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Rossari Biotech Ltd. Initial Public Offering (IPO), Is it worth subscribing?

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The IPO’s are back! Rossari Biotech Ltd. is ready to list the first IPO of the Financial year 2019-20. Rossari Biotech is hitting the D-street with 500 crore IPO on Monday, July 13, 2020.

After a four-month lull in the IPO market, Rossari Biotech’s public issue will open for subscription tomorrow. Rossari IPO was supposed to launch its IPO on March 18 but canceled its IPO press conference on March 13 as market conditions turned unfavorable. We all remember the crisis with the most awaited SBI cards and payments IPO.

Also Read: IRCTC declares its first annual result after listing into exchanges. Here’s a detailed insight into the monopoly business.

Rossari Biotech has fixed a price band of ₹423-425 per equity share, and the issue will remain open till July 15. The equity shares will be listed on both the NSE and BSE. According to brokerages, the anticipated date of listing could be 23rd July.

Axis Capital and ICICI Securities are the merchant bankers for the IPO, and Axcelus Finserv Private Limited is the adviser to the offer. Link Intime India Pvt Ltd is the registrar of Rossari Biotech IPO.

The minimum bid quantity stands at 35 shares in one lot, and the maximum number allows investment up to 470 shares in 13 lots. For retail investors, a maximum subscription amount is set at Rs 2,00,000. The face value of each stock is set at Rs 2.

We are expecting shares to be oversubscribed, but how many times is the question. The reason for the same is as followed:

  • It manufactures specialty chemicals and provides customized solutions to the apparel, animal & poultry feed, and FMCG industries.
  • The company is growing, a new production unit is under construction and is expected to complete by March 2021.
  • Has Operations in 18 countries, including India, Bangladesh, Vietnam, and Mauritius.
  • The IPO is a current issue and also an offer-for-sale by its two promoters-Edward Menezes and Sunil Chari. Edward Menezes and Sunil Chari are promoters of the company holding 42.10% and 42.05% stake, respectively, while the public shareholding stands at 4.9%. After the sale of 52.5 lakh shares each, the total promoter shareholding will fall to 73% from 95%, and the remaining 27% stake will be held by public shareholding.
  • Total revenues stood at Rs 603.80 crore and a net profit after tax of Rs 65.25 crore for the last financial year.
  • Last three years, it has shown growth in revenues at a compounded annual growth rate (CAGR) of 41.65 percent and profit at a CAGR of 60.27 percent.
  • Key customers are giants like HUL, IFB Industries & Arvind Ltd.
  • The company competes with Aarti Industries, Galaxy Surfactants, Atul Ltd, Vinati Organics & Fine Organics Industries.
  • COVID-19 did not much impact company sales as manufacturing of Disinfectants and sanitizers were in essential goods.
  • Home, personal care, and performance chemicals (HPPC), was the major contributor (46.8%) to the total revenue in fiscal 2020.
  • SBI Mutual Fund, HDFC Mutual Fund, Ashoka India Opportunities Fund, Nippon India and ICICI Mutual Fund, invested Rs 14 crore each in their various scheme

How to apply: You can subscribe to this IPO directly from your Demat account.
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Also Read: 5 tips that can make you an investment expert

Author’s view:
Subscribing one lot of the IPO will cost nearly 15000 Rs. Fundamentally, the company has diverse operations with its presence in chemicals, FMCG sector. Having a presence outside India is an advantage. The business somewhat appears to be benefitted by current scenarios.

If you are thinking of parking your money for the next 2-3 years, this stock looks promising. I am expecting it to reach 600-700 levels by 2022.

Disclaimer:
The Content is for informational purposes only; you should not construe any such information or other material as legal, tax, investment, financial, or other advice. The Author is not a registered Advisor or a legal entity.
There are risks associated with investing in securities. Investing in stocks, bonds, exchange-traded funds, mutual funds, and money market funds involve risk of loss. Loss of principal is possible. Some high-risk investments may use leverage, which will accentuate gains & losses. Foreign investing involves unique risks, including higher volatility and political, economic, and currency risks and differences in accounting methods. A security’s or a firm’s past investment performance is not a guarantee or predictor of future investment performance.

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