This post on Neogen Chemicals IPOtries to bring out consolidated brokerage views , subscription information, Grey Market Premium (GMP) and anchor investor information where applicable. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Neogen Chemicals IPO or not.
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Neogen Chemicals IPO: Grey Market Premium etc.
- 25-04-19 GMP Rs 45
- 23-4 -19 Rs. 2000 on subject to allotment basis. i.e. about Rs. 40 GMP
Related Post: Neogen Chemicals IPO Review
Subscription: Neogen Chemicals IPO ( x times)
Neogen Chemicals IPO: Anchor Investors
Neogen Chemicals has raised Rs 39.70 crore from anchor investors ahead of its initial public offering (IPO). The anchor investors include SBI Magnum Comma Fund, AXIS Mutual Fund Trustee – AXIS Small Cap Fund, L&T Mutual Fund Trustee – L&T Emerging Opportunities Fund,
Consolidated Brokerages Views on Neogen Chemicals IPO
Anand Rathi: At the higher end of the issue price of `215 a share, the stock is valued at ~20.1x FY18EV/EBITDA and ~47.8x P/E. Arti Industries and Atul Industries trade at FY18 P/E multiples of 38-42, while Vinati Organics and Navin quote at respectively 21x and 63x. On the annualised 9MFY19 EPS of `7, the stock priced at 28.5xPE and 17.4x EV/EBITDA. We believe the higher multiple is justified given the company’s ability to grow profitably and command better return ratios.
Angel: ” In terms of valuations, PE works out to be 31x annualized FY19 EPS of `7 post listing (at the upper end of the issue price band) and there is no listed peer available with similar products for comparison. Moreover, NCL is operating at optimum level of utilization and company has not planned any defined capacity expansion in near term. Therefore we believe investors should wait for price discovery before taking any investment decision. Hence, we have NEUTRAL view on the issue. “
Capital Market: ” Score 38/100, At the higher price band of Rs 215, the offer is made at around 53.8 times its FY 2018 consolidated EPS (net of preference dividend) of Rs 4 on a post-issue equity share capital of Rs 23.34 crore of face value of Rs 10 each. Aarti Industries, Navin Flourine International (Navin) and Paushak are some of the listed companies in similar line of business.
Choice Broking: ” Based on FY19E and FY20E EPS, the stock is valued at P/E multiples of 32.2 times and 26 times, respectively, which is at a premium to the peer average. However, considering its historical growth profile and proposed expansion activities, we feel the issue is fully priced. Thus, we assign an ‘avoid’ rating for the issue, “
Dalal Street Journal: ” At the higher price band of Rs 215, the offer is demanding market cap to sales (FY18) of 3.0 times, which is lower than the Paushak of almost 6 times and equal to Atul of 3.14 times. In terms of PE, the offer is made at around 30 times after annualising its 9MFY19 EPS and post dilution of equity. This is in line with other listed peers and however, expensive to some of larger players. Looking at the weak balance sheet along with fair valuation, we believe that nothing is left in the table for subscribers and hence it is risky to invest in the issue.
SP Tulsiyan website: ” Other than planned doubling of capacity in the future, there is no attraction in the issue – small scale of operations, slim margins, high debt, poor working capital management, aggressive pricing and a ‘small cap’ tag. Given better opportunities in the listed space (even when market is at all-time high levels), this issue is best avoided. ”
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering and Management. Iam also certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.