Avoid to Anupam Rasayan India: Ajcon Global

Ajcon Global IPO report on Anupam Rasayan India

Anupam Rasayan is one of the leading companies engaged in the custom synthesis and manufacturing of specialty chemicals in India (Source: F&S Report). The Company has two distinct business verticals (i) life science related specialty chemicals comprising products related to agrochemicals, personal care and pharmaceuticals, and (ii) other specialty chemicals, comprising specialty pigment and dyes, and polymer additives. In FY20 and in the nine months ended December 31, 2020, revenues from its life science related specialty chemicals vertical accounted for 95.37% and 93.75%, respectively, of its revenue from operations, while revenue from other specialty chemicals accounted for 4.63% and 6.25%, respectively, of its revenue from operations, in such periods. As of Dec. 31, 2020, the company operated through six multi‐ purpose manufacturing facilities based in Gujarat, India; four located at Sachin, Surat, Gujarat and two located at Jhagadia, Bharuch, Gujarat. The Company has a combined aggregate installed capacity of around 23,396 metric tonne, of which 6,726 metric tonne was added in March 2020.

Valuation and Outlook

At the upper end of the price band of Rs. 555, the Company's IPO is valued at P/E of 86x on 9MFY21 annualised EPS, 105x on FY20 EPS and 94x on trailing 12 months EPS which is very expensive and steep as against its peers who have a much better ROE profile. We are not comfortable with the aggressive pricing done in this IPO. Hence, we recommend "AVOIID" to the issue.

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