JG Chemicals IPO: 10 things to know before you buy into the 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 opening on March 5. The anchor book will open for a day on March 4.

Here are all the key details of the offer:

1. IPO Dates
The IPO will open for subscription on March 5, 2024 and close on March 7, 2024.

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

3. Offer Details
The offer is a mix of fresh shares worth Rs 165 crore by the company and an offer-for-sale (OFS) of 39 lakh equity shares by promoters.

Vision Projects & Finvest, Jayanti Commercial, Suresh Kumar Jhunjhunwala (HUF) and Anirudh Jhunjhunwala (HUF), all from the promoter group, will be selling shareholders.

Half of the issue size is reserved for qualified institutional buyers, 15 percent for non-institutional investors and 35 percent for retail individual investors.

4. Objectives of the Issue
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.

5. Lot Size
Investors can bid for a minimum of 67 equity shares and in multiples thereof. Hence, the minimum investment by retail investors would be Rs 14,070 (67 (lot size) x Rs 210 (lower price band)). At the upper end, the bidding amount will increase to Rs 14,137.

6. Company Profile
The company is involved in the business of manufacturing zinc oxide. JG Chemicals produces more than 80 grades of zinc oxide and the product is used in various industrial applications such as ceramics, paints and coatings, pharmaceuticals and cosmetics, electronics and batteries, agrochemicals and fertilizers, specialty chemicals, lubricants, oil and gas, and animal feed.

It has three manufacturing facilities in Jangalpur and Belur, both in Kolkata, West Bengal and Naidupeta in Nellore District, Andhra Pradesh.

7. Financials of the Company
The chemicals company recorded a consolidated net profit of Rs 56.8 crore for the year ended March FY23, growing 31.7 during the same period last year. The revenue from operations rose 28 percent to Rs 784.6 crore over the same period.

Its EBITDA (earnings before interest, tax, depreciation and amortisation) for the year grew by 34.4 percent to Rs 75.5 crore, a marginal expansion of 40 bps at 9.6 percent compared to the previous financial year.

8. Lead Managers
Centrum Capital Limited, Emkay Global Financial Services Ltd and Keynote Financial Services Ltd are the book-running lead managers of the JG Chemicals IPO, while Kfin Technologies Limited is the registrar for the issue.

9. Key Risks

(i) JG's business is almost completely dependent on the sale of zinc oxide (in various grades) and any reduction in the demand for the same may hurt our business and the financial performance of the company.

(ii) The company derives a significant part of its revenue from select customers. If one or more of such customers choose not to source their requirements from JG Chemicals, its business, financial condition and results of operations may get affected.

(iii) The business is heavily dependent on the procurement of raw materials from overseas suppliers. Given that the company doesn't have long-term agreements with suppliers, an increase in the cost or a shortfall in the availability of such materials can harm the financial performance.

(iv) It is dependent on third-party transportation and logistics service providers. Any increase in the charges of these entities could affect the business conditions of the company.

10. Listing DateJG Chemicals IPO is likely to list on the BSE and the NSE on March 13, 2024.