prospectus (RHP).

Three-fourth of the issue size has been reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors and the remaining 10 per cent for retail investors.

Archean Chemical Industries is specialty marine chemical manufacturer which is focused on producing and exporting bromine, industrial salt, and sulphate of potash. The company produces its products from its brine reserves in the Rann of Kutch, located on the coast of Gujarat, and manufactures products at its facility near Hajipir in Gujarat.

“Our bromine is used as key initial level materials, which have applications in the pharmaceuticals, agrochemicals, water treatment, flame retardant, additives, oil & gas and energy storage batteries,” the RHP said.

Industrial salt is an important raw material used in chemical industry for production of sodium carbonate (soda ash), caustic soda, hydrochloric acid, chlorine, bleaching powders, chlorates, sodium sulphate (salt cake) and sodium metal. Sulphate of potash is used as a fertilizer and also has medical uses.

Investors who wish to subscribe to Archean Chemical Industries IPO can bid in a lot of 36 equity shares and multiples thereafter. At the upper price band, they will be shelling out Rs 14,652 to get a single lot of Archean Chemical Industries. The shares will be listed on both BSE and NSE.

The applicants also must note that the cut-off time for UPI mandate acceptance is Friday, November 11, 2022, upto 5:00 pm, the last day of IPO bidding. Further bids with confirmed status of mandate amount blocked (RC100) shall be considered as valid applications and hence, investors are advised to submit their UPI applications in IPO well in advance to avoid any last minute technical/systemic constraints that may hamper their ability to participate in IPOs by successfully accepting the mandate.

IIFL Securities, ICICI Securities and JM Financial are the book-running lead managers to the offer while Link Intime India is the registrar of the issue.

Before heading into the IPO, Archean Chemical Industries on Monday raised over Rs 658.03 crore (Rs 6,58,03,72,337) from 42 anchor investors in lieu of 1,61,67,991 equity shares at Rs 407 each, data from the stock exchanges showed.

The research teams at Reliance Securities and Geojit Financial Services in their respective IPO notes have given a “Subscribe” rating to the offer.

Geojit Research in its IPO note said, “At the upper price band of Rs 407, ACIL is available at a P/E of 26x (FY22), which appears reasonably priced. Considering its consistent top-line & bottom-line growth with cost efficiencies, industry leading position in a high entry barrier industry, expansion plans in product lines and capacities, we assign a “Subscribe” rating on a short to medium term basis.”

Reliance Securities in its reserch report noted, “Based on FY22 earnings, the company is valued at 26.5x P/E, 12.4x EV/EBITDA and 5.1x EV/Sales, which is a discount to peers. The company has a leading market position and it is undergoing continues expansion in bromine and industrial salt. High entry barriers in the speciality marine chemicals industry bodes well for the company. In view of market leading position, established infrastructure, integrated production with cost efficiencies, consistent financial performance, high entry barriers for competitor, an experienced management team and attractive valuation, we recommend ‘SUBSCRIBE’ to the issue.”

The share allotment is likely to take place on Wednesday, November 16, 2022, and the shares are expected to be listed on Monday, November 21, 2022, according to the timeline given in the RHP.