Archean Chemical: Company plans to clean balance sheet through IPO

Subscription for the initial public offer (IPO) of Archean Chemical Industries Limited is going to end today. By 12:38 AM on third day of bidding, the public issue worth 1,462.31 crore has been subscribed 3.60 times whereas its retail portion has been subscribed 2.64 times. Meanwhile, after strong rally on Dalal Street today, Archean Chemical IPO (grey market premium) has surged in early morning deals. According to market observers, shares of Archean Chemical are available at a premium of 66 in grey market today.

Archean Chemical IPO GMP

Market observers said that Archean Chemical IPO GMP today is 66, which is 4 higher from its yesterday’s grey market premium of 62 per equity share. They said that Archean Chemical IPO GMP dipped from around 80 levels to 62 levels after negative sentiments on Dalal Street. However, today’s rally has brought the positive sentiments back at grey market in regard to Archean Chemical IPO. They expected this to move further if the bull run continues on Dalal Street. As subscription ends today for the public issue, those who were in wait and watch mode, they are also expected to take a final call on their investment decision in this IPO.

What this GMP means?

Market observers said that Archean Chemical IPO GMP today is 66, which means grey market is expecting that the IPO will list at around 473 ( 407 + 66), which is around 11.50 per cent higher from its price band of 386 to 407 per equity share. They said that due to tepid response given by the investors, grey market is expecting moderate listing gain from the IPO.

However, stock market experts advised investors to go by financials of the IPO. They said that one should not rely heavily on GMP as it is a non-regulated speculative number which has nothing to do with the balance sheet of the company.

Archean Chemical IPO: Should you apply?

Giving ‘subscribe’ tag to Archean Chemical IPO, brokerage Geojit says, “At the upper price band of Rs.407, ACIL is available at a P/E of 26x (FY22), which appears reasonably priced. Considering its consistent top-line & bottom-line growth with cost efficiencies, industry leading position in a high entry barrier industry, expansion plans in product lines and capacities, we assign a “Subscribe” rating on a short to medium term basis.”

On Archean Chemical IPO review, Abhay Doshi, Founder at UnlistedArena.com said, “Archean Chemical is India’s leading specialty marine chemical manufacturer, producing and exporting bromine, industrial salt, etc. In addition, they were India’s largest exporter by volume of bromine and industrial salt in FY21. Their EBITDA and PAT margins are on an upward trajectory. The asking p/e at the upper band of issue price is around 26.54x (Post fresh issue). As a result, the IPO appears to be priced fairly and If the market remains stable, we can anticipate a high level of subscription.”
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