Kronox Lab Sciences share price lists at ₹165, a 21% premium to IPO price (2024)

The ₹130.15 crore initial public offering (IPO) of Kronox Lab Sciences was open for subscription between June 3-5 at a price band in the range of ₹129-136. The issue was subscribed 117.25 times in the 3 days of bidding. It received bids worth 98.54 crore shares as against 95.70 lakh shares on offer. The NII portion was subscribed to 301.92 times while the QIB part was bid 89.03 times. Meanwhile, the retail investor category was subscribed 52.24 times.

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The issue was entirely an offer for sale of 96 lakh shares. The was no fresh issue in this IPO.

The minimum lot size for an application was 110 Shares. The minimum amount of investment required by retail investors was ₹14,960. As per the DRHP, 15 percent of the shares in the Kronox Lab Sciences IPO were set aside for non-institutional institutional investors (NII), retail investors were allotted 35 percent of the shares, and qualified institutional buyers (QIB) were assigned 50 percent of the shares.

Pantomath Capital Advisors was the book-running lead manager of the Kronox Lab Sciences IPO, while Kfin Technologies Limited was the registrar for the issue.

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Incorporated in 2008, Kronox Lab Sciences Limited is a manufacturer of high-purity specialty fine chemicals for diverse end-user industries. The company's High Purity Specialty Fine Chemicals are used in various applications such as manufacturing APIs, pharmaceutical formulations, scientific research, nutraceuticals, biotech applications, agrochemical formulations, personal care products, metal refineries, and animal health products.

The company offers a wide range of over 185 products, including phosphate, sulphate, acetate, chloride, citrate, nitrates, nitrites, carbonate, EDTA derivatives, hydroxide, succinate, gluconate, and others. These products are supplied to customers in India and more than 20 countries worldwide.

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The listed peers of the firm include Tanfac Industries Ltd (P/E of 39.15), Neogen Chemicals Ltd (P/E of 77.55), Sigachi Industries Ltd (P/E of 46.64), Tatva Chintan Pharma Chem Ltd (P/E of 57.57), and DMCC Speciality Chemical Ltd (P/E of 116.57).

On the financial front, Kronox Lab Sciences Limited's revenue increased by 16.99 percent and profit after tax (PAT) rose by 21.94 percent between the financial year ending with March 31, 2023 and March 31, 2022.

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Most experts advised subscribing to the issue for long-term gains.

“Due to its broad range of products that serve different end-user sectors and its strict production procedures that create obstacles to entrance and departure, the firm is well-positioned for long-term growth. Its production facilities are ideally positioned, and it has built excellent client connections. Their steady financial performance and debt-free status serve to further bolster their sound financial standing.

However, there are certain important concerns that need to be taken into account. Due to its exposure to global markets, Kronox Lab Sciences is subject to variations in foreign exchange rates. Furthermore, their present manufacturing process employs a smaller percentage of their total capacity, and their goods are delivered in restricted amounts for certain uses, which may constrain the growth of their income.

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The IPO's P/E valuation of 31.62x appears reasonable. Taking into account Kronox Lab Sciences' strengths, potential risks, and attractive valuation, we recommend a subscribe rating to this IPO for potential listing gains and long-term growth with due diligence regarding the aforementioned risks," said brokerage house Swastika Investmart.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 10 Jun 2024, 09:59 AM IST