Chemcon IPO : Subscribe or NOT?

The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

Chemcon– is a manufacturer of specialized chemicals, such as HMDS (Hexamethyl Disilazane) and CMIC (Chloromethyl Isopropyl Carbonate) and is market leader in both products. This are predominantly used in the pharmaceuticals industry, and inorganic bromides, namely Calcium Bromide, Zinc Bromide and Sodium Bromide, which are used as completion fluids in the oilfields industry

Offer purpose — 318cr Complete offer for sale by promoters

Key Service domains – Pharmaceuticals and oilfields industry

Clients -Hetero Labs Limited, Laurus Labs Limited, Aurobindo Pharma Limited, Sanjay Chemicals (India) Private Limited, and the key customers of Oilwell Completion Chemicals include Shree Radha Overseas, Water Systems Specialty Chemical DMCC, Universal Drilling Fluids and CC Gran Limited Liability Company.

Revenues from Key Clients— 67%

Revenues from Key regions–32% exports

Risks —

Limited product range

Significant portion from few customers

Promoters past is the biggest risk. There are cases of non-compliance and criminal proceedings

Future

Company has grown revenues and profits and partially supported by ban of chemicals in China to support environmental policies

Due to specialty chemicals and market leader, company stands at good point to gain

Valuations

Reasonable considering peers in India in specialty chemicals. Fundamentals seems promising as of now

Should we apply?

Less chances of allotment due to small size. People who understand chemical business well can take the risk of applying

Less risk taking people can avoid

Listing day may see see moderate gains . Recommended to book profits if any on listing day

Keep an eye on promoter walk the talk scenario if holding for long

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