Grey market signals 40% listing pop for Rossari Biotech tomorrow

In the unofficial market for trading in unlisted stocks, the stock has been holding on to its hefty premium for the past couple of days, thanks to a strong 79 times subscription to the Rs 496-crore initial public offering and the ongoing rally in ...

iStock
Rossari is among the largest manufacturers of textile specialty chemicals in India. It also manufactures acrylic polymers.
NEW DELHI: If one were to go by the signals from the grey market, shares of Rossari Biotech could debut on the stock exchanges in the Rs 575-Rs 605 range on Thursday, a 37-42 per cent premium over its issue price of Rs 425.

In the unofficial market for trading in unlisted stocks, the stock has been holding on to its hefty premium for the past couple of days, thanks to a strong 79 times subscription to the Rs 496-crore Initial Public Offering and the ongoing rally in the secondary market, especially in peer group stocks.

Dinesh Gupta of Investor Zone said the stock is trading at a Rs 170-180 premium over the past few days and has not fallen below that level. At a Rs 180 premium, the stock would see a 42.35 per cent listing pop.


“The IPO was to come in March, but due to Covid-19 disruptions, it was put on hold. That said, the period since then has been quite good for the chemicals sector. And the IPO came in at the right time. Peer stocks such as Galaxy Surfactants and Fine Organics were performing well and the Rs 500 crore issue received bids for shares worth over Rs 27,000 crore,” Gupta said.

Shares of Galaxy Surfactants have gained 20 per cent in last three months and 29 per cent for last one year. Fine Organics has added just 4 per cent in last three months, but is up 52 per cent in last one year.

Sagar Shah of Ascent Wealth Advisors said a premium of Rs 175-180 was on the expected lines. That said, premium or discount levels do vary in the unlisted space due to dearth of liquidity and scattered information.
ADVERTISEMENT

Narottam Dharawat of Dharawat Securities, a Mumbai-based firm that deals in unlisted shares, also expects Rossari to enjoy a premium at Rs 150-160.

“It is small-sized issue from an in-demand industry, and that is why it saw heavy oversubscription. There is also a lot of demand for the stock,” he said.

At Dharawat’s suggested premium range, the scrip could list at Rs 575-585 levels.

The IPO, which was sold from July 13 to July 15, was subscribed over 79 times. At the upper end of the price band of Rs 423-425, the issue demanded a valuation that was 19.9 times FY20’s EV/Ebitda and 33.1 times earnings per share on a FY20 basis. Despite being priced higher than its peers, the valuations did not bother much of the investors, as reflected in the subscription levels.
ADVERTISEMENT

Rossari is among the largest manufacturers of textile specialty chemicals in India. It also manufactures acrylic polymers. The company offers three main product categories -- namely home, personal care and performance chemicals; textile specialty chemicals and animal health & nutrition products.

The home care segment accounted for 46.81 per cent of its total revenues in FY20 (against just 18.63 per cent in FY18), textile specialty 43.71 per cent (from 71.54 per cent in FY18) and animal healthcare 9.48 per cent (9.83 per cent in FY18).
ADVERTISEMENT

The company said demand for disinfectants and sanitizers surged in last couple of months, but the textile specialty chemicals segments witnessed a temporary plunge in sales due to the coronavirus disruption.

The company offers 2,030 different products in 18 countries and has two R&D facilities – one within its Silvassa manufacturing facility and the second in Mumbai.

Rossari Biotech manufactures majority of its products in-house at its Silvassa manufacturing facility and is setting up another manufacturing facility at Dahej in Gujarat with a proposed installed capacity of 132,500 MTPA.
ADVERTISEMENT
READ MORE

READ MORE:

LOGIN & CLAIM

50 TIMESPOINTS

Related Companies

More from our Partners

Loading next story
Text Size:AAA
Success
This article has been saved

*

+