JG Chemicals IPO keeps brokerages upbeat: Should you subscribe to Rs 251-cr issue?

The price band for the public offer has been fixed at Rs 210-221 per share.

JG Chemicals, a zinc oxide manufacturer, is tapping the primary markets with a Rs 251.19-crore public offer. After a stellar opening day, when the issue was subscribed over two times, the IPO seems to be attracting a healthy investor interest.

Should you join the party? Here's how market experts view the JG Chemicals listing.

Analysts at StoxBox recommend investors to 'subscribe' to the issue as the company is the largest producer of zinc oxide in India and among the top 10 in the world. The company plans to establish a greenfield manufacturing facility in Gujarat. Moreover, the company is an approved vendor to most large global tyre companies, with a significant presence in South East Asia.

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"Despite high entry barriers, its certifications and global supplier base ensure continued growth. The favourable demand outlook in automotive, rubber, and ceramics, along with the expected revival of the chemical industry in early FY25, positions JG Chemicals for sustained market leadership," StoxBox said in a note.

Also read: JG Chemicals IPO: 10 things to know before you buy into the Rs 251-cr issue
Domestic brokerage house Anand Rathi has assigned a 'subscribe for long-term' rating on the offer. The broking firm suggests that being a supplier to nine out of top 10 global tyre manufacturers and to all the top 11 Indian tyre manufacturers, the company is poised for growth in the coming years. "We believe that the IPO is fairly priced."

Read more: JG Chemicals IPO fully subscribed on debut day, with retail & HNIs support

Mehta Equities suggests investors 'subscribe for listing gains' as it taps into lucrative markets and would benefit from higher margins, mitigating risks associated with reliance on a single product line. "We also believe
company capacity expansion and exploring options of organic and inorganic expansion opportunities in Southeast Asia would make it well-positioned for growth," said the brokerage house.

The West Bengal-based company intends to allocate Rs 91.06 crore of the proceeds to its material subsidiary, BDJ Oxides. Additionally, it plans to allocate Rs 35 crore for long-term working capital requirements. The remaining funds will be reserved for general corporate purposes.

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