Given the company's strong financial performance, industry-leading margins and returns ratios, brokerages have assigned "Subscribe" ratings to the issue.
The initial public offering (IPO) of specialty chemicals manufacturer Clean Science and Technology (CSTL) opens for subscription today at a price band of Rs 880-900 per share. The public issue will close on July 9.
The Rs 1,546.62-crore IPO is a complete offer for sale by existing shareholders including promoters Ashok Ramnarayan Boob, Krishnakumar Ramnarayan Boob, Siddhartha Ashok Sikchi and Parth Ashok Maheshwari.
The company raised Rs 463.98 crore from 41 anchor investors on July 6, ahead of its IPO opening. The company informed exchanges that in consultation with merchant bankers, it has finalised allocation of 51,55,404 equity shares, to anchor investors, at a price of Rs 900 per share.
Clean Science and Technology is the leading manufacturer in several of its products using internally developed processes. Given the company's strong financial performance, industry-leading margins and returns ratios, brokerages have assigned "Subscribe" ratings to the issue.
Here's what brokerages have to say:
Aditya Birla Capital
Clean Science and Technology enjoys healthy return ratios and margins through creation of strong entry barriers, said the brokerage. "The IPO is valued at 48.2x FY21 EPS which we believe is reasonable when compared to the valuations of several of the specialty chemical companies in the listed universe. We assign a 'Subscribe' rating on the issue," the brokerage said.
"We believe that India's specialty chemical industry is going to be one of the biggest beneficiaries of shifting of supply chains post the Covid-19 pandemic. Given CSTL’s financial performance, industry-leading returns ratios and a favorable outlook for the industry, we recommend 'Subscribe' to the issue," said Angel Broking.
Clean Science and Technology, a family-owned firm, is among the few companies globally focused entirely on developing newer technologies using in-house catalytic processes, which are eco-friendly and cost competitive, said the brokerage.
"The company possesses a healthy balance sheet and robust return ratio profile (FY21 RoE at 36.8%). We recommend a 'Subscribe' rating to this IPO," Anand Rathi said.
CSTL’s continued focus on product identification, process innovation, catalyst development, the significant scale of operations and measures towards strategic backward integration make it a good long-term investment offer, it said.
Considering these factors, it gives a 'Subscribe' rating on this issue for the long term.
Despite reporting better return ratios compared to peers, CSTL is valued at discount to peers. Thus, issue appears attractive for investment, said the brokerage
It recommends subscribing to the issue.
Canara Bank Securities
"CSTL is a global player with niche techno developed products. The company is setting up 3rd facility at Kurkumbh to manufacture Anisole, MEHQ etc. It has also allocated land for construction for 4th facility in Kurkumbh, Maharashtra. The company would trade at P/E of 48.18x for FY21 which is attractive as compared to its peer competitors. We recommend ‘Subscribe’ for listing gains."
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First Published: IST