Anupam Rasayan IPO – Anupam Rasayan India Limited IPO

Anupam Rasayan India Limited IPO Tentative Timetable

About The Company – Anupam Rasayan India Limited

Anupam Rasayan India Limited is one of the leading companies engaged in the custom synthesis and manufacturing of specialty chemicals in India. The company primarily focuses on developing in-house innovative processes for manufacturing products requiring complex chemistries and achieving cost optimization. Anupam Rasayan has two distinct business verticals:

1. Life science-related specialty chemicals comprising products related to agrochemicals, personal care, and pharmaceuticals; and
2. Other specialty chemicals, comprising specialty pigment and dyes, and polymer additives.

The company has stringent quality and technical specifications and customizations. It undertakes a large number of complex chemical reactions and automated manufacturing capabilities, develops in-house innovative processes along with strong technical competencies and R&D capabilities, and has a transparent cost model, enabling it to act as a complete one-stop solution for process innovation and development of specialty chemicals for multinational companies in a cost-efficient manner. Anupam Rasayan is also one of the leading companies in manufacturing products using continuous and flow-chemistry technology on a commercial scale in India.

The company has a dedicated in-house R&D facility and a pilot plant, which is equipped with laboratories engaged in process development, process innovation, new chemical screening, and engineering, which assists it in pursuing efficiencies from the initial conceptualization up to commercialization of a product. It has six production facilities across Gujarat.

Anupam Rasayan has a target-driven approach to the environment, sustainability, health, and safety measures. It undertakes hazard and operability studies before commencing commercial production of a new product and looks to mitigate these hazards through process improvement, engineering controls, developing safe operating procedures, and training of its employees. Further, its integrated model allows it to develop insights across the entire value chain right from process innovation, process development, and manufacturing to performing custom synthesis and manufacturing services for its customers.

Growth Story of Anupam Rasayan India Limited

The company was initially formed as a partnership firm in 1984 to manufacture and sell chemicals. It was converted into a company in 2003 and registered as a public limited company. In 2010, Anupam Rasayan started supplying specialty chemicals to Singapore-based Syngenta Asia Pacific Pte Ltd. The company received its first tranche of investments from its key investor – KPI LLC in 2016. Spreading its global presence, Anupam Rasayan started supplying speciality chemicals to Japan-based Sumitomo Chemical Company Limited. In 2018, KPI LLC invested USD35 million as an external commercial borrowing in the company. 

Anupam Rasayan India Limited established a subsidiary company in 2013 called Jainam Intermediates Private Limited (JIPL). JIPL is in the business of manufacturing, producing, refining, processing, formulating, buying, selling, export, import, or dealing in all types of heavy and light chemicals, chemical elements, and compounds.

Financials of Anupam Rasayan India Limited

Here is a quick look at the financial performance of Anupam Rasayan India Limited over the last three years:

All amounts in INR Crore

A quick glance at the financial performance of Anupam Rasayan over the last three years highlights significant growth. During this period, the total income of the company showed growth at a CAGR of 24.29%. Further, between 2018 and 2020, the profit after tax grew at a CAGR of 14.59%. Also, the company’s total assets grew at a CAGR of 28.92%. 

SWOT Analysis

After the opening of the lockdown across major global economies, the specialty chemical industry was amongst the first to recover, given the increasing need for its inputs towards essential supplies, such as pharmaceuticals, personal health and hygiene, fertilizers, and other agricultural needs. Agrochemicals and pharma-chemicals were the first ones to revive owing to their application in essential products, such as food and medicines, respectively. The major agrochemical companies have shown approximately 38% improvement in stock prices since the initial lockdown started on March 24, 2020, compared to approximately 23 % by Sensex in general. Further, the Government of India’s initiatives, western countries focusing on ‘China plus one’ strategy, and companies moving away from China present opportunities for India to recover. Additionally, agrochemical manufacturing represents a highly profitable and lucrative opportunity. To meet the rising diversified food demand, the commercial cultivation of high-value crops is increasing rapidly in recent years. Farmers are demanding superior quality agrochemicals which are balanced and nutritive, which is one of the key drivers.

The speciality chemicals market in India was valued at USD200 billion in 2019 with basic chemicals, also known as commodity chemicals or bulk chemicals, accounting for a majority share of 56%. The specialty chemicals industry is driven by both domestic consumption and exports. India’s specialty chemical companies are gaining favor with international multinational companies on account of the geopolitical shift after the outbreak of COVID-19 as the world looks to reduce its dependence on China. Currently, China accounts for approximately 17% to 18% of the world’s exportable specialty chemicals, whereas India accounts for only 1% to 2%, indicating that India has a large scope of improvement and widespread opportunity. It is anticipated that specialty chemicals will be the next great export pillar for India. Overall, the specialty chemicals industry is likely to continue to perform well in the near to medium term and is expected to capitalize on the ‘Make in India’ benefits to assume a leadership position in the market.

Strengths of Anupam Rasayan India Limited

• Anupam Rasayan India Limited has developed strong and long-term relationships with various multinational corporations that have helped it expand its product offerings, processes, and geographic reach.
• The custom synthesis and manufacturing industry presents significant entry barriers, including customer validation and approvals, expectations from customers for process innovation and cost reduction, high quality standards, and stringent specifications. This makes the entry of new players difficult.
• The company focuses on process innovation through continuous R&D and value engineering. These factors have been instrumental in the growth of its business and improved its ability to customize products for its customers as well as reduced its cost of goods while maintaining its margins.
• Over the years, Anupam Rasayan has diversified, expanded, and evolved our operations from a manufacturer of conventional products into custom synthesis and manufacturing of life science-related specialty chemicals and other specialty chemicals, which have diverse applications across various industries.
• The company has automated manufacturing facilities with a strong focus on the environment, sustainability, health, and safety measures.
• Anupam Rasayan has demonstrated consistent growth in terms of revenue and profitability.

