Chemcon Speciality Chemicals Ltd. announced their public IPO issue last week for an offering of Rs.318 crore. The price range fixed for this offer was Rs.338 to Rs.340 per share. Before the offer closed on Sep 25th, this stock was oversubscribed by 149 times! It received bids for 976,426,440 shares against 6,547,061 shares on offer
What does Chemcon do?
Chemcon is an Indian specialty chemical manufacturer specializing in chemicals such as HMDS (Hexamethyldisilane) & CMIC (Chloromethyl isopropyl carbonate). These are predominantly used as raw ingredients in the pharmaceutical industry and inorganic bromides, predominantly used as completion fluids in the oilfields industry (Oil well completion chemicals).
The Vadodara based Chemcon key customers include Laurus Labs Ltd, Aurobindo Pharma Ltd, and Ind-Swift Laboratories Ltd. The firm also has an extensive global export base and covers marks, including the US, Germany, Italy, South Korea, Japan, the United Arab Emirates, Serbia, Russia, Spain, Thailand, and Malaysia.
Why the craze over Chemcon?
Last Tuesday, The stock got listed on the market at a premium of 115% over the offer price, thus offering a gain bonanza for the initial investors. This craze over Chemcon could be attributed to the fact that the investors believe that the firm has a bright potential given the demand is moving away from China-based suppliers to home-grown ones.
However, some analysts believe that the stock cannot hold on to the current hyped-up premium and are forecasting that there will be a price correction to set it at the same level alongside its peers. Given this forecast, the short-term investors are booking their profits and this can be seen in the 20% drop at the end of the trading day.
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