Kronox Lab Sciences IPO: The initial public offering of speciality chemical company Kronox Lab Sciences, which opened for public subscription on June 3, received a strong response from investors with the issue getting fully subscribed within the first hour of its opening. Till 4:33 pm on the first day of bidding, the Rs 130.15-crore mainboard IPO received 10.40 times subscription garnering bids for 6,96,56,070 shares as against 66,99,000 shares on offer.
The retail category has received a 12.35 times subscription, while the non-institutional investor (NII) category got a 18.27 times subscription. The QIB category received a 1.08 times subscription.
Kronox Lab Sciences IPO Key Dates
The Kronox Lab Sciences IPO was opened for public subscription on June 3 and will be closed on June 5. The Kronox Lab Sciences IPO allotment will likely be finalised on June 6, while the listing will take place on June 10 on both BSE and NSE.
Kronox Lab Sciences IPO Price
The price of the IPO was fixed at Rs 129-136 per share.
Kronox Lab Sciences IPO GMP Today
According to market observers, unlisted shares of Kronox Lab Sciences Ltd are trading Rs 76 higher in the grey market as compared with its issue price. The Rs 76 grey market premium or GMP means the grey market is expecting a strong 55.88 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Kronox Lab Sciences IPO: Should You Subscribe?
Giving a ‘subscribe’ rating to the IPO, brokerage Mastertrust in its note said, “Kronox Lab Sciences is a specialty chemicals company that focusses on stringent quality control for its products and has a marquee clientele that it serves. The company is currently operating at a capacity utilization of close to 50% of its current capacity of 7,242 MTPA for 9MFY24. They have a plan to more than double its capacity to 18,000 MTPA and will be commissioning it in the next 2 years by setting up another Unit at Dahej.”
The company has ample room to grow in the coming years given the expansions it have in pipeline. The IPO is coming at a discount to the company’s listed peers. “Given the growth prospects and the valuations, we advise to subscribe to the IPO from a medium to long term standpoint.”
SMC Global in its IPO note said Kronox Lab emerges as a promising player in the chemical industry, with a solid foundation, strategic growth initiatives, and a commitment to innovation and quality. It is well-positioned to capitalise on the opportunities presented by the evolving market landscape and achieve long-term success by capitalizing on its strengths, expanding its capacity, and improving operational efficiencies, said .
Kronox Lab Sciences IPO: Risks
Kronox Lab Sciences Ltd’s products are required to meet domestic and international industry standards, says Mastertrust in its note.
The products are supplied in limited quantities for specific use by application industries. Any reduction in the requirement of the products may result in loss of business and may affect the financial performance and
condition.
Its top-20 products contributed 60.49%, 70.58%, 68.62%, 69.85% and 70.04% of their revenue for the nine months period ended December 31, 2023, December 31, 2022 and the Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. Any change in demand for those products could significantly affect their revenues.
The majority of sale of products are concentrated in industries viz. Pharmaceuticals and Scientific Research and Laboratory Testing. Any change in demand or change in application or processes of their customers
in these industries may lead to loss of revenues and profits.
Kronox Lab Sciences IPO: More Details
The proposed issue is entirely an offer-for-sale (OFS) of 95.7 lakh equity shares by promoters Jogindersingh Jaswal, Ketan Ramani and Pritesh Ramani.
At the upper end of the price band, the IPO size is estimated to be Rs 130.15 crore.
Vadodara-based Kronox is a manufacturer of speciality fine chemicals. Its products find application in a wide spectrum of industries for diversified uses such as pharmaceutical formulations, active pharmaceutical ingredients, biotech, scientific research and testing, personal care, agrochemicals, animal health, and metallurgy, amongst others.
It has three manufacturing facilities and a Research, Development and Testing (RDT) laboratory in Vadodara, Gujarat. Additionally, the company has acquired land at Dahej, Gujarat to set up a new manufacturing plant. It exports to more than 20 countries with major exports to the US, the UK, Mexico, Australia, and Egypt, among others.
Half of the issue size has been reserved for qualified institutional buyers, 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors. Further, investors can bid for a minimum of 110 equity shares and in multiples of 110 equity shares thereafter.
Pantomath Capital Advisors is the sole book-running lead manager. The company’s equity shares are proposed to be listed on the BSE and the NSE.
