Rossari Biotech stake sale worth Rs 496 crore on the first day of its price band IPO i.e.,July 13, received bids for about 60 per cent or 49,30,030 shares of 81,73,530 issued shares on the block. With the higher end of the Rs 423-425 price band, the company is now expecting a valuation of 19.9 times FY20’s EV/Ebitda and 33.1 times earnings per share on an FY20 basis. The asking valuation multiple is more than 27 times the peers are commanding. Analysts have majorly given ‘subscribe’ ratings to the issue.
According to Emkay Global, “The company has delivered robust growth. The new capacity expansion at Dahej should strengthen its portfolio in the high-growth HPPC (home and personal care) segment to serve its wide customer base. Customized product offering, fungible capacities and rapid finished product conversion rate remain the key differentiators for the company”.
Rossari Biotech has raised funds worth Rs 148.87 crore from anchor investors including fund houses like SBI Mutual Fund, HDFC Mutual Fund and ICICI Prudential Mutual Fund. Angel Broking who has given ‘subscribe’ rating on the issue said, “Rossari may command a premium over most of its chemical peers, as it is net debt free and has better asset turnover, working capital days return on equity”.
The company deals in three segments which includes home care, textile and animal healthcare.
Considering near-term demand from the textile industry and the significance of Rossari’s Silvassa facility in the company’s business, few brokerages are concerned that any disturbance in its textile segment may adversely impact its business. While other brokerages believe it would not impact much given the rising demand in the home and personal care segments of the company.
Ventura Securities said, “Despite the lockdown and the pandemic, the company did not suffer any major losses in revenue in last four months. The company has added over 20 private label customers during the lockdown. The soaps & detergent and pulp & paper products segments have gained a lot of traction during this period”.