Kronox Lab Sciences Limited IPO Review –
Kronox Lab Sciences Limited IPO is set to open from 3rd June 2024 to 5th June 2024. This article will analyze the financials , strengths and weaknesses of the Kronox Lab Sciences Limited. Keep scrolling below to read more!
Kronox Lab Sciences Limited IPO Overview –
Established in 2008, Kronox Lab Sciences Limited manufactures high-purity specialty fine chemicals for diversified end-user industries. Their High Purity Specialty Fine Chemicals are used in various applications such as:
- Reagents and raw materials for the manufacture of Active Pharmaceutical Ingredients (APIs);
- excipients in pharmaceutical formulations;
- Reagents for scientific research and laboratory testing;
- ingredients of food supplements;
- process intermediates and fermentation agents in biotechnological applications;
- Ingredients in agrochemical formulations;
- Ingredients in personal care products;
- refining agents in metal refineries; and
- ingredients in veterinary pharmaceuticals, to name a few.
The company offers a wide range of more than 185 products, across the family of phosphate, sulphate, acetate, chloride, citrate, nitrates, nitrites, carbonate, EDTA derivatives, hydroxide, succinate, gluconate among others, are supplied to customers in India and more than 20 countries worldwide.
The company has three manufacturing facilities in Vadodara, Gujarat, close to the seaports of Mundra, Kandla, Hazira, and Nhava Sheva. The facilities are spread across 17,454 sq. m. and have an installed capacity of 7,242 TPA as of December 31, 2023. Unit I/II holds FSSC 22000 (Version 5), ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018 certifications. Additionally, some products manufactured at Unit I have obtained Kosher, Halal, GMP, and GLP certifications.
As of December 31, 2023, the company is conducting research and development on 122 products.
The company has served over 592 customers in the past three years.
By December 31, 2023, 141 customers of the total, placed repeat orders.
As of December 31, 2023, the company employees 212 people at various levels.
Kronox Lab Sciences Limited IPO Synopsis-
Kronox Lab Sciences Limited IPO is set to be open from 3rd June 2024 to 5th June 2024, offering only Offer-for-Sale (OFS) of 9,570,000 shares aggregating to Rs 130.15 crores. This NSE,BSE IPO follows a Book Built Issue IPO.
The total issue size of this IPO amounts to Rs.130.15 Crores. The company has allocated shares 35% to retail investors, 50% to institutional and 15% to non institutional investors.
| Particulars | Details |
| Opening Date | 3rd June 2024 |
| Closing Date | 3rd June 2024 |
| Lot Size | 110 Shares |
| Face Value | Rs. 10 |
| IPO Size | Rs. 130.15 Cr |
| Fresh Issue | N/A |
| IPO Price Range | Rs. 129-136 |
| Min. Investment | Rs. 14,960 |
| Offer for Sale (OFS) | Rs. 130.15 Cr |
| Basis of Allotment | 6th June 2024 |
| Refunds | 7th June 2024 |
| Listing Date | 10th June 2024 |
| DRHP Draft Prospectus: | Click Here |
| RHP Draft Prospectus: | Click Here |
Kronox Lab Sciences Limited IPO Book Running Lead Managers –
Pantomath Capital Advisors Pvt Ltd
Kronox Lab Sciences Limited IPO Registrar to the offer –
The registrar for the Kronox Lab Sciences Limited IPO is Kfin Technologies Limited. They are responsible for ensuring the IPO allotment and refund processes are carried out smoothly.
The Objective Of The Issue –
- Carry out the Offer for Sale of up to 95,70,000 Equity Shares by the Promoter Selling Shareholders; and
- Achieve the benefits of listing the Equity Shares on the Stock Exchanges. Further, the Company expects that the proposed listing of the Equity Shares will enhance the visibility and brand image, provide liquidity to its existing Shareholders, and provide a public market for Equity Shares in India.
Key Performance Indicator –
The market capitalization of Kronox Lab Sciences Limited IPO is Rs 504.61 Cr.
KPI as of December 31, 2023.
| Earning Per Share (EPS): | ₹4.48 per Equity Share |
| Price/Earning P/E Ratio: | 30.37 |
| Return on Net Worth (RoNW): | 25.66% |
| PAT Margin(%) | 22.6 |
Financial Status –
Kronox Lab Sciences Limited’s revenue increased by 16.99% and profit after tax (PAT) rose by 21.94% between the financial year ending with March 31, 2023 and March 31, 2022.
| Particulars(in Rs. Crores) | FY 23 | FY 22 | FY 21 |
|---|---|---|---|
| Revenue From Operations | 97.50 | 83.34 | 63.24 |
| EBIDTA | 21.99 | 19.69 | 14.80 |
| PAT | 16.62 | 13.63 | 9.73 |
| Total Assets | 54.03 | 56.79 | 37.65 |
| Total Borrowings | 9.35 | 16.43 | 10.83 |
Peers of Kronox Lab Sciences Limited IPO –
The table below show peer comparison from DRHP/RHP.
| Company | EPS Basic | EPS Diluted | NAV | P/E(x) | RoNW | Financial statements |
|---|---|---|---|---|---|---|
| Tatva Chintan Pharma Chem Limited | 19.45 | 19.45 | 220.07 | 57.57 | 8.84 | Consolidated |
| Tanfac Industries Ltd. | 56.27 | 56.27 | 184.74 | 39.15 | 30.46 | Consolidated |
| Neogen Chemicals Ltd | 18.94 | 18.94 | 182.9 | 77.55 | 10.36 | Consolidated |
| Sigachi Industries Limited | 1.42 | 1.42 | 8.73 | 46.64 | 16.22 | Consolidated |
| DMCC Speciality Chemical Limited | 2.78 | 2.78 | 79.49 | 116.57 | 3.5 | Consolidated |
IPOs Strengths –
- Broader range of products finding applications in diversified end user industries.
- Long standing relationships with customers.
- High entry and exit barriers due to long customer approval cycles and strict product standards.
- Focus on R&D and quality control.
- Zero debt company with strong and consistent financial performance.
- Strategically located manufacturing facilities providing supply chain efficiencies.
- Experienced promoters and senior management with extensive domain knowledge.
IPOs Weakness –
- Company’s 20 products contribute the highest to its revenue
- Failure in developing new high purity specialty fine chemicals may affect the future growth and business.
- Average P/E ratio of the listed industry peers is 67.50, while P/E ratio of the company is at a premium of 31.63 times at the higher price band and 30 times at the lower price band.
- Had a streak of high current ratio in the past.
- Exposed to foreign exchange risks.
- High working capital requirements.
- Reported negative cash flows in the past.
IPO GMP Today –
The latest GMP of Awfis Space Solutions Limited as on 03rd June 2024 is Rs. 82.
Conclusion –
The company operates in high-purity speciality chemical segment and enjoys virtual monopoly in certain products. Its product portfolio currently has 185 products and another 122 is in the pipeline. Based on FY24 annualized earnings, the issue appears fully priced. Experienced investors may apply in the upcoming IPO after thorough evaluation of all the factors to gain medium to long term rewards.
Also, investors should conduct further due diligence, analyze industry trends and the competitive landscape, and consider risk factors before making an investment decision.
