Home Market Neogen Chemicals IPO kicks off next week: Should you invest?

Neogen Chemicals IPO kicks off next week: Should you invest?


NEW DELHI: The 132 crore initial public offering (IPO) of specialty chemicals firm Neogen Chemicals will hit the market on Wednesday. On the block are fresh issue aggregating up to Rs 70 crore.

Besides, promoters Haridas Thakarshi Kanani and Beena Haridas Kanani would be looking to offload up to 29 lakh shares in a price band of Rs 212–215.

What does the company do?
Neogen makes organic chemical compounds – Bromine compounds and other organic compounds containing chlorine, fluorine and iodine-based and combination – used in application industries such as pharmaceutical, agrochemical, flavour and fragrance and electronic chemicals.

Besides, it makes inorganic chemicals primarily comprising Lithium compounds. These compounds are used in vapour absorption machines (VAM) and in heating ventilation and air-conditioning (HVAC) and refrigeration, construction chemicals, pharmaceutical and specialty polymer. Organic chemicals account for 60-70 per cent of the companys revenues while the rest comes in from inorganic chemicals.

Where are its manufacturing sites?
The company has two active manufacturing sites. One is in Mahape, Navi Mumbai, which is leased by Maharashtra Industrial Development Corporation (MIDC) and used to make both organic and inorganic chemicals. The other is in Vadodara, which is a freehold land used to make inorganic chemicals. Capacity utilisation levels at these facilities stood at 60-85 per cent.

The company has also invested in a 50,000 square meter plot in Dahej SEZ, leased from Dahej SEZ, on which it plans further investment in machinery to set up the first phase capacity to produce lithium inorganic chemicals of about 12,00,000 tonnes per annum. The company expects the plant to be operational by FY20. Besides, the company plans to invest an additional 126,000 litre glass-lined reactor capacity in Vadodara, which is expected to be operational by FY20.

Who it counts among peers?
The maker of organic and inorganic chemicals has many listed peers, including Aarti Industries, Atul, Navin Fluorine International, Vinati Organics and Paushak. These stocks have had a good run in last three years.

At the upper end of the issue price of Rs 215, the IPO is demandRead More – Source