Citichem India Limited is all set to launch its Initial Public Offering (IPO) from December 27 to December 31, 2024. The IPO has created significant buzz in the market due to its attractive price band of ₹70 per share and promising business model. Let’s dive into the details and understand if this IPO could be a good investment opportunity.
About Citichem India Limited
Founded in 1992, Citichem India Limited specializes in sourcing and distributing organic and inorganic chemicals, bulk drugs, and food chemicals. These products serve industries such as pharmaceuticals, aluminum, steel, textiles, paper, and food. The company also markets its own brand of food chemicals and preservatives, ensuring safe delivery through its distribution team.
Competitive Strengths:
- Experienced promoters with a proven track record.
- Diverse product offerings catering to multiple industries.
- Scalable and efficient business model.
IPO Details at a Glance
| Details | Information |
|---|---|
| IPO Date | December 27 – December 31, 2024 |
| Price Band | ₹70 per share |
| Minimum Lot Size | 2,000 shares (₹1,40,000) |
| Total Issue Size | ₹12.60 crore |
| Listing Exchange | BSE SME |
| Market Maker | Aftertrade Broking Pvt Ltd |
| Lead Manager | Horizon Management Pvt Ltd |
Important Dates:
- Allotment Finalization: January 1, 2025
- Listing Date: January 3, 2025
Financial Performance
| Metric | FY 2024 | FY 2023 | FY 2022 |
|---|---|---|---|
| Revenue (₹ Lakhs) | 1,960.58 | 2,094.07 | 8,528.00 |
| EBITDA (₹ Lakhs) | 179.29 | 116.72 | 93.49 |
| PAT (₹ Lakhs) | 111.83 | 36.26 | 23.94 |
| Net Worth (₹ Lakhs) | 745.06 | 613.27 | 577.01 |
The significant drop in revenue from FY 2022 to FY 2024 warrants further analysis. Potential contributing factors could include market conditions, operational challenges, or strategic shifts in the company’s focus. Investors should consider these aspects when evaluating the IPO.
While the company has shown strong profitability growth in FY 2024, its revenue has declined. Investors should weigh this against the overall market conditions and future potential.
Grey Market Premium (GMP)
The GMP for Citichem India IPO is currently at ₹30 per share, indicating strong investor interest. The estimated listing price is ₹100 per share, which is a 42.86% premium over the issue price.
Peer Comparison
Citichem India’s listed peers include:
- Shankar Lal Rampal DyeChem Ltd (P/E: 91.33)
- Vinyl Chemicals (I) Ltd (P/E: 361.05)
With a post-IPO P/E of 59.65, Citichem India is relatively better valued compared to its peers, such as Shankar Lal Rampal DyeChem Ltd (P/E: 91.33) and Vinyl Chemicals (I) Ltd (P/E: 361.05). This makes the valuation attractive, considering the industry average for companies in similar segments is significantly higher.
Objects of the Issue
The proceeds from the IPO will be used for:
- Capital expenditure, including property acquisition.
- Purchase of transportation vehicles and accessories.
- General corporate purposes.
- Issue-related expenses.
Subscription Details
| Category | Shares Offered | Subscription (Day 1) |
|---|---|---|
| Retail | 8,54,000 | 46.12x |
| NII | 8,54,000 | 8.43x |
| Total | 17,08,001 | 27.28x |
The strong subscription numbers on Day 1 highlight robust demand, especially among retail investors.
FAQs
1. What is the minimum investment required?
The minimum investment is ₹1,40,000 for one lot of 2,000 shares.
2. How is Citichem India’s financial performance?
The company has shown significant PAT growth in FY 2024 despite a decline in revenue.
3. Should I invest in Citichem India IPO?
While the IPO shows promise, it operates in a competitive industry. Assess your risk tolerance and financial goals before investing.
Disclaimer
Investing in IPOs involves risks, including market volatility and business uncertainties. This article is for informational purposes only and does not constitute financial advice. Consult a certified financial advisor before making investment decisions.
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