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    Chemcon Speciality IPO subscribed over 5 times on strong retail demand

    Synopsis

    The Vadodara-based company plans to raise Rs 318 crore, out of which it already raised Rs 95.40 crore through allotment of 28.06 lakh shares to anchor investors at Rs 340 per share last week.

    iStock
    In the grey market, the shares of the company were trading with a premium of Rs 275 per share, that is, 81 per cent more than the price band set for the IPO.
    NEW DELHI: The initial public offering (IPO) of Chemcon Speciality Chemicals received a robust response was subscribed more than 5 times on Monday, despite the bloodbath in the stock market at large

    With 65,59,173 shares on offer, the issue had received applications for 3,38,38,596 shares, implying 5.15 times subscription, data from BSE and NSE showed.

    The retail quota saw huge applications and was subscribed 9.86 times on the opening day. Quota for non institutional investors or high net-worth investors was subscribed 1.24 times while the QIB quota was subscribed only 3 per cent.

    The Vadodara-based company plans to raise Rs 318 crore, out of which it already raised Rs 95.40 crore through allotment of 28.06 lakh shares to anchor investors at Rs 340 per share last week.

    The company is offering a fresh issue of equity shares, aggregating up to Rs 165 crore and offer for sale of up to 45,00,000 equity shares, to be sold in the price range of Rs 338-340.

    In the grey market, the shares of the company were trading with a premium of Rs 240 per share, that is, nearly 71 per cent more than the upper end of the price band set for the IPO.

    Analysts said that the issue is demanding an inexpensive valuation of 25.5 times FY20 earnings per share and that the company could gain from a shift in demand from China. But high client concentration, criminal proceeding against a promoter and limited portfolio are risks to the company.

    Most brokers had ‘subscribe’ ratings on the stock. Angel Broking said the company's return ratios and margins are better than most of its peers, adding that the company is undervalued compared to its peers and "a lot of value is left in the table".

    "As we are positive on the future outlook for the industry as well as the company, we would recommend to “Subscribe” issue for long term as well as for listing gains," it said.
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    4 Comments on this Story

    Dinesh Ladha28 days ago
    Yes it is history of Indian market that companies collected cores of rupees through IPOs and many companies out of those did not fulfil commitments and investors particularly retail one have lost huge hard earned money. There is no concrete framework of structural process to examine the end use of investors' money. Investors are left at the mercy after IPO. DOES SEBI HAS ANY VISION IN THIS REGARD TO PROTECT RETAIL INVESTORS?
    Suresh Kamath39 days ago
    The CRAZE of Listing GAINS and such flock of IPOS at almost in succession speaks of the kind of Spare MONEY on hand and even in times of CRISIS such Over subscription to ALL such IPOs is AMAZINGLY SHOCKING and SEBI and ROC must track all such Promoters after a few Months of such IPO allotment and Trading sequence done in ALL such Companies for sustainable DATA given during the IPO Documents to attract the INVESTOR Fraternity and PEOPLE of the Country
    Reverse Swing39 days ago
    Everyone has gone crazy
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