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Deepak Chemtex lists at a 90% premium at Rs 152 per share on the BSE and hits the UC

06 December 20235 mins read by Angel One
The IPO witnessed an impressive response, especially when compared to other IPOs recently listed, with a subscription rate of 403 times
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Deepak Chemtex Limited operates within the realm of manufacturing colourants applied in various industries such as Food, Drugs, Cosmetics, Cleaning compounds, Agriculture, and others, debuted on the Indian stock market today.

Upon its debut on the BSE, the stock opened at Rs 152 per share, reflecting an impressive 90% premium compared to the final issue price of Rs 80 per share.

At present, the stock is trading at Rs 159.60 per share on the BSE, having reached intraday highs and lows of Rs 159.60 and Rs 152, respectively. Adding to this, the stock has hit the upper circuit price limit of 5% following its market debut. The current market capitalisation of the company stands at Rs 173.39 crore.

IPO Proceeds 

The net proceeds from the issue will be directed toward several objectives. Firstly, it will fund capital expenditure for the installation of plant and machinery within our current premises. Secondly, investments will be made in our subsidiary, DCPL Speciality Chemicals Private Limited, to finance its capital expenditure for plant and machinery. Additionally, a portion of the proceeds will be allocated to fulfil working capital needs. Finally, the remaining funds will be utilised for general corporate purposes.

Company profile

Deepak Chemtex Limited operates within the realm of manufacturing colourants applied in various industries such as Food, Drug, Cosmetics, Cleaning compounds, Agriculture, and others. The company was incorporated in 1997.

The company’s product line includes FDC (Food, Drug, and Cosmetic) colours, which find applications in confectionery, bakery items, desserts, beverages, dairy goods, seasonings, pet foods, pharmaceuticals, as well as cosmetics & personal care products. Additionally, it produces salt-free dyes utilized in the inkjet sector, pond dyes for ponds, lakes, and swimming pools, and diverse colourants employed in car wash products, portable sanitation cleaners, detergents, soaps, fuel, oil, lubricants, smoke, seed treatment, crop protection, fertilizer indicators, floral dyes, and more.

Subscription details 

On December 01, 2023, the final day of the IPO window, the IPO witnessed an impressive response, especially when compared to other IPOs recently listed, with a subscription rate of 403.03 times. The public issue received remarkable interest, with the retail category being subscribed 475.36 times, the QIB category achieving a subscription rate of 96.80 times, and the NII category reaching a subscription rate of 642.25 times.

The company attracted Rs 6.54 crore from various anchor investors by allocating 8.17 lakh equity shares at Rs 80 per share. The complete lock-in period for these anchor investors ends on April 11, 2024.

The IPO price range was set between Rs 76 and Rs 90, with a face value of Rs 10 per share and a lot size of 1600 shares. The total size of the company’s IPO was Rs 23.04 crore, and the final share issue price was fixed at Rs 90 each.

Financial Performance

Particulars FY22 (Rs Lakh) FY23 (Rs Lakh) Q2 FY24 (Rs Lakh)
Revenue 5443.68 4783.72 2212.95
Net Profit / (Loss) 423.10 631.02 311.18
Total Assets 1715.17 2382.32 2820.64
Net Worth 938.43 1568.88 1879.90
Total Borrowings 199.49 136.80 120.78

Conclusion

The key dilemma for investors lies in whether to hold onto their shares. Those who applied for the IPO solely intending to capitalise on listing gains have already gained an impressive 90% return over its final issue price on the listing day itself. Investors who applied for the IPO purely for listing gains may consider closing their positions.

Conversely, investors with a higher risk tolerance might opt to hold onto their shares for the medium to long term, as this strategy could potentially yield benefits over time.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

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