Specialty chemical maker Rossari Biotech witnessed tremendous demand on its first day of trade on July 23 with the stock hitting the upper circuit of Rs 804 intraday and rallying 89 percent before settling at Rs 742.35 on the BSE.
The appetite seen for public issues earlier seems to have continued today as the listing premium was far ahead of analysts expectations as well as grey market premium of around 35-40 percent over the issue price.
The stock closed the day with 74.67 percent gains at Rs 742.35 on the BSE, with trading volumes of 30.27 lakh shares and market capitalisation of Rs 3,854.98 crore.
On the National Stock Exchange, the scrip rallied 74.51 percent to end at Rs 741.65 with volumes of 3.57 crore equity shares.
Rossari Biotech share price opened at Rs 670 on the BSE and Rs 669.25 on the National Stock Exchange.
In fact, it was among the top 11 companies that showed remarkable performance of listing with a premium of over 50 percent in the last five years. Avenue Supermarts and IRCTC topped the list as both started off their first trade with more than 104 percent premium over issue prices.
Apollo Micro Systems listed with a premium of 77 percent, CDSL 72.4 percent, Capacite Infraprojects 62.86 percent, Ujjivan Small Finance Bank 61.11 percent, Quess Corp 60.97 percent, HDFC AMC 58.81 percent, Thyrocare Technologies 57.62 percent and Dixon Technologies 54.83 percent.
"We believe Rossari will command a premium over most of its chemical peers (Galaxy Surfactants, Fine Organics, Aarti Industries, Atul and Vinati Organics) as it is net debt-free as well as it has better asset turnover, working capital days, ROE and ROCE better than most of its peers. In the last three years, Rossari has reported 32 percent and 66 percent revenue and PAT CAGR, respectively, due to the strong promoter and management team. We are positive on the future outlook for the industry as well as the company," said Angel Broking.
Rossari Biotech, which raised Rs 496 crore via public issue during July 13-15, is engaged in three segments - home, personal care and performance chemicals (HPCC); textile specialty chemicals; and animal health and nutrition segments.
It manufactures a majority of products in Silvassa manufacturing facility which has a capacity of 1.2 lakh MTPA and is in the process doubling its capacity by adding another 1,32,500 MTPA plant in Dahej, Gujarat which is expected to be completed by March 2021.
Given the COVID-19 crisis, the demand for its first segment HPCC (which contributed 47 percent to total revenue in FY20) has grown significantly and hence its plant was not shut during the lockdown as these products come under essential items, which could be one reason behind appetite for the stock.
Meanwhile, the company has reduced its significant dependency on the textile space as its textile specialty chemicals segment hit badly during the lockdown period. In FY20, textile space accounted for 44 percent to total revenue, which reduced sharply from nearly 71 percent in FY18.
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