Clean Science and Technology is recognized as the largest manufacturers of certain specialty chemicals in the country. Well, it is the investors that are now trying to cash out of the Pune-based company through the initial public offering from 7th to 9th July at a time when the tide is in favor of the whole sector.
The whole Rs 1,546 crore share sale and priced at Rs 880-900 per piece will be from existing investors Ashok Ramnarayan Boob (Rs193), Siddhartha Ashok Sikchi (Rs 40 crore), and Parth Ashok Maheshwari (Rs 75 crore).
However, the company is not utilizing the IPO money for expanding its business, broking firms recommend that investors must subscribe.
Angel Broking in a report mentioned, “We believe that the Indian specialty chemical industry is going to be one of the biggest beneficiaries of shifting of supply chains post the COVID-19 pandemic. Given the company’s financial performance, industry-leading returns ratios, and favorable outlook for the industry we recommend ‘subscribe’ to the IPO issue.”
Notably, the pandemic has been a blessing in disguise for the specialty chemicals sector. The stalling of imports from China in the previous year translated to more buyers in India. However, they were otherwise buying from China, leading to a 20% revenue growth of the company at the end of March 2021.
“Since specialty chemicals come under essential services, there was not a very strong impact of the lockdown on our financials, but yes demand was impacted. For some products, there was low demand and for some demand was significantly better. In fact, our revenues went up over 20% in FY2020,” Siddhartha Ashok Sikchi, promoter and whole-time director.
The disruption in global supply from China has also got them more buyers in other parts of the world. The company manufactures critical specialty chemicals like performance chemicals, pharmaceuticals, fast-moving consumer goods chemicals, and other products.
Over two-thirds of the company’s revenue comes from export clients in China, Canada, Europe, the United States of America, Taiwan, Korea, and Japan.
Notably, some of the company’s consumers have now also been associated with the company for more than 10years, as per the report.
On the other hand, in the previous three years, the company has curtailed its dependence on the top clients. However, the revenue from the top 10 clients fell from more than half of the total revenue in the financial year 2019 to 47.9% at the end of March 2021.
Notably, the global specialty chemicals market is projected to grow at an annual compounded rate of around 5% to reach almost $1.09 trillion by the end of 2025. Notably, some of the segments like pharma APIs, agrochemicals, construction chemicals, home, and personal care, and additives that are poised to enhance at much higher rates than the overall industry mentioned Aditiya Birla capital dated 5th July.