Weaknesses of Anupam Rasayan India Limited

• All the manufacturing facilities of the company are operated on industrial land allotted to it by industrial development corporations on a leasehold basis.
• Anupam Rasayan faces competition from both domestic and multinational corporations.
• The company needs to constantly develop new products to remain competitive.

Peer Comparison

Here is a quick look at the performance of Anupam Rasayan in comparison to its peers on some key aspects for FY 2020:

All amounts in INR Crore

As you can see, compared to its listed peers, Anupam Rasayan has a slightly higher Debt to Equity Ratio and relatively lower RoNW. However, it has been recording consistent growth in recent years.

Opportunity to investors – valuation of the IPO

Let’s look at the valuation factors of Anupam Rasayan in comparison with its peers:

As per the peer group selected by Anupam Rasayan in the RHP, the average PE Ratio is 42.81. If we look at the price band of Anupam Rassayan IPO and calculate the P/E Ratio at the higher price of Rs.555, then we get a value of P/E Ratio of 79.97. This is way higher than the industry average. Therefore, the IPO is overvalued.

Risk Factors

• The company has incurred significant indebtedness, and an inability to comply with repayment and other covenants in its financing agreements could adversely affect its business, financial condition, cash flows, and credit rating.
• The company’s business operations require working capital for activities including purchase of raw materials, for its specialty chemicals manufacturing operations as well as for the purchase of packing materials for its products. If it experiences insufficient cash flows to meet required payments on its debt and working capital requirements, its business and results of operations could be adversely affected.
• All of the company’s manufacturing facilities are operated on industrial land allotted to it by industrial development corporations on a leasehold basis. Failure to comply with the conditions of use of such land could result in an adverse impact on its business and financial condition. Further, its Registered and Corporate Office is located on leased premises and there can be no assurance that these lease agreements will be renewed upon termination or that it will be able to obtain other premises on lease on the same or similar commercial terms.
• Anupam Rasayan may become involved in claims concerning intellectual property rights, and could suffer significant litigation or related expenses in defending its own intellectual property rights, or defending claims that it infringed the rights of others.
• Failure to maintain confidential information of its customers could adversely affect its results of operations and/or damage its reputation.
• The specialty chemicals industry provides for significant entry barriers. The company faces competition from both domestic as well as multinational corporations and its inability to compete effectively could result in the loss of customers, hence, its market share, which could have an adverse effect on its business, results of operations, financial condition, and future prospects.
• Anupam Rasayan depends on the success of its relationships with its customers most of whom are multinational corporations. Any adverse developments or inability to enter into or maintain such relationships could have an adverse effect on its business, results of operations, and financial condition.
• The company is dependent on its Promoters, management team, a number of Key Managerial Personnel, and persons with technical expertise. The loss of, or its inability to attract or retain such persons could adversely affect its business, results of operations, and financial condition.
• Newly developed products by competitors could replace the company’s existing products and its research and development efforts may not yield new products, processes, and solutions consistently to enable it to remain competitive.
• Restrictions on the import of raw materials and an increase in shipment cost may adversely impact its business and results of operations.
• The company is subject to increasingly stringent environmental, health, and safety laws, regulations, and standards. Non-compliance with, and adverse changes in health, safety, labor, and environmental laws, and other similar regulations to its manufacturing operations may adversely affect its business, results of operations, and financial condition.

Objects of the Offer

Anupam Rasayan India Limited proposes to utilize the net proceeds from the issue for:

• The repayment/prepayment of certain indebtedness availed by it (including accrued interest); and
• General Corporate Expenses

Promoters of Anupam Rasayan India Limited IPO

1. Mr. Anand S Desai;
2. Dr. Kiran C Patel;
3. Ms. Mona A Desai;
4. KPI LLC; and
5. RIRCPL

How can you apply for the Anupam Rasayan India Limited IPO?

You can apply for the Anupam Rasayan India Limited IPO by using one of these two methods of payment:

1. ASBA – available via the net banking interface of your bank account. Almost all banks offer this facility
2. UPI – available with brokers who do not offer banking services. 

Things to keep in mind before investing in the Anupam Rasayan IPO

Here are some things that you need to keep in mind before investing in the Anupam Rasayan IPO:

1. The IPO seems to be overpriced based on peer comparison. You might want to analyze the intrinsic value of the company before making a decision.
2. The company has registered a consistent growth in recent years.
3. The speciality chemicals industry is poised for growth and expected to be the next export pillar of India.

FAQs

Q1. What is the Anupam Rasayan India Limited IPO?

The Anupam Rasayan India Limited IPO is a Main Board IPO for the issue of equity shares having the face value of Rs.10 totaling up to Rs.760 crores. The registrar for the IPO is KFintech Private Limited and the shares are proposed to be listed on the BSE and NSE.

Q2. What are the open and close dates of the Anupam Rasayan India Limited IPO?

The Anupam Rasayan India Limited IPO opens on March 12, 2021, and closes on March 16, 2021.

Q3. What are the lot size and minimum order quantity of the Anupam Rasayan India Limited IPO?

The lot size of the Anupam Rasayan IPO is 27 shares. Also, the minimum order quantity is 27 shares.

Q4. What are the allotment and listing dates of the Anupam Rasayan India Limited IPO?

According to the RHP, the basis of allotment will be finalized by March 19, 2021. Further, investors can expect to receive the credits in their demat accounts by March 23, 2021 and may get listed on March 24.