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Rossari Biotech is going for an IPO. Its equity shares will be listed on the NSE and BSE. The likely date of listing is July 23.
Rossari Biotech has kickstarted subscription for its initial public offering (IPO) today. The issue will be opened until Wednesday, July 15, with a price band of Rs 423-425 per equity share.
The IPO of Mumbai-based specialty chemicals producer comprises issuance of shares worth 50 crores and sale of 1,05,00,000 equity shares through offer-for-sale route. After the IPO, the promoter shareholding is expected to fall to 73% from 95% earlier. The issue size is pegged around Rs 494-Rs 496 crores.
Nirali Shah, the Senior Research Analyst at Samco Securities, commented:
“There are a number of reasons why Rossari is a subscribe for short and long term investors alike. Fundamentally it is extremely strong with a topline, EBITDA and net profit CAGR of 32 percent, 63 percent and 67 percent respectively from FY17 to FY20.”
On the first day of bidding, Rossari Biotech IPO subscription has already made up has 33.65%. The issue has already received bids for 27,58,560 equity shares against offer size of 81,73,530 equity shares (excluding the anchor book portion).
Speaking of anchor investors, it is worth mentioning that 59% of them were retail investors. Non-institutional investors accounted for 4.5%, and qualified institutional investors made up 11.3%. By the way, among anchor buyers, there were top funds including SBI Mutual Fund, ICICI Mutual fund, and HDFC Mutual fund.
The equity shares will be listed on the NSE and BSE. The likely date of listing is July 23.
About Rossari Biotech before Its IPO
Rossari Biotech is a specialty chemical manufacturing company that focuses on home and personal care, performance chemicals, textile specialty chemicals, and animal health and nutrition products. As of May 31, 2020, Rossari Biotech had a range of 2,030 different products sold across these categories. With headquarters in Mumbai, India, the company has 204 distributors globally and is operating in 17 countries worldwide, including Bangladesh and Vietnam.
Speaking of the company’s earnings, Rossari Biotech reported total revenue of Rs 603.82 crore, EBITDA of Rs 104.53 crore, and net profit after tax of Rs 65.25 crore in fiscal 2020. The sources of its revenues divide into two main segments — Textile Speciality Chemicals (TSC) and Home Personal Care & Performance Chemicals (HPPC). They comprise about 44% and 47% respectively. The firm has also forayed into the Animal Health and Nutrition (AHN) sector which contributes 9% to its revenues.
Should You Subscribe?
Some analysts give a green light for subscription to Rossari Biotech’s IPO, while others say it is a risky decision.
For example, Kotak Securities brokerage is making positive predictions:
“The company’s diversified product portfolio addresses the needs of varied and long-standing customers across industries. Strong research & development capabilities with a focus on innovation and sustainability will profit the company.”
Another brokerage Anand Rathi is optimistic as well:
“The high return ratios coupled with the proof of concept in the historic growth rates provide further comfort.”
However, there can be risks like downturn in the textile industry and great dependence on a few customers. Besides, the coronavirus second wave can also have a negative impact on the company’s performance.
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