Should You Subscribe to Anupam Rasayan IPO as GMP Falls?

  • Stock Market News
Should You Subscribe to Anupam Rasayan IPO as GMP Falls?
Credit: © Reuters.

By Aditya Raghunath -- Specialty chemicals company Anupam Rasayan India Ltd (BO: ANUY ) opens its IPO for a subscription today. The company has fixed a price band of Rs 553-Rs 555 for its Rs 760 crore share issue. The IPO is very aggressively priced at a P/E of 80 times FY20 earnings and 69 times FY21 annualized earnings.

Brokerage firm Reliance (NS: RELI ) Securities has said that the stock looks expensive compared to peers like SRF Ltd (NS: SRFL ) and PI Industries Ltd (NS: PIIL ) Industries. It added that it is not comfortable with the low operating cash flow yields.

Anand Rathi is positive on the company’s long-term prospects and has recommended a ‘subscribe’ rating for the same. Ventura Securities and Samco Securities have also recommended a ‘subscribe’ on the IPO.

However, one point to consider is the fact that volatility in Indian markets has impacted the perception of the IPO in the grey market. A week back, the GMP (grey market premium) for Anupam was Rs 320 a share, up almost 58% than its issue price of Rs 555. On Thursday, the premium had fallen to Rs 230, a premium of just over 41%. This means a share that was trading at Rs 875 is now available at Rs 785.

Anupam Rasayan operates in the agrochemical space where it produces intermediates and ingredients for insecticides, fungicides and herbicides. It also manufactures anti-bacterial and ultraviolet protection ingredients for FMCG and pharma companies.

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