Clean Science IPO versus GR Infraprojects: Which one should you choose?

Two companies - Clean Science & Technology and GR Infraprojects - will roll out their initial share-sale offers on July 7 to raise a little over Rs 2,500 crore cumulatively.

The IPOs of Clean Science & Technology and GR Infraprojects will open for subscription on July 7 and conclude on July 9.

Indian market, which is flooded with liquidity, should be able to absorb the two IPOs with ease, feel experts.

The key question for the investors is which one should they choose.

Experts are of the view that both companies look good from an investment perspective, but if someone has to choose one, then Clean Science & Technology has an edge.

“With company’s robust financial position, leadership in market share in some of its products, strong clientele (like Bayer AG and SRF for agrochemical products, Gennex Laboratories for pharmaceutical intermediates, and Vinati Organics), and strong prospects of chemical industry, we recommend “Subscribe” on the issue,” Astha Jain, Senior Research Analyst at Hem Securities said.

“Both IPOs are looking good to us but if anyone wants to put money in only one issue, then we recommend Clear Science as a strong bet for short as well as long term,” she added.

Clean Science was the largest manufacturer, globally, of certain specialty chemicals in terms of manufacturing capacities, as of December 31, 2020.

Clean Science is the only company globally to deploy vapor-phase technology for manufacturing Anisole from phenol with better atom economy and only water as effluent compared to the liquid phase manufacturing process.

Also Read: Strong primary market show: 10 IPOs lined up for July and at least 20 for rest of 2021

Clean Energy is going to list at a PE of 48.18x with a market-cap of Rs.95,597 million, while its peers, namely Vinati Organics and Fine Organics are trading at 77.4X and 75.1X times, respectively.

“We recommend to “Subscribe” this IPO as the company is amongst the largest producers globally of functionally critical Speciality Chemicals and is available at favourable valuation as compared to its peers,” Marwadi Shares and Finance said in a report.

“For long-term investment, both the companies look good. Clean science is a speciality chemical manufacturing company with innovative chemical processes developed in-house. The company product portfolio includes performance chemical, pharmaceutical intermediates, FMCG chemicals and company sales is more than 60% export,” Akhil Rathi - Vice President Advisory at Marwadi Shares and Finance said.

“Clean Science is among the largest producers globally of functionally critical Speciality Chemicals, and for all products, global position is among the top 3. On the Financial front, company revenue, EBITDA and PAT saw a CAGR of 14.2%, 38.9%, and 42.5%, respectively, during FY19-21. At an upper price band of Rs 900, Clean Science and Technology is priced 48 times the earnings of FY21, which is attractive as compared to peers,” he added.

Views from some other experts:

Ravi Singhal, Vice-Chairman, GCL Securities

Both IPOs include offer for sale, but GR Infraprojects' debt-equity ratio is not comfortable, though it is showing valuation comfort. On the other hand, Clean Science debt-equity ratio is reasonable and it is nicely placed in business products, worldwide.

Overall, business from export is very high. Their customer base is very good. So, our recommendation is to go with Clean Science for the long term.

Sandeep Matta, Founder – TRADEIT Investment Advisor

Both IPOs - Clean science and GR Infra - are reasonably priced and are trying to milk the bullish market sentiment.

Between the two, we would recommend applying and holding Clean Science as the company is enjoying the virtual monopoly for many products and available at a PE of ~48x against industry PE of 55x.

Therefore, the stock can be held for a longer term for relatively better returns with low volatility.

Kapil Goenka, (Director) at C.M. Goenka Stock Brokers

July seems to be the IPO month for stock markets wherein more than ten IPOs are expected to hit the Street this month.

Clean Science & Technology is a fine & specialty chemical manufacturing company, with unique & innovative chemical processes, developed in-house which work primarily on developing clean and eco-friendly manufacturing processes.

Its IPO price band is Rs. 828-837 and the grey market premium is currently Rs. 300-350 per share which suggests around 35% premium listing.Since it’s a prominent company in this field, so we recommend investors apply for its IPO with decent listing gains.

Since both IPO dates are clashing and the investors who have limited funds to apply for IPO, can go for Clean Science & Technology IPO as the company prospects are very bright as they have innovative technology and unique product, which will stretch the stock price to Rs 2,000 to Rs 2,500 in a short period with a view as a long-term investment.

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