Review By on May 17, 2017
Vadivarhe Speciality Chemicals Ltd (VSCL) is primarily engaged in manufacturing of Speciality chemicals, Active Pharmaceutical ingredients, intermediate and personal care ingredients. It is a a globally active, Indian chemical producer, focused on organic chemicals and custom synthesis. It has entered into an agreement with Enaltec Labs Pvt Ltd in December 2012 to manufacture API products for them for a period of 10 years based on the material and specification provided by them. The company has also entered into an agreement with Zenvision Pharma LLP for offering its manufacturing facility on Loan and License basis. Some of its major clients are Glaxo Smithkline Pharmaceuticals Ltd, Fine Organics Ltd UK, Chem-Impex International INC, D C Fine Chemicals, USV Ltd, Lupin Ltd, Mankind Pharma Limited, Himedia Laboratories Pvt. Ltd., Hetero Labs Ltd & many others in the Domestic and International sector.
To part finance its working capital needs and general corpus fund requirements, the company is coming out with a maiden IPO of 3444000 equity share of Rs. 10 each at a fixed price of Rs.42 per share to mobilize Rs. 14.46 crore. Offer consists of fresh equity issue of 689000 equity share and the rest by way of offer for sale. Issue opens for subscription on 22.05.17 and will close on 25.05.17. Minimum application is to be made for 3000 shares and in multiples thereof, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Hem Securities Ltd and Bigshare Services Pvt Ltd is the registrar to the issue. On Rs. 10 FV basis after issuing equity at par on MoA, it raised further equity at a price of Rs. 1000 per share in 2010 and has also issued bonus shares in the ratio of 8 for 1 in January 2010, 1.5 for 1 in February 2013 and 3 for 2 in February 2016. Post issue, company's current paid up equity capital of Rs. 12.09 crore will stand enhanced to Rs. 12.78 crore.
On performance front, the company has posted turnover/net profits of Rs. 13.99 cr. / Rs. 0.07 cr. (FY14), Rs. 19.13 cr. / Rs. 3.98 cr. (FY15), Rs. 26.43 cr. / Rs. 3.38 cr. (FY16) and Rs. 35.37 cr. / Rs. 5.79 cr. (FY17). Thus while its top line has shown continuous growth, its bottom line suffered a bit in FY16. Thus if we attribute latest earnings on the fully diluted equity post issue, then asking price is at a P/E of 9 plus(against industry composite of 32 plus and peers trading in the range of 14 to 21 P/E) and P/BV at 2.14. Its average RoNW for last three year is 23.07%.
On merchant banker's front, this is the 32nd mandate from its stable since 2013 and last 10 listings have shown positive trends on the day of listing.
Conclusion: Investors may consider investment from short to long term in this reasonably priced issue.
Review By on May 17, 2017
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of Vadivarhe Speciality Chemicals Ltd. offers an early investment opportunity in Vadivarhe Speciality Chemicals Ltd.. A stock market investor can buy Vadivarhe Speciality Chemicals IPO shares by applying in IPO before Vadivarhe Speciality Chemicals Ltd. shares get listed at the stock exchanges. An investor could invest in Vadivarhe Speciality Chemicals IPO for short term listing gain or a long term.
Read the Vadivarhe Speciality Chemicals IPO recommendations by the leading analyst and leading stock brokers.
Vadivarhe Speciality Chemicals IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Vadivarhe Speciality Chemicals IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Vadivarhe Speciality Chemicals IPO?"
Our recommendation for Vadivarhe Speciality Chemicals IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Vadivarhe Speciality Chemicals IPO.
The Vadivarhe Speciality Chemicals IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Vadivarhe Speciality Chemicals IPO allotment status to check.
