Muted Debut! Citichem India shares list at ₹70 on BSE SME, same as IPO price

Citichem India IPO listing: Citichem India shares made a completely flat debut on Friday, January 3, listing at ₹70 on BSE SME, same as the IPO price.

Citichem India's initial public offering (IPO), valued at ₹12.60 crore, was open for subscription from December 27 to December 31. The Citichem India's IPO price band stood at ₹70 per equity share.

Following the three days of bidding, Citichem India IPO closed with exemplary demand, garnering 414.35 times bids. The IPO received bids for 70.77 crore shares against 17.08 lakh shares on offer. The retail investor segment was booked 543.18 times, while the non-institutional investors (NII) category was subscribed 277.88 times.

About the IPO

Citichem India IPO was entirely a fresh issue of 18 lakh shares aggregating to ₹12.6 crore. Post the issue, promoter shareholding in the company will reduce to 61.21 percent from 83.25 percent before the IPO. Retail investors could apply with a minimum lot size of 2,000 shares, requiring a minimum investment of ₹1.4 lakh.

The company plans to allocate the net proceeds from the fresh issue toward several strategic objectives. These include funding capital expenditures for acquiring property, purchasing transportation vehicles and accessories, and addressing general corporate purposes. Additionally, a portion of the proceeds will be used to cover expenses related to the issue.

"The company is mainly engaged in supplying third party products in organic/inorganic chemicals, bulk drugs, food chemicals, Pharmaceuticals, etc. It marked drastic de-growth in its top lines for the reported periods, but net margin surged from FY24 onwards that raise eyebrows and concern over its sustainability going forward as it is operating in a highly competitive and fragmented segment. Higher spending for IPO process hints at structured and managed funding. Small equity base post-IPO indicates longer gestation for migration. Based on its recent super earnings, the issue appears aggressively priced. There is no harm in skipping this “High Risk/Low Return” bet," said Dilip Davda of Chittorgarh.com, recommending an avoid rating for the issue.

Horizon Management Private Limited is the book running lead manager of the Citichem India IPO, while Kfin Technologies Limited is the registrar for the issue.The market maker for Citichem India IPO is Aftertrade Broking Pvt Ltd.

About the Company

Established in 1992, Citichem India Limited operates as a supplier of organic and inorganic chemicals, bulk drugs, and food chemicals, primarily catering to the pharmaceutical sector. The company emphasizes direct supply of specialty chemicals, bulk drugs, and intermediate products tailored to industry requirements.

Citichem India trades a diverse range of specialty chemicals and intermediates that find applications across various sectors, including aluminum, steel, textiles, paper, dairy, paints, dyes, soap making, pharmaceuticals, food, and adhesives. Its portfolio also includes food preservatives and chemicals marketed under its own brand, which are distributed through an established network, ensuring the safe delivery of bulk orders to clients.

In its financial performance, Citichem India reported a 6 percent decline in revenue for the fiscal year ending March 31, 2024, compared to the previous year. However, the company showcased a remarkable 208 percent year-on-year surge in profit after tax (PAT) during the same period, reflecting improved profitability despite revenue contraction.