Clean Science and Technology Ltd- IPO

Specialty chemicals are interesting. From personal care to pharmaceuticals, they have industry-wide applications, which is why you can say this industry won’t ever be out of business! 

And so, from this ever-growing industry comes the next IPO - Clean Science and Technology Ltd.

But what’s making it hit the headlines, you ask?

50 percent! Yes, you heard it right.

The share of this issue is trading at a whopping 50% premium in the Grey market. While the numbers seem to be good, you still might wonder if the company is the right one for your portfolio or not?

Well, the IPO will be available for subscription from July 7th onwards. So if you are still persisting in a state of dilemma, then here’s help.

Clean Science and Technology Ltd IPO – Details

The IPO will be up for subscription till July 9th of 2021. It is a book building issue and will be launched in both the houses of the stock exchange, i.e the BSE and NSE. The issue is worth 1,546.62 crores and the entire issue comes in the form of an offer for sale. Further, post the issue, the promoter holding will plummet to 78.51%.

A total of 35% of the entire issue will be set aside for the retail investors and 50% for QIB’s. The shares are priced at Rs 880 to 900 per equity share. However, the investors will be allowed to make subscriptions only in the form of a lot containing 16 shares and in multiples of 16 thereafter. The minimum lot one can bid for is 1 such lot and the maximum goes up to 13 lots containing 208 shares. For a bird’s eye view into the pricing, look below-

The issue is aimed to achieve the benefits of listing. And the entire process starting from allotment to refund, and to the listing of shares in the stock exchange, is considered to be finished by July 19th, 2021. Adding to that, the shares will carry a face value of Rs 1 per equity share. Axis Capital, JM financial consultants and Kotak Mahindra Capital Company Ltd will act as the bookkeeping lead managers, whereas Link Intime India Pvt Ltd will be the registrar of the same.

Clean Science and Technology Ltd.- Company Details

The company kicked into operation in 2003. Along with its MD Ashok Ramnarayan and promoters Krishnakumar Ramnarayan Boob, Siddartha Ashok Sikchi and Parth Ashok Maheswari, the company has been walking on the success path, expanding globally. Some of its products include the following,

• Performance chemicals – such as MEQ, BHA

• Pharmaceutical intermediates – Guaiacol and DCC

• FMCG chemicals – 4-MAP, Anisole

The company has about 300+ employees working under its wings. Further, they have 100+ customers spread across the world including USA, Canada and Japan. Along with that, they also have 14+ plants working under them. Furthermore, they have ultra-modern labs, warehouses, R&D facilities and effluent treatment plants operating alongside.

Company Financials

The company’s financials look promising with a consistent growth showcased irrespective of the pandemic and related disruptions. The P/E earning of the issue is lingering around 48. Further, the EPS (earnings per share) is also around 18.68 for the previous financial year. And the P/ B ratio is at 17.71.

The following chart shows its listed peers:

Advantages of the IPO

Let’s first turn towards the good points:

• The company manufactures and supplies certain chemicals which have industry-wide applications. Being one of the leading and biggest producers of the same has been its shining advantage.

• Nowadays we speak more about the environment and its well-being. Clean Science & Technology Ltd is among the many leading brands that have embraced this talk practically by modifying its process of manufacturing to be environment friendly. It places a strong emphasis on EHS (Environment, Health and Safety).

• Customers are the king. And the company has been following this religiously, maintaining a healthy and long-standing relationship with its customers.

• The company has the good and latest technology in place to facilitate its operations.

Risks Associated with the IPO

No investment is free from risk. On similar lines, the following are some of the risks an investment in this IPO might entail:

• The company’s product lacks protection. As most of its products are not patented, it is vulnerable to associated risks.

• While the company has many customers backing its business, the majority of the profits are earned from a few of its customers. Adding to that, they don’t have any long-running contracts with the same. Thus, any problem might leave a huge dent in their balance sheets.

• Its related group of companies have sustained huge challenges financially. This might make us doubt the course of this IPO.

• There are numerous legal proceedings against the directors and the company.

• Competitive market, raw material availability, pandemic, and capital intensive business structure, might all rise as areas of concern.

In Conclusion

The issue has equal weight on both drawbacks and disadvantages. While in the short term it might fetch listing gains, one should always dive deeper to avoid small yet visible mistakes.

However, considering the fact that no investment is free from risks, you must carry out proper research and due diligence before jumping into any offering, just out of mere enthusiasm. Because in the end, it’s all money.

Invest wisely!