Kronox Lab Sciences had a strong debut on the stock exchanges on June 10, 2024. The company’s shares listed at ₹164.95 on the NSE, reflecting a 21% premium over the issue price of ₹136. On the BSE, the stock started at ₹165, marking a 21.32% increase or ₹29 above the IPO price. This robust start highlights investor confidence in the company.
**IPO Details:**
The initial public offering (IPO) of Kronox Lab Sciences, amounting to ₹130.15 crore, was open for subscription from June 3 to June 5, with a price band set between ₹129 and ₹136 per share. The IPO was met with an overwhelming response, being subscribed 117.25 times.
It received bids for 98.54 crore shares compared to the 95.70 lakh shares available. The non-institutional investors (NII) category was particularly enthusiastic, subscribing to 301.92 times the allotted shares, while the qualified institutional buyers (QIB) and retail investors subscribed 89.03 times and 52.24 times, respectively.
**Investment Details:**
The IPO was entirely an offer for sale, with no fresh issue of shares. Investors had to apply for a minimum lot size of 110 shares, requiring a minimum investment of ₹14,960. The shares distribution was segmented with 15% allocated for NIIs, 35% for retail investors, and 50% for QIBs.
**Company Background:**
Incorporated in 2008, Kronox Lab Sciences is a leading manufacturer of high-purity specialty fine chemicals used across various industries, including pharmaceuticals, biotech, agrochemicals, and personal care products. The company boasts a diverse product range of over 185 items, such as phosphates, sulfates, acetates, and more, supplying to customers in India and over 20 other countries.
**Market Comparisons:**
Kronox Lab Sciences’ listed peers include Tanfac Industries Ltd (P/E of 39.15), Neogen Chemicals Ltd (P/E of 77.55), Sigachi Industries Ltd (P/E of 46.64), Tatva Chintan Pharma Chem Ltd (P/E of 57.57), and DMCC Speciality Chemical Ltd (P/E of 116.57).
**Financial Performance:**
Financially, the company has shown growth, with revenue increasing by 16.99% and profit after tax (PAT) rising by 21.94% from the fiscal year ending March 31, 2022, to March 31, 2023. This steady financial performance, along with a debt-free status, underscores the company’s solid financial health.
**Expert Opinions:**
Experts have largely recommended subscribing to the IPO for long-term gains. They cite the company’s extensive product range, stringent production processes, strategic manufacturing locations, and strong customer relationships as key strengths.
However, they also note some risks, such as exposure to foreign exchange rate fluctuations and the current underutilization of manufacturing capacity, which could limit revenue growth. Despite these concerns, the IPO’s P/E valuation of 31.62x is deemed reasonable, making it an attractive investment for both listing gains and long-term growth, provided investors are aware of the associated risks.